As global warming thaws the Arctic, Russia is leading the rush to exploit the region’s resources. In late 2013, on a platform in the Pechora Sea, Gazprom became the first company to produce oil offshore in the Arctic, after jailing 30 Greenpeace protesters and confiscating their ship. On the east side of Yamal a partnership led by another Russian company, Novatek, is building a giant terminal to liquefy gas and export it to East Asia and Europe by ice-breaking tanker—though over time there may be less and less ice to break. ... Russia is not alone. More than a fifth of the world’s conventional oil and gas that has yet to be discovered lies above the Arctic Circle, according to a 2008 estimate by the U.S. Geological Survey, and the region is rich in other minerals too. ... Given the hype on both sides of the argument, what’s striking is how patchy the Arctic rush actually is. Few companies have dipped their toes into Arctic waters, and fewer still are making a profit. Last fall Royal Dutch Shell abruptly abandoned its multiyear, seven-billion-dollar effort to extract oil from the Chukchi Sea off Alaska after drilling a single unpromising hole. Record-low oil prices likely contributed to the decision. So did the astronomical costs of operating in a region where infrastructure is sparse, distances are huge, and the weather remains horrific.
Few developing countries have seen their hopes dashed more by the slump in global commodity prices than Mongolia, this country of three million people that is almost four times the size of California. ... With its vast unexploited reserves of copper, coal and other minerals once estimated to be worth more than $1 trillion, and a neighbor—China—going through a belated industrial revolution, Mongolia looked to have won a ticket into the modern world. ... “We missed the big time; the free ride that we were given,” said Ganhuyag Chuluun Hutagt, Mongolia’s vice minister of finance from 2010-2012. “No matter what happens to China, I thought, we will still find something to sell to them…which was not true, obviously.” ... There is little industry outside of Mongolia’s resources sector and no other country is as reliant on China, to which Mongolia sends nearly 90% of its exports, mostly commodities. ... Residential property prices have dropped by 35% in the past four years, while an estimated 37,000 apartments stand empty across the city, according to estimates from M.A.D. Investment Solutions, a local property group.
Successful empires and kingdoms are good at building infrastructure and sharpening the best ideas. The inscription along the magnificent colonnade above the James A Farley building in central Manhattan, the largest post office in the United States, reads: ‘Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.’ Herodotus wrote the words 2,500 years ago, to describe the ancient Persians – who were always on the lookout for innovative technologies and ideas that made it easier to administer their great empire. Getting messages quickly and reliably from A to B in the ancient world was no less important than it is today. ... The instant communications made possible by recent technological changes should not make us susceptible to the breathless commentary about globalisation as something new. For more than two millennia, news and information, goods and products, ideas and beliefs have flowed through networks linking the Pacific coast of China with the Atlantic coasts of North Africa and Europe, the Indian Ocean and the Persian Gulf with the Mediterranean and Scandinavia. Since the late 19th century, these networks have been known as the Silk Roads. ... We are witnessing the world’s centre of gravity return to the axis on which it spun for millennia. When viewed from the vantage point of the Silk Roads, the familiar narrative begins to quiver, history itself begins to shift. In fact, to understand the world, the best place to look is not in the centre of the West nor in the heart of the East, but on the old Silk Road where the two come together. ... Most scholars have neglected these networks for three reasons. First, they challenge the familiar, triumphalist story of the rise of the West. Second, historians today work in crowded and competitive fields requiring increasingly narrow and precise specialisations. ... Finally, there’s the simple fact that Western scholars’ ability to follow historical connections can be limited by the lack of knowledge of central Asian languages.
Mark your calendar: January 1, 2020. ... As this future year unfolds, the gap between how much cocoa the world wants to consume and how much it can produce will swell to 1 million metric tons, according to Mars Inc. and Barry Callebaut AG, the world’s largest chocolate maker. By 2030, the predicted shortfall will grow to 2 million tons. And so on. ... Because of disease, drought, rapacious new markets and the displacement of cacao by more-productive crops such as corn and rubber, demand is expected to outstrip supply by an additional 1 million tons every decade for the foreseeable future. Here, now, as you read these words, the world is running out of chocolate ... Last year, we again consumed more cocoa than we were able to produce. This year, despite an unexpected bumper crop, supply barely kept pace with the recent upswing in demand. From 1993 to 2007, the price of cocoa averaged $1,465 a ton; during the subsequent six years, the average was $2,736 -- an 87 percent increase. ... The world’s most universally delectable treat has begun a journey from being very loved and very common, like beer, to being very loved and a good deal less common, like Bordeaux. Unfortunately, that is the least of the confection’s problems. ... Efforts are under way to make chocolate cheap and abundant -- in the process inadvertently rendering it as tasteless as today’s store-bought tomatoes, yet another food, along with chicken and strawberries, that went from flavorful to forgettable on the road to plenitude.
I wondered whether a diamond grown in a lab could carry the same emotional weight as the real thing, without the guilt. And really, if it was identical to a natural diamond down to every last atom, as Roscheisen swore it was, what does it even mean to be the real thing? ... A carbon atom has four electrons in the shell around its nucleus—four little guys just looking to bond with electrons of other atoms. If four of those electrons form single bonds with, say, four hydrogen atoms, you’ll get CH4, methane. If the carbon atoms bond with more carbon atoms in a layered, chicken-wire pattern, you’ll have graphite—just one of many forms of pure carbon. ... So when you think about it, diamonds are a life force in its mightiest form: The densest, hardest, strongest expression of carbon, the element underlying all of life on earth. ... As scientific knowledge goes, our understanding of the conditions that cause carbon to bond this way, or exactly how long it takes, is limited. That’s because it occurs over 100 miles inside the planet, at extreme temperatures and pressures. Many of the world’s diamonds were formed billions of years ago, and scientists don’t know exactly how those carbon atoms got down there inside the mantle to begin with.
We read almost every week of new research into the deleterious effects of sugar on our bodies. In the US, the latest edition of the government’s official dietary guidelines includes a cap on sugar consumption. In the UK, the chancellor George Osborne has announced a new tax on sugary drinks. Sugar has become dietary enemy number one. ... This represents a dramatic shift in priority. For at least the last three decades, the dietary arch-villain has been saturated fat. When Yudkin was conducting his research into the effects of sugar, in the 1960s, a new nutritional orthodoxy was in the process of asserting itself. Its central tenet was that a healthy diet is a low-fat diet. Yudkin led a diminishing band of dissenters who believed that sugar, not fat, was the more likely cause of maladies such as obesity, heart disease and diabetes. But by the time he wrote his book, the commanding heights of the field had been seized by proponents of the fat hypothesis. Yudkin found himself fighting a rearguard action, and he was defeated. ... In 1980, after long consultation with some of America’s most senior nutrition scientists, the US government issued its first Dietary Guidelines. The guidelines shaped the diets of hundreds of millions of people. Doctors base their advice on them, food companies develop products to comply with them. Their influence extends beyond the US. ... We tend to think of heretics as contrarians, individuals with a compulsion to flout conventional wisdom. But sometimes a heretic is simply a mainstream thinker who stays facing the same way while everyone around him turns 180 degrees. When, in 1957, John Yudkin first floated his hypothesis that sugar was a hazard to public health, it was taken seriously, as was its proponent. By the time Yudkin retired, 14 years later, both theory and author had been marginalised and derided. Only now is Yudkin’s work being returned, posthumously, to the scientific mainstream.
When Papadellis first arrived at Ocean Spray, prices had hit rock bottom because of a massive surplus of cranberries on the market. It was nearly impossible for a farmer to turn a profit, and hatchet men from Bain & Company and Merrill Lynch had advised company brass to trim the fat and dump the brand while it was still worth selling. Papadellis had a different vision. He set out to bring the juice giant back from the brink, and by 2005 had discovered a company-saving cash cow: Craisins, those addictive little treats that are a whole lot like raisins—sweet enough to soothe a tyrannical toddler’s afternoon tantrum yet packed with enough fiber to kick-start a senior citizen’s GI tract. With boundless consumer appeal, the shriveled hulls of cranberries reduced the industry-wide glut of fruit and blossomed nearly overnight into a bite-size blockbuster that resurrected the cranberry business. ... In reality, though, Craisins were both a savior and a scourge: They hoisted profits, but the more Ocean Spray produced, the more cranberry-juice concentrate it was left holding. As a result, when Craisins sales skyrocketed, millions of gallons of viscous, bitter concentrate flooded Ocean Spray’s storage freezers. With bottled-cranberry-juice sales remaining stagnant, Papadellis worried that this excess of concentrate would soon drown the farmers, saturate the market, and send everyone back to the poorhouse. ... Two harvests after his speech at Disney, the price for a 100-pound barrel of cranberries on the open market plunged from $70 to $18. Since then, the market has continued to flounder, and today much of the cranberry industry is still sputtering in a glut of concentrate while growers increasingly face bankruptcy.
Sometime in 1882, a skinny, dark-haired, 11-year-old boy named Harry Brearley entered a steelworks for the first time. A shy kid—he was scared of the dark, and a picky eater—he was also curious, and the industrial revolution in Sheffield, England, offered much in the way of amusements. He enjoyed wandering around town—he later called himself a Sheffield Street Arab—watching road builders, bricklayers, painters, coal deliverers, butchers, and grinders. He was drawn especially to workshops; if he couldn’t see in a shop window, he would knock on the door and offer to run an errand for the privilege of watching whatever work was going on inside. Factories were even more appealing, and he had learned to gain access by delivering, or pretending to deliver, lunch or dinner to an employee. Once inside, he must have reveled, for not until the day’s end did he emerge, all grimy and gray but for his blue eyes. Inside the steelworks, the action compelled him so much that he spent hours sitting inconspicuously on great piles of coal, breathing through his mouth, watching brawny men shoveling fuel into furnaces, hammering white-hot ingots of iron. ... There was one operation in particular that young Harry liked: a toughness test performed by the blacksmith. ... young Harry became familiar with steelmaking long before he formally taught himself as much as there was to know about the practice. It was the beginning of a life devoted to steel, without the distractions of hobbies, vacations, or church. It was the origin of a career in which Brearley wrote eight books on metals, five of which contain the word steel in the title; in which he could argue about steelmaking—but not politics—all night; and in which the love and devotion he bestowed upon inanimate metals exceeded that which he bestowed upon his parents or wife or son. Steel was Harry’s true love. It would lead, eventually, to the discovery of stainless steel.
Over half a century (the company will celebrate its 50th anniversary in August) Vitol has never suffered an annual loss. Profits surged from just $22.9 million in 1995 to a record $2.28 billion in 2009, according to documents reviewed by Bloomberg. At its peak, Vitol’s return on equity, a measure of profitability compared with the money that partners have invested, was a geyserlike 56 percent. Even Wall Street pales in comparison; Goldman Sachs’s best ROE since going public in 1999 is 31 percent. ... Vitol, which trades about 6.5 percent of the world’s oil, fights in a tough arena. It competes with other independents such as Glencore, Trafigura Group, Mercuria Energy Group, Gunvor Group, and Castleton Commodities International. It also grapples for market share against Big Oil’s in-house trading arms, including those of BP, Royal Dutch Shell, Total, and, increasingly, state-owned Chinese oil companies. ... As for the future, Vitol faces a daunting fact: The best days of oil trading are almost undoubtedly in the rearview mirror. Margins are shrinking as the market becomes ever more transparent and competitors emerge fighting for the same barrels. Even as Vitol sinks more capital into assets such as refineries and terminals, returns are falling. Last year’s ROE was 16 percent—for Vitol, a less-than-stellar number. ... In August 1966, two Dutchmen, Henk Viëtor and Jacques Detiger, invested 10,000 Dutch guilders (about $2,800 at the time) to start a Rotterdam company with the aim of buying and selling refined petroleum products by barge up and down the Rhine. They crunched Viëtor and “oil” to get Vitol. The money was a loan from Vietor’s father and the pair agreed to pay an annual interest rate of 8 percent. ... The modern Vitol began to take shape in 1990, when Detiger and seven other partners sold the company for $100 million to $200 million (the actual figure wasn’t disclosed) to a group of about 40 employees, including Taylor.
American Grown, which has exclusive rights to buy diamonds from several undisclosed labs in the US, started selling synthetics (a scientific term loathed by the lab-grown industry, but routinely used in the greater jewelry world) a little over three years ago and now wholesales stones to some 250 stores around the country. ... Though lab-growns have been around for a while, it was only recently that the science of creating colorless, nearly flawless diamonds was finally perfected. ... With technology advancing, and with younger shoppers drawn to synthetic options, the question of whether or not lab-grown diamonds will invade the market is now a matter of when, not if. ... the stones first gained commercial popularity in India, where diamond trading began as early as the 4th century BC. During the Middle Ages, caravans that unearthed diamonds in India's rivers traded them with Western Europe, where they became coveted by the upper class. The world's diamond capital moved from India to Brazil in the 1700s, and then to South Africa, when a giant diamond mine was discovered in the city of Kimberley in 1866. In 1888, British businessman Cecil Rhodes established his mining company, De Beers, in the country, and effectively founded the diamond industry as we now know it. ... A century before this, however, scientists began their quest to make diamonds in a lab. Ignited by Antoine Lavoisier's discovery that diamonds were merely a crystalline form of carbon, the result of pressure deep within the earth, in the late 1700s, little progress was made for nearly 200 years. ... Then came General Electric. Physical chemist H.Tracy Hall joined its "Project Superpressure," and in 1954, after nearly four years of synthetic diamond experimentation, Hall lead his team to a breakthrough. They were able to create small diamonds after heating carbon to 5,000 degrees Fahrenheit and applying extreme pressure with a heavy hydraulic press — a method referred to as high pressure and temperature, or HPHT.
Today the Glencore CEO believes that the industry is suffering from a glut of commodities on world markets. If mining companies could only get a handle on production, Glasenberg says, prices would inevitably rise. “Mining companies have to wake up and stop increasing supply and look at demand,” he says. “And that is it.” ... When you travel around the Copperbelt in Africa, it quickly becomes clear just how big a player Glencore is. At the tiny Kolwezi airport in the DRC’s southernmost province of Katanga, Glencore paid to rebuild the small runway and put up new buildings in 2011. On the road leading to the Mutanda copper mine, our vehicle rumbles over a new bridge crossing the Lualaba River, funded recently by Glencore at a cost of $10 million. ... For Glencore’s long haul as a public company, Glasenberg must continue to do what investors have demanded over this bruising year: Control spending and cut debt. Meanwhile, it waits for markets to rationalize.
Jeremy has written extensively about the long-term prospects for natural resources,1 but there are advantages to commodity investing beyond potential commodity price appreciation, including diversification and inflation protection. Resource equities are a great way to gain commodity exposure, while also accessing the equity risk premium. Given their somewhat hybrid nature, with one foot in the equity market and the other foot in the commodity market, resource equities display some unusual characteristics; over various timeframes, resource equities may move more with equities or more with commodities and can look more or less risky than the broad market. Perhaps due to their quirky nature, resource equities are generally unloved and possibly misunderstood. However, we believe that resource equities present a compelling investment opportunity, both strategically and tactically, and that long-term investors could benefit from larger allocations to these assets. ... investors are still wary of investing in commodity producers due to the commodity price risk and the always uncertain commodity outlook. Long-term investors willing to tolerate that shorter-term risk should strongly consider whether they have allocated enough to this exciting and unloved segment of the market.
On Sept. 1, in the Siberian port city of Vladivostok, Russian President Vladimir Putin discussed a wide array of issues with Bloomberg Editor-in-Chief John Micklethwait. The two-hour interview ranged from islands disputed with Japan to the price of petroleum and the vicissitudes of Gazprom, the immense state-owned enterprise that supplies natural gas not only to his country but to much of Europe. Putin, the longest-ruling Russian leader since Leonid Brezhnev, weighed in on the U.S. election, as well as his relationship with Turkey’s Recep Tayyip Erdogan and Syria’s Bashar al-Assad. Here are excerpts from their conversation.
Right now, the global bottled water industry is in one of those strange and energetic boom phases where every week, it seems, a new product finds its way on to the shelves. Not just another bland still or sparkling, but some entirely new definition of the element. It is a case of capitalism at its most hyperactive and brazenly inventive: take a freely available substance, dress it up in countless different costumes and then sell it as something new and capable of transforming body, mind, soul. Water is no longer simply water – it has become a commercial blank slate, a word on to which any possible ingredient or fantastical, life-enhancing promise can be attached. ... The global market was valued at $157bn in 2013, and is expected to reach $280bn by 2020. Last year, in the UK alone, consumption of water drinks grew by 8.2%, equating to a retail value of more than £2.5bn. Sales of water are 100 times higher than in 1980. Of water: a substance that, in developed countries, can be drunk for free from a tap without fear of contracting cholera. What is going on? ... There now seems to be no limit on what a water can be, or what consumers are willing to buy. It is no longer enough for water to simply be water: it must have special powers. ... At some point, surely, we will reach “peak” water. Perhaps it will be the moment consumers lose faith in the cellulite-eradicating powers of Buddha water or wonder if it’s really worth paying over the odds for birch sap.
With greater oil reserves than Saudi Arabia, Venezuela should be at least moderately prosperous. Instead, it has the world’s fastest contracting economy, the second highest murder rate, inflation heading towards 1,000% and shortages of food and medicine that have pushed the poorest members of its 30 million population to the edge of a humanitarian abyss. ... It takes just five minutes to cross from the porous border at Pacaraima. Locals say the government in Caracas lifted food import tariffs from Brazil two months ago in a sign both of its desperation to ease shortages and its weakening control over the economy. There is now a steady stream of traders buying sacks of rice, sugar, wheat and spaghetti for resale in Venezuela. ... Life could be made easier if the authorities printed notes with higher denominations than 100 Bolivars, which is worth less than 8p, or 10 cents. But the central bank appears reluctant to make a move that would confirm a level of hyperinflation not seen in Latin America since the crises in Brazil and Argentina in the 1980s and 1990s. As a result, locals have to pay for everything in the equivalent of dimes. Even when made of paper, that can be cumbersome and heavy. ... The government’s tendency to subsidise many products below the cost of production is a major reason why the economy is in such a mess. ... Even in the midst of crisis, the government still hands out free or massively discounted homes, cars, DVD players and microwave ovens.
Congo is one of the last frontiers in a global scramble for the world’s best-tasting coffee. The rise in demand for specialty coffee, which accounts for one of every two cups sold in the U.S., has encouraged exporters, roasters and retailers to go places where the potential is huge—and so are the risks. ... The many challenges of doing business in Congo include death threats, kidnapping and extortion. Government officials often concoct new taxes on the spot or forge documents to demand more money than what is owed. Last year, at least 175 foreigners and Congolese, many working for aid organizations, were abducted and held for ransom, according to Human Rights Watch. ... Most of the kidnappings happened in areas near where specialty coffee is grown, though no Western coffee prospectors have been abducted. ... Specialty coffee is a fast-growing segment of the approximately $175 billion-a-year world-wide coffee market. Specialty coffee is made from the highest-quality arabica beans, sells at a premium and has gone from the fringe to mainstream. In the U.S., 31% of adults drink specialty coffee every day, up from 16% in 2006, the National Coffee Association trade group estimates. ... Congo’s best beans regularly get at least an 85 and fetch a wholesale price of about $3 a pound, about double the price on the ICE Futures U.S. exchange in New York.
Smash an old TV, and you risk spewing lead into the air. Crack open an LCD flatscreen, and you can release mercury vapor. Mobile phones and computers can contain dangerous heavy metals such as cadmium and toxic flame retardants. Mexican workplace regulations, like those in the U.S., require e-waste shops to provide such safety equipment as goggles, hard hats, and masks. There’s little of that in Renovación. ... In much of the world, a place like Renovación couldn’t exist, and not only because business owners wouldn’t be allowed to employ people in those conditions. Twenty-five U.S. states and Washington, D.C., home to 210 million Americans, have laws establishing what’s known as extended producer responsibility, or EPR. That means electronics makers must collect, recycle, and dispose of discarded equipment rather than allow it to enter the waste stream. Parts of Europe also have this system. ... Manufacturers don’t do this work themselves. Typically, a state, county, or town establishes an e-waste collection program. Then recycling companies come to haul away the junk. The manufacturers pay some or all of the bill. The e-waste can be of any provenance. ... The lack of a formal, regulated recycling industry is one of many reasons Mexico has become a magnet for spent electronics. ... A ton of mobile phone circuit boards can produce 30 ounces of gold, worth about $39,000 at current prices.
Williams’ discovery of the mysterious block was followed by dozens of reports of similar findings on beaches across western Europe. The blocks, materializing from the Atlantic surf, would cast the spotlight on gutta percha, a Victorian commodity whose obscurity belied its crucial place in modern communications. The humble latex would accelerate global telecommunications to a previously unimagined pace; cement the British empire’s grip over the world’s critical messaging systems; and spur industry and academia to devise some of the foundational theories of modern physics. ... The Victorian system of submarine cables literally laid the foundation, in many cases, for today’s fiber-optic networks. The globe-spanning networks of the day spawned business titans, and technological innovators, that bear close parallels to today’s internet-enabled tycoons. Gutta percha was largely replaced by polyethylene by the 1950s, ending a century of industrial telecommunications use. ... in 1832, a Scottish surgeon stationed in Singapore with the East India Company named William Montgomerie wrote a paper about gutta percha’s unique properties: it could be moulded in hot water but it hardened as it cooled. ... It was as if the Elon Musks or Steve Jobs of the day were all focused on the same, potentially world-altering technology. ... Pender’s businesses left a legacy. Vestiges of his cable empire live on in today’s telecom conglomerates. His firms formed the core of Cable & Wireless
Two groups of true believers are driving changes in the developed world. The first: single-minded central bankers who spent trillions of dollars pushing government bond yields close to zero (and below). While this unprecedented monetary experiment helped owners of stocks and real estate, its regressive nature did little to satisfy the second group: voters who are disenfranchised by globalization and automation, and who are on the march. What next? The fiscal experiments now begin (again). ... why do we see 2017 as another year of modest portfolio gains despite the length of the current global expansion, one of the longest in history? As 2016 came to a close, global business surveys improved to levels consistent with 3% global GDP growth, suggesting that corporate profits will start growing at around 10% again after a weak 2016. More positive news: a rise in industrial metals prices, which is helpful in spotting turns in the business cycle ... Furthermore (and I understand that there’s plenty of disagreement on the benefits of this), many developed countries are transitioning from “monetary stimulus only” to expansionary fiscal policy as well. Political establishments are aware of mortal threats to their existence, and are looking to fiscal stimulus (or at least, less austerity) as a means of getting people back to work. The problem: given low productivity growth and low growth in labor supply, many countries are closer to full capacity than you might think. If so, too much fiscal stimulus could result in wage inflation and higher interest rates faster than you might think as well. That is certainly one of the bigger risks for the US.
Hardly a lost city, Fordlândia is home to about 2,000 people, some who live in the crumbling structures built nearly a century ago. ... Ford, the automobile manufacturer who is considered a founder of American industrial mass-production methods, hatched his plan for Fordlândia in a bid to produce his own source of the rubber needed for making tires and car parts like valves, hoses and gaskets. ... In doing so, he waded into an industry shaped by imperialism and claims of botanical subterfuge. Brazil was home to Hevea brasiliensis, the coveted rubber tree, and the Amazon Basin had boomed from 1879 to 1912 as industries in North America and Europe fed the demand for rubber.
Because: after Howell dropped out of Yale in 1967 (“the whole world was exploding at that point”) and met his future wife, Laurie, and moved to Berkeley and visited the first Peet’s Coffee, changing his conception of coffee shops forever; and after he then tasted a cup of lighter-roasted coffee made by the Bay Area Capricorn Coffees, which changed his conception of coffee further still; but before he moved to Boston and started his café company, the Coffee Connection, where he invented the Frappuccino and pushed light roasts and sourced single-origin beans when the whole world was drinking anonymous dark-roasted muck; and before he sold the whole kit and caboodle to Starbucks for $23 million in SBUX stock in ’94; and before ... He was, at the time, mostly preoccupied with the beauty and power of the psychedelic yarn paintings that the Huichol made as a part of their shamanic religious practices in those remote Mexican mountains. ... mostly they talk about his pragmatically mystical conviction that a higher truth of coffee exists, and that we can figure out how to get to it. ... These are boom times for fancy coffee. You can buy locally roasted bags of expensive Ethiopian varietals in small American towns, and every major city with a recently gentrified neighborhood is now home to at least one coffee bar serving pour-over made with single-origin beans and a small roaster setting up shop in a industrial brown zone near a canal.
De Beers, the world’s biggest diamond company, marked the opening of its Gahcho Kué mine in September. ... the aim of extracting more than 12,000 carats (2.4kg) of diamonds each day. Gahcho Kué is an astonishing endeavour, the biggest new mine in the world in over a decade. De Beers has no plans for another. ... The diamond business gained its sparkle around 1866, when a farmer’s son picked up a glistening pebble on the bank of the Orange river in South Africa. For most of the next 150 years, De Beers would dominate the global market. Success depended on manipulated supply and skilfully cultivated demand. ... Much has changed since then. De Beers can no longer control the market. Though it is the biggest producer by value, it accounts for only a third of global sales, down from 45% in 2007. It faces many uncertainties, from synthetic diamonds to changing relationships with polishers and cutters. Its loosening grip is reflected in increased volatility: its sales fell 34% in 2015, before bouncing back by 30% last year. Meanwhile the source of the demand that drives sales—the link between diamonds and love—looks weaker than it used to. ... But one forecast seems solid: there will be fewer new diamonds. ... diamonds’ principal value has nothing to do with science. ... They are a “Veblen good”, as items that gain their value solely from their ability to signal status are named, after Thorstein Veblen, an economist who wrote about the spending of the rich.
Whatever their aspirations, people keep right on gorging. Americans now eat a total of 76 pounds in various sugars every year, up 8% from 1970. ... That’s the problem for Big Food: It’s built on the stuff. Some 74% of packaged foods and beverages in the U.S. contain some form of sweetener ... the final factor that is pressing heavily on packaged food companies: the ever-more-ravenous appetite for “natural,” unprocessed products. ... Think of food companies’ plight this way: The finest scientists in industry have spent decades trying to find or invent a no-calorie sweetener that tastes and feels as good as the stuff extracted from pure cane. And now, after they largely failed to master that complex, arduous task, the level of difficulty is being raised even higher: This improbable concoction cannot appear to have been engineered by scientists. ... Most people in the business believe that a “systems approach”—a blending of ingredients rather than a single molecule—is the future of the natural-sweetener industry.
During the 2003–15 commodity supercycle, spending on resources including oil, natural gas, thermal coal, iron ore, and copper rose above 6 percent of global GDP for only the second time in a century before abruptly reversing course. Less noticed than these price gyrations have been fundamental changes in supply and demand for resources brought about by expected macroeconomic trends and less predictable technological innovation. Our analysis shows that these developments will have major effects on resource production and consumption over the next two decades, potentially delivering significant benefits to the global economy and bringing change to the resource sector.
-Rapid advances in automation technologies such as artificial intelligence, robotics, analytics, and the Internet of Things are beginning to transform the way resources are produced and consumed.
-Scenarios we modeled show that adoption of these technologies could unlock cost savings of between $900 billion and $1.6 trillion in 2035, equivalent to the GDP of Indonesia or, at the upper end, Canada. Total primary energy demand growth will slow or peak by 2035, despite growing GDP, according to our analysis.
-The price correlation that was evident during the supercycle is unraveling, and a divergence in prospects between growth commodities and declining ones may become more significant.
-Policy makers could capture the productivity benefits of this resource revolution by embracing technological change and allowing a nation’s energy mix to shift freely, even as they address the disruptive effects of the transition on employment and demand.
-For resource companies, particularly incumbents, navigating a future with more uncertainty and fewer sources of growth will require a focus on agility.
Already, the four companies that in 2015 provided 88 percent of the world’s lithium can’t keep up: Lithium contract prices have increased from $4,000 per metric ton in 2014 to as high as $20,000 today. ... That’s why a host of junior entrants are scrambling to get into the game. Whoever can figure out the extraction and chemistry required to get lithium out of the ground and into batteries stands to capture a significant share of the market. But as with any commodity, it’s a precarious business. ... Lithium can be mined from rocks, as in Australia and China, but in Clayton Valley and the lithium triangle it’s extracted from briny aquifers. ... The best hope new entrants have of catching Albemarle lies in a process being developed by Tenova SpA, an Italian engineering company. This method, which strips the lithium using an ion-exchange system and returns the water to the ground, would allow companies to skip evaporation ponds, slashing production time from months to hours while yielding a higher concentration of lithium.