Category Archives: Resource Based Economy

This years recovery, after months of life under lockdown, stands out from previous ones; it started with inflation roaring back.

Normally the symptom of overheating in a dynamic economy reaching full speed, inflation this time reflects a weakened economy taken by surprise. It was hard for anyone under lockdown on government support to believe that a solution for living with a new virulent disease would be found so quickly. It makes for a happy end to social distancing, but it also creates a new type of economic havoc.

The rush to go back to normal is being limited by the constraints of a globalised world. Differences in vaccine availability in various parts of the world have resulted in a global upturn more sequenced than synchronised. Bottlenecks in shipping and resource limitations are creating shortages. Delivery times are near all-time highs, while firms are still working overtime to replenish depleted inventories. With people not yet ready or able to return to work, firms are having difficulties hiring. In the US, among the most advanced in terms of vaccinations, prices are rising.

One must step out of the business cycle rationale to understand it properly. Business cycles are generated by fluctuations in demand. This time, the shock came from the supply side. Disrupted global production chains and labour markets keep supply from rising to satisfy demand. Inflation accelerates while industry capacity utilisation, employment rates and key commodities levels all remain below pre-Covid levels. Inflation appears just as growth begins to accelerate.

And it is for this reason that inflation will subside. It is not taking place anywhere near the peak of a cyclical expansion, where factors of production are in full use. Ample slack remains in the labour market, which will prevent wages from rising meaningfully. For the bottom fifth of US wage earners, fiscal support roughly doubled their annual income, which may create an artificial tightening in labour markets. But government programmes will be phased out in the autumn and labour shortages should ease. Supply chain bottlenecks, related to the an early reopening, will resolve with time.

Crucially, even if supply disruptions last for longer than expected, their impact on inflation can only fade if wages do not rise. The 70s are long gone and widespread wage indexation is a thing of the past.

Early evidence points towards disruptions being on the mend. Data show that US manufacturing inventories in sectors driving inflation, such as vehicles and energy, returned to pre-Covid levels by the end of the first quarter. Together with waning base effects, this should push inflation sharply down by the turn of the year.

The Federal Reserve remains calm and committed to keeping a watchful eye on undesirable inflation pressures. Its dual mandate, coupled with a new attention to social equity, including ethnic- and gender-based unemployment, gives the Fed room to manoeuvre before removing support. While growth and inflation forecasts were upgraded considerably in the latest Federal Open Markets Committee meeting, unemployment expectations were not. Markets appear to understand the message. Yet, they will use every new data and dot plot as a test.

Strong growth with no persistent inflation is likely to present many investment opportunities. This is particularly true in Europe. There is less of a risk of a policy driven consumption boom than in the US, given wage replacement was less than complete. Also, the Next Generation EU programme galvanises investment rather than consumption, with the prospect of raising potential growth and alleviating future inflation pressure. A scenario of accelerating growth with no tapering fears is the most supportive markets can hope for.

Looking further ahead, there is a concrete chance that euro area growth will normalise at a higher level than that of the last decade. The NGEU plan is focused on investment in key growth areas, such as the digitalisation and greening of the economy. Facilitating public investment in countries where it had been cut brutally after 2008, NGEU funds could increase productivity meaningfully if well spent.

The euro area has also finally tackled some of the institutional inconsistencies that have been preventing it from achieving its full growth potential. It now has a proactive and effective central bank, a safety net for governments undergoing liquidity problems, a system of fiscal transfers to smooth uneven growth shocks and a sizeable pool of safe and liquid assets denominated in its own currency. All this is not lost on long term investors. Net foreign direct investment inflows are hovering around all-time highs. Even though the direction of travel is clear, the ride may still prove bumpy.

Agns Belaisch is Chief European Strategist, and Matteo Cominetta is Director of Economic Research at Barings.

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Increase in inflation will not last - OMFIF

Does Your Organization Extract Enough Value from Valuable Data?

Half my advertising spend is wasted. The trouble is, I dont know which half.

Business pioneer John Wanamakers legendary quip, now more than a century old, is ready for a reboot. Today, at many organizations, the real puzzle is wasted data.

In sectors including finance, manufacturing, telecoms, and pharma and healthcare, many organizations struggle to manage their ever-increasing volume of data and convert it into insights that help them innovate, create value, and lead their competitionin essence, to turn their big data into big decisions.

Call it the data paradox: 67% of organizations in a recent Forrester study*, commissioned by Dell Technologies, said they need more data than their capabilities can provide, yet 70% are already bringing in data faster than they can process and analyze it. The pandemic has only intensified this dilemma as the growing on-demand economy generates more data for organizations whose skills, culture, and infrastructure cannot always keep up.

To tap its greater utility, organizations need to rescue their data from traditional silos and legacy infrastructure and share it widely, opening the way to greater predictive accuracy and more meaningful discoveries. Achieving all this requires implementing new end-to-end technology and services.

Data Novices and Data Champions

While six in 10 organizations agree that an as-a-service (aaS) model would help them become more agile, and scale, only two in 10 have migrated most of their applications and infrastructure to aaS systems. More than half of companies are data novices, drowning in their own data; only a few data champions are extracting the insights they need from multi-cloud and aaS models and from processing data at the edge.

For data novices, the risks of keeping legacy processes and technology in place are significant. Organizations that cannot generate data-based innovations and strategies risk losing market share to rivals that know their audiences and can improve the customer experience (CX) because they can see, distribute, and integrate their real-time data.

Data champions create data-driven cultures and boost their competitive edge by democratizing data: breaking down internal barriers and bottlenecks to motivate their workforces, inviting more employees to make critical data-based decisions. Cloud-based aaS data models can also help these organizations boost their data security while lowering the costs of data storage.

Here is how two organizations became data champions.

Speed, Accuracy, Reliability

Healthcare company Medacist helps hospitals and healthcare professionals apply artificial intelligence (AI), machine learning (ML), and analytics to data and uncover unusual patterns in drug distribution at every stage.

To support latency-sensitive analytical and AI workloads faster and more reliably, the company replaced its fragmented legacy infrastructure with a private cloud-based platform running software-as-a-service (SaaS). This migration helped Medacist cut data processing times and deliver noticeably faster and more accurate analysis.

Delivering analytics that once needed a 24-hour turnaround now takes five minutes. The infrastructures greater reliability meets clients strict requirements, upholding service level agreements 99.99% uptime guarantee, which saves Medacist millions of dollars in fees. This greater speed, accuracy, and reliability has proved critical to Medacists expansion of its customer base from 600 providers to more than 2,000.

Speed, Accuracy, Reliability

Great Little Box Company, a small packaging-materials manufacturer in Vancouver, determined its legacy forklift IT infrastructure was underperforming by clogging up data that kept the company from responding to customer demands, creating innovative designs, and efficiently producing and delivering its inventory.

To connect the data from its factory-floor machinery directly to its sales and service team, GLBC introduced aaS-powered enterprise resource planning (ERP) technology that enhanced its IT infrastructures performance: a key improvement in a competitive sector.

After GLBC selected an integrated modular solution, its IT partner installed and deployed the ERP infrastructure within 48 hours. The changes upgraded the companys data-center computing, storage, and networking resourcesand helped lead to performance increases of up to 100%.

Shifting to this system also led to other economic and sustainability gains, as GLBC eliminated the significant demands of powering and cooling its standalone servers. We rely on it day-to-day to streamline our business processes, from sales to the factory floor, said Sorel Apreutesei, GLBCs IT manager.

Making Your Data Work for You

John Wanamaker may have been comfortable wasting half his ad spend, but your organization cannot afford to waste half your data. Tapping data for the business insights that can improve the experiences of your employees and your customers will mean shifting from an infrastructure that bottles it up.

Adopting an agile aaS data-driven infrastructure can help your organization remove these barriers and turn data into insights, so your business can uncover once-hidden opportunities and become a market-leading data champion.

Learn more about the Dell solutions that can help your organization use your data to its fullest.

*A May 2021 commissioned study, Unveiling Data Challenges Afflicting Businesses Around The World, conducted by Forrester Consulting on behalf of Dell Technologies. Base: 4,036 Director+ decision-makers responsible for data and data strategies in NA, EMEA, APJ, GC, or LATAM

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Is Your Organization Extracting the Value in Your Valuable Data? - SPONSOR CONTENT FROM DELL TECHNOLOGIES AND INTEL - Harvard Business Review

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PENSACOLA, Fla.,June 30, 2021 /CSRwire/ -The Nature Conservancy (TNC) and partners announce the start of construction on the Pensacola East Bay Oyster Habitat Restoration Project to boost oyster populations in East and Blackwater Bays. The project is the largest scale estuarine habitat restoration undertaken by TNC in Florida33 oyster reefs will be placed along approximately 6.5 miles of Santa Rosa County shoreline, to return oysters to a region where they thrived historically but have since declined.

The restoration project is funded by a $15 million grant from the National Fish and Wildlife Foundations Gulf Environmental Benefit Fund (NFWF GEBF) through funding from the criminal settlement of the Deepwater Horizon oil spill. The reefs will help to restore oysters to the bays and in doing so benefit the oyster fishery, wildlife, water quality, and nearshore habitats. The project aligns with the new regional oyster fisheries and habitat management plan, created to improve the resilience and sustainability of the oysters in the bay ecosystem. Implementation of the oyster management plan will be led by the Pensacola and Perdido Bays Estuary Program.

Oysters play a vital and often overlooked role in the health of our estuaries, our fisheries and our economy. Reinvigorating and conserving the oyster population in Pensacola Bay helps restore a vital part of the regions rich history and puts to good use funds from the Deepwater Horizon Oil Spill that impacted the region so profoundly, said Temperince Morgan, executive director of The Nature Conservancy in Florida. Were grateful to NFWF, the State of Florida, Santa Rosa County, the community, and the many partners who have worked to make the effort to recover the oyster population here possible. Joint efforts such as this demonstrate the power of collaboration and can be replicated across the Gulf to great conservation and economic benefit.

The oyster habitat restoration project reflects the long-term and collaborative effort of a diverse team of partners, including the oyster fishing community and a technical working groupa committee formed by TNC to provide feedback and expertise on the project design and monitoring. Participants include Eglin Air Force Base, Florida Department of Agriculture and Consumer Services Aquaculture Division, Florida Department of Environmental Protection, Florida Fish and Wildlife Conservation Commission (FWC), National Fish and Wildlife Foundation, National Oceanic and Atmospheric Administration, Santa Rosa County, Northwest Florida Water Management District, and the US Fish and Wildlife Service.

NFWF appreciates the significant work done by The Nature Conservancy and its partners to advance the Pensacola Bay oyster restoration project to the construction phase, said Jeff Trandahl, executive director and CEO of NFWF. This project, like so many others in the State of Florida, is a testament to the outstanding partnerships among state and federal resource agencies, conservation organizations and Page 2 of 3 local governments. These strong partnerships are the key to advancing conservation and restoration projects at a scale that will have meaningful benefits for Floridas fish, wildlife and habitats impacted by the Deepwater Horizon oil spill.

"Oysters are unique in the marine world in that they are a species that forms a habitat that other species rely onand they are a fishery, said Anne Birch, marine program manager for The Nature Conservancy in Florida. Oysters and the reef habitat they form are vital for the health and well-being of our environment, economies, and communities throughout the Gulf of Mexico. As one of the indicators of the health of our estuaries, a decline in oysters is a signal to us to figure out why and intervene with actions to reverse the trend. Restoration of the habitat and addressing the root causes for their decline are critical steps toward their sustainable future.

We are fortunate to work with The Nature Conservancy on this project, said Chris Verlinde, UF/IFAS Sea Grant Extension Santa Rosa County. Like oyster populations throughout the world, our local oyster populations have declined. This project will increase oyster and marine habitat in our local system and provide benefits for the local community both environmentally and economically.

TNC lends science and conservation management expertise to the project, complemented by the efforts of coastal professionals including coastal engineering firm Jacobs, managing the design, permitting and construction; coastal construction firm CrowderGulf, installing the reefs; and professional services firm WSP, conducting science-based monitoring for the project.

The reef structures have been designed to maximize oyster settlement and success under specific local conditions, enabled by the collection and review of data reflecting over two years of pre-construction monitoring and an intensive design and engineering process. The reefs will be constructed of limestone rock of select sizes and oyster shell. They will be placed between 200-500 feet off the east shores of East and Blackwater Bays in about four feet of water and may be visible at low tides during certain times of the year.

Once completed, the reefs will offer a place for oysters to settle, grow and contribute to the ecosystem by filtering water and providing an important habitat for commercially and recreationally valuable finfish, crabs, shrimp, and birds. These reefs may also serve as a source of oyster larvae for the adjacent harvestable reefs restored by the state. Monitoring will continue for up to five years following the completion of construction.

This project will enhance the diversity of estuarine habitat adjacent to the FWC Escribano Point Wildlife Management Area, and enhance the living conditions for countless fish and wildlife species that use oyster reef systems, said Kent Smith, Biological Administrator for the FWCs Habitat Conservation and Restoration Section. Collaboration between these partners has led to a large scale enhancement effort that will benefit these species and provide opportunities for the people that use and visit this system as well. The resulting oyster reef network will provide natural resilience to the effects ofsea levelrise, create fishing opportunities, stabilize sediments and improve water quality through the filtration provided by oysters growing on the structures. The FWC is pleased to be a partner with The Nature Conservancy on this regionally significant aquatic habitat project.

Oyster reefs are considered one of the planets most imperiled marine habitats. Over the last two centuries more than 85 percent of the worlds oyster reefs have been lost, and this statistic is echoed in most of Floridas bays and estuaries. Oyster reefs face a variety of threats including overharvesting, disease, pollution, and damage from boat traffic. TNC is working to restore these critical ecosystems in Florida and around the globe.

# # #

The Nature Conservancy is a global conservation organization dedicated to conserving the lands and waters on which all life depends. Guided by science, we create innovative, on-the-ground solutions to our world's toughest challenges so that nature and people can thrive together. We are tackling climate change, conserving lands, waters and oceans at an unprecedented scale, providing food and water sustainably and helping make cities more sustainable. Working in 72 countries and territories: 38 by direct conservation impact and 34 through partners, we use a collaborative approach that engages local communities, governments,the private sector, and other partners. To learn more, visit http://www.nature.org or follow @nature_press on Twitter. In Florida since 1961, with support from our members, we have helped protect more than 1.2 million acres of vulnerable lands and waters across the state. We own and manage more than 52,000 acres in 25 Conservancy preserves in Florida. nature.org/florida, facebook.com/NatureConservancyFL, twitter.com/nature_florida, instagram.com/natureflorida/

WSP is a global business providing management and consultancy services to the built and natural environments. The firms expertise includes environmental remediation and urban planning, engineering of iconic buildings, design of sustainable transportation networks, development of the energy sources of the future, and implementation of new ways of extracting essential resources. It is one of the worlds leading professional service firms, with 15,000 employees based in more than 300 offices in 35 countries. From offices across the USA, our environmental professionals are part of an international team of specialists that draws on best practices and brings solutions to our clients most difficult business and technical challenges.

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The Nature Conservancy and Partners Begin Oyster Reef Constr - CSRwire.com

Outfitters call on feds to reopen Canada-U.S. border to fully vaccinated Americans

Tourism was hit first, hit hardest.

That from David MacLachlan, executive director of Sault Ste. Marie-based Destination Northern Ontario, speaking to a group of concerned Northern Ontario tourism industry operators in a virtual presentation held Tuesday.

The industry has been under extreme duress since the start of the pandemic. Weve been operating under some form of lockdown or restriction for almost 16 months, MacLachlan said.

Though MacLachlan said he is encouraged by the COVID-19 vaccine rollout and a decreasing number of COVID-19 cases, he and his fellow tourism officials are calling on the federal government to reopen the Canada-U.S. border to fully vaccinated Americans and other international travellers July 22.

Much of the Northern Ontario tourism industry is dependent on American anglers and hunters heading north of the border to enjoy what the region offers them.

Campgrounds, parks, hotels, motels and cabin rentals, along with sports events and festivals, have taken a devastating blow due to the pandemic-induced border closure.

Typically, one million Americans visit Northern Ontario annually and spend half a billion dollars, generating $150 million in taxes for the three levels of government, MacLachlan estimated.

While the federal government has encouraged northerners to visit their own backyard in terms of tourism as a result of closed borders, MacLachlan said theres just not enough anglers in Ontario to replace anglers coming from the U.S.

We have a short season. We have three months left to this season at this point. While (government assistance) programs have been helpful, we know from the research we did last winter that theres been a 91 per cent revenue drop in the resource-based tourism sector, and that goes as high as 97 per cent in the northwest.

A lot of operators have exasperated and used all their personal resources, their business resources and on average have taken on more than $100,000 worth of new debt, MacLachlan said.

This sector is close to my heart. My familys been in the business for 65 years...I think everyone feels that nows the time to get started, MacLachlan said, speaking to SooToday.

Noting that the U.S. economy is beginning to reopen and that infection rates are lowering in Ontario, MacLachlan said what were asking for is not automatic extensions of these border closures, but lets put some effort behind opening it as opposed to just putting the decision off and off and off. Thats not helping anyone.

Susan Crane, owner and operator at Cranes Lochaven Wilderness Lodge in French River, said he U.S. customers have indicated their wish to visit her lodge and are willing to be tested for COVID at the border.

I have 75 per cent international travel (most of them from U.S. tourists)...Ive gone from 95 per cent occupancy to 15 per cent, she said.

Crane said many of her U.S. customers are holding their reservations for this summer, hoping the border will open in July.

We dont know if the border is going to open for August. Were hoping it does. If it doesnt, our numbers will be significantly less (for the second consecutive season) with major revenue loss, Crane said.

Carol Anniuk, who owns and operates Young's Wilderness Camp in the Lake of the Woods area in northwestern Ontario, critized thepractice of extending the border closure month by month.

While Anniuk said she understands health concerns over COVID-19, she said she is exhausted with the wait for the border to reopen despite having observed COVID restrictions.

The lack of a long-term plan from the government makes me feel like Im dying a slow death, Anniuk said.

Whileshe said she's not calling for the border to be wide open to non-vaccinated Americans, she feels vaccinated Americans and other international tourists should be allowed in to enjoy Northern Ontario tourism.

I know the governments answer to this will be the possibility of the Delta variant, but I also know the vaccines were using seem to be beneficial in fighting this also. There are always going to be variants. We must learn how to live with COVID. We cant live in a bubble forever, Anniuk said.

Federal government aid, much of it in the form of low-interest loans, have been made available to tourist industry operators throughout the pandemic.

However, Laurie Marcil,who heads up Nature & Outdoor Tourism Ontario (NOTO) in North Bay, said right now, what were asking for is that more of those loans be made forgivable. Originally, there was a portion of those loans that were made forgivable.

Now that were facing a second season of massive losses, were looking for more of those loans to be made forgivable and were also looking for longer timelines on when to pay those loans back if theyre not going to make more of them forgivable, Marcil said.

Optimistically, MacLachlanbelieves the industry will rebound quickly, but the border first needs to open in order for that to happen.

We really need the government to hear these stories. This industry cannot sustain any further closures. We have two to three months left for most of these businesses to generate revenue in this season. Many of them have not had any revenue since 2019, Marcil said.

Marcil pointed to projections that 70 per cent of Ontario residents will be fully vaccinated by July 19, while75 per cent of all Canadians will be fully vaccinatedby Aug. 1 as an impetus to reopen the border.

The time is now, Marcil said.

Marcil said correspondence expressing concern from northern Ontario tourism industry operators, along with recommendations, has been sent to the federal government.

SooToday

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The time is now to reopen the border, Northern Ontario tourism businesses say - Northern Ontario Business

Understanding the layers and drivers of polarisation is now critical for achieving success in the Indian market.

It is evident to most observers that the Indian stock market has sharply polarised over the past decade insofar as a handful of companies now drive the Indian market. Where investors differ, however, is in their understanding and in their rationalisation for this polarisation. In particular, a popular school of thought contends that this polarisation is somehow driven by the loose monetary policies that have been followed by the Western central banks since the Global Financial Crisis of 2008. An analysis of the fundamentals of the Indian stock market shows that it isnt so.

As we explain below, polarisation in the Indian market is being driven by two sets of structural forces one Indian and one global which have nothing to do with quantitative easing and which will continue to play out over the forthcoming decade.

In our March 5 column, Indias Top 20 Leviathans Awe-Inspiring Dominance we demonstrated that, The top 20 profit generators in India (the Leviathans) now account for 90% of the countrys corporate profits. Beyond dominating the countrys profit pool, the Leviathans also reinvest these profits far more efficiently back into their businesses.

However, the polarisation dynamic in the Indian market extends beyond mere profitability. In the decade ending Dec. 31, 2010, the Nifty added around Rs. 35 lakh crore in market cap. In these ten years, 80% of the value generated came from 26 companies, and the median Total Shareholder Return CAGR was 34% for these 26 companies. Moving forward by a decade, in the decade ending Dec. 31, 2020, the Nifty added Rs. 71 lakh crore in market cap. 80% of the value generated in these ten years came from just 16 companies whose median TSR CAGR was 21%.

Wealth creation by Nifty companies is being driven by fewer and fewer companies that account for 80% of the wealth creation in the stock market. A decade ago, the 26 companies which accounted for 80% of the decadal wealth creation in the Nifty (in the decade ending Dec. 2010) accounted for just 26% of India Incs PAT. Now, if we look at the 16 companies which have driven 80% of the decadal wealth creation in the Nifty in the decade ending Dec. 31, 2020, they account for 79% of India Incs PAT.

In fact, polarisation in the Indian stock market, therefore, has three separate dimensions:

A handful of companies precisely ten are now taking home almost the entire PAT generated by the Indian stock market. This profit concentration in the hands of the top 10 companies has quintupled in the past decade and it has nothing to do with quantitative easing by central banks. Fewer and fewer companies precisely twenty now account for around 55% of the Free Cashflow to Equity generated by the Indian stock market. A decade ago, the top 20 Free Cashflow generators accounted for around 41% of Indias FCFE. Once again this has nothing to do with QE.

In comparison, 26 companies accounted for the same proportion of the wealth created by the Nifty in the decade ending December 2010.

So why is this happening? Two different dynamics one Indian and one global are at play here. We begin by highlighting the Indian dynamic at play which is the networking of the Indian economy over the past decade.

A networked economy helps more efficient companies

In our March 1, 2019, blog Exit the Kirana Store, Enter the Supermarket we had highlighted how over the past ten years, the length of roads in India has increased from 3.3 million kilometres to 5.9 million kilometres (CAGR of 6%). The number of mobile phone subscribers has increased over the same period from 392 million to 1.161 billion (CAGR of 12%). The number of broadband users has increased from 6 million to 563 million (CAGR of 57%). A decade ago, around 44 million Indians were taking flights each year. Now 3x as many Indians are flying each year (CAGR of 13%). 15 years ago, only one in three Indian families had a bank account; now nearly all Indian families have a bank account.

For example, as the economy gets integrated, lending, which was once dominated by regional players is now seeing the emergence of a few national leviathans like HDFC Bank and HDFC with both lenders entering the list of top 20 PAT generators over the last 10 years.

The global dynamic is the rise of affordable, easy-to-use enterprise technology which if implemented increases profit margins, reduces working capital cycles, and increases asset turnover.

Sunk costs drive industry concentration

In 1991, John Sutton of the London School of Economics wrote a prescient book titled Sunk Costs and Market Structure which foresaw how the application of modern marketing techniques, R&D, and technology was leading to the polarisation of profits.

Sutton said that companies which invest in brand building, in R&D basically, invest in intangible assets (something that cannot be physically touched or felt) which are critical sources of competitive advantage go on to dominate that industry provided, of course, intangible assets are a source of competitive advantage in that industry i.e., this theory is not applicable to sectors like cement and steel where intangibles confer little by way of competitive advantage.

The technical name of such investments in intangibles is Endogenous Sunk Costs or ESC and Sutton said that in absence of ESC, an industry would see tough price-based competition [which is exactly what we see in sectors like steel, cement, construction, and wherever else intangibles dont matter].

Companies that invest in technology benefit from increasing returns to scale

Suttons book was followed by a remarkable paper published in 1996 in the Harvard Business Review by Brian Arthur. Titled Increasing returns and the new world of business, Arthur highlighted that the conventional idea of diminishing returns to scale is being replaced by businesses that are generating increasing returns to scale. Increasing returns basically mean the tendency of returns (on the goods produced or the services provided) to keep increasing as output increases whereas diminishing returns imply the opposite.

In Arthurs words: As the economy shifts steadily away from the brute force of things into the powers of mind, from resource-based bulk processing into knowledge-based design and reproduction, so it is shifting from a base of diminishing returns to one of increasing returns. A new economicsone very different from that in the textbooksnow applies, and nowhere is this more true than in high technology. Success will strongly favor those who understand this new way of thinking.

Furthermore, network effects (for example, the compatibility of software with hardware and its development) kick in along with customers, who after some initial training, need only adapt a little as the products update, further strengthening the positive feedback loop.

Growth in profitability is increasingly not related to traditional capex

Jonathan Haskel & Stian Westlake then developed this line of thinking further in their 2017 book Capitalism Without Capital.

The central theme of the book is that corporate investments, in the past 40 years especially, have become increasingly intangible rather than tangible. Aggregating data for the developed world, the authors show that around the turn of the century, the developed economies started investing more in intangibles (which traditional accounting techniques do not capture as capex) and less in tangibles (like factories & machines). The pre-eminence of intangible investing according to the authors have brought to the fore four effects that intangible assets showcase:

These four effects are crucial for a company to become a consistent compounder because once a company scales using intangibles assets (such as a proprietary database), it can then extract spillovers from other companies investments in intangibles (such as a third party software platform like SAP), and then create synergies between intangible investments (the proprietary database feeds the SAP with big data) which can potentially help the company corner the entire industry (first in its home market and then in the global market).

The rise of giant companies, which are not only utterly dominant in the context of their specific industries but are also increasingly dominant in the context of the broader economy, poses a challenge to conventional valuation techniques (both relative and absolute). Whereas conventional valuation techniques assume that great companies fade to mediocrity over the course of 10-20 years, the evidence on hand in India suggests the converse (thus rendering ineffective conventional valuation techniques). This in turn is compelling investors to look for other more effective ways to assess the fair value of the Leviathans.

As time progresses, the consistent compounders are likely to continue increasing their share of the total profit pie of India Inc.

Investing in the dozen or so companies that will drive 80% of the wealth creation in the Indian market in the coming decade, therefore, involves an in-depth understanding of the companies ability to make intelligent use of technology to build a dominant position in its sector. Investing in this manner is far harder than traditional P/E-based investing. For the same reason, investing in this manner is far more rewarding.

Saurabh Mukherjea and Nandita Rajhansa are part of the Investments team at Marcellus Investments Managers. Marcellus forthcoming book Diamonds in the Dust: Consistent Compounding for Extraordinary Wealth Creation will be published by Penguin in July.

Note: HDFC Bank is part of many of Marcellus portfolios.

The views expressed here are those of the authors, and do not necessarily represent the views of BloombergQuint or its editorial team.

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Three Distinct Layers Of Polarisation In The Indian Stock Market - BloombergQuint

From bioplastics to mushroom leather, the bioeconomy replaces materials from unrenewable sources, especially fossil-fuel based plastics, with bio-based ones. But a combination of circular economy processes and regenerative thinking brings the bioeconomy past just bio-based plastics and alternative leathers.

"In this new economic and industrial paradigm, its the use of agriculture, forestry and aquatic resources to replace the chemicals, materials, and energy that is needed by society," said Liz Corbin, research director at circular economy consulting company Metabolic, during a session last week at Circularity 21.

Yet that need for natural resources to replace fossil fuel-based materials adds to increasing competition across food, fuel, fiber and material for these finite resources. As a result, corporate strategies for preserving biodiversity and embracing the circular economy sometimes can be one step removed from (and even in conflict with) each other.

As Corbin continued, "One of the major challenges that we have to face now is that our bioeconomy is not mimicking natural systems in the way that it should." Meaning that the regenerative element key to the bioeconomy is left out when resources are not replaced at the rate that they are taken.

Addressing part of the problem of over-extraction will be solved by improving metrics and creating standardized approaches that help companies and governments gather data, such as the Science Based Targets Initiative, as brought up by Jim Goddin, circular economy director at New Zealand based consulting company thinkstep-anz.

One of the major challenges that we have to face now is that our bioeconomy is not mimicking natural systems in the way that it should.

The problem also can be addressed by bringing circular design into the bioeconomy, especially around creative ways to use untapped supplies of waste and avoid the need for new resource extraction, as explained by Corbin. This includes using massive amounts of unavoidable food waste (such as coffee grounds or fruit peels) to create new materials, such as fertilizers. Other examples include redeploying "waste" from existing industrial processes, such as capturing methane emissions for the creation of new polymers.

As an example of how the bioeconomy is being translated into practice at a major company, Dell Technologies prioritizes first designing out plastics and waste from new products and then maximizing recycled plastics before turning to virgin bio-based materials, said Nick Abbatiello, senior distinguished engineer at Dell, during the Circularity 21 session.

Certain materials, such as clear plastics for consumer technologies, require a level of quality that recycled content is not yet able to meet, described Abbatiello, so that is where Dell and others turn to bio-based materials to meet those needs.

To ensure that bioeconomy systems are truly regenerative means thinking about the methods of production, as well as the products themselves.

At Dell, this means bringing its supply chain along by using bio-based materials that act as one-to-one replacements for existing polymers and can be created with existing manufacturing processes. This strategy has avoided the need to build completely new industrial facilities for a novel material while supporting six of their suppliers on the journey towards making bio-based polymers. For Metabolic, a regenerative bioeconomy means moving toward distributed material production facilities to optimize extraction or waste reuse based on the unique conditions and resources of every ecosystem or urban area.

As Corbin described, "Nature constructs itself using a common set of nutrients. When something dies or is no longer needed, [it is] able to break down into common building blocks back into the system. That should be the premise through which we design our own bioeconomy."

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Regenerative thinking meets circular economy in the bioeconomy | Greenbiz - GreenBiz

MONTGOMERY Governor Kay Ivey announced Tuesday that Westwater Resources Inc. plans to build a first-of-its-kind advanced graphite processing plant in Coosa County, putting Alabama at the forefront in the production of an essential material in batteries that power electrical vehicles, electronics and other green energy products and equipment.

Westwater said its Alabama Graphite Products LLC subsidiary plans to make an initial investment of $80 million or more to build the graphite processing plant in Kellyton, near Alexander City. A second phase of the project will push the total investment to $124 million.

Centennial, Colorado-based Westwater a mineral resources company committed to exploring and developing materials for clean, sustainable energy production said construction will start later this year, with the graphite processing plant operating by the end of 2022.

This plant not only will make Alabama the U.S. leader in graphite production, the go-to place for this important resource in battery manufacturing, it also will elevate our standing even more as a major player in the fast-growing electric vehicle sector, Governor Ivey said. Were home to four major auto plants, and the ability to source precious materials in state for the lithium-ion batteries used in electric and hybrid vehicles will be a big plus in attracting other manufacturing jobs to the state.

The Coosa County graphite plant is expected to employ at least 100 full-time, permanent workers. Those jobs will pay an average hourly wage of $21.15.

Graphite is a key component in lithium-ion batteries, as well as a conductivity enhancer for all types of batteries, including the common lead-acid batteries in traditional vehicles.

Governor Ivey joined Westwater President and CEO Chris Jones at a ceremony in the Old House Chamber at the State Capitol in Montgomery on Tuesday to announce the project. Also present were Commerce Secretary Greg Canfield, state Sen. Clyde Chambliss, Alexander City Mayor Woody Baird, and representatives of the Coosa County Commission and the Lake Martin Area Economic Development Alliance, as well as members of the Alabama Graphite Products team.

I want to thank Governor Ivey, Secretary Canfield, other state leaders and the many local officials in Alexander City and Coosa County who worked with us to make this vision come true, Jones said. The people of Alabama have been very welcoming since day one, and their cooperation has been integral in putting together the many pieces needed for us to build this innovative plant in Alabama. We look forward to being an active member of the business community here for many years to come.

An agreement signed by the governor will provide Alabama Graphite Products jobs and tax credits under the Alabama Jobs Act totaling an estimated $29.9 million over 15 years. In addition, AIDT, the states primary workforce development agency, is providing Alabama Graphite Products $925,000 in job-training and employee recruitment incentives.

This is a great project for Alabama for many reasons, Commerce Secretary Canfield said. It complements perfectly our auto industry and what these automakers are doing with EVs here in Alabama. Mercedes and Hyundai have announced major expansion projects specifically for the manufacturing of electric vehicles. Plus, these are well-paying, sustainable jobs that will spur additional economic development and even more jobs in the area.

Local incentives for the project, estimated to total approximately $4.7 million, are expected to include tax abatements and use of 80 acres at Lake Martin Industrial Park at no cost. In addition, a bridge will be built to provide additional access to the industrial park.

As part of the project, water and wastewater treatment will be provided by Alexander City. To support this effort, Alabama Graphite Products has entered into a public-private partnership to upgrade Alexander Citys wastewater treatment system with a contribution of $400,000 and prepayment of $100,000 in treatment fees.

Tallapoosa County Commissioner and Lake Martin Area Economic Development Alliance Chairman T.C. Coley Jr. said projects like this reinforce the alliances regional approach to economic development.

Attracting an operation like this means a great deal to the region, Coley said. I cant praise enough the multi-jurisdictional effort led by our staff, Executive Director Chad Odom and Assistant Director Denise Walls. Their creativity, knowledge and use of local, state and federal resources made this possible. The mayor of Alexander City, the City Council, city staff and the Coosa County Commission also are to be commended for their efforts to overcome various infrastructure challenges and make investments that secure the regions economic future.

In addition to making Alabama home to the first large-scale producer of refined graphite in the U.S., Alabama Graphite plans to mine raw graphite in western Coosa County in part of what was known as the Alabama Graphite Belt. Westwater Resources acquired mineral rights to 42,000 graphite-deposit-rich acres in 2018 and expects to begin mining operations by 2028.

Alabama Graphites processing plant will produce approximately 7,500 tons of battery-grade graphite a year initially, eventually expanding to 15,000. The battery in an average EV needs about 175-200 pounds of graphite. Fords new electric F-150 truck, the Lightning, is expected to need roughly 450 pounds of graphite.

Westwaters Jones noted that the U.S. government has declared graphite critical to the nations economy and national security.

All of the graphite used and needed in the United States, including by Americas auto industry, is imported, he said. Most of it is from China, where media have reported both worker and environmental issues. Domestic production of graphite reduces our dependence on foreign sources. Even though the raw graphite we will process into battery-grade material will be imported initially, none of it will be from China. We have secured agreements from other providers.

Alabama Graphite will use a proprietary process to purify the raw graphite and refine it into battery grade purity. That process is safer and more environmentally friendly and sustainable than the hydrofluoric acid-based process commonly used in China and elsewhere that use more water and produces more environment-damaging byproducts.

One of our core values is safety. Were protective of our workers, the community and the environment, Jones said. Whether its mining or processing graphite, our company is committed to doing it in an environmentally safe, sustainable manner. The biggest virtue of electric vehicles and other battery-powered products is they reduce carbon emissions and are better for the environment. Producing the key materials for those batteries, we believe, can and should be done in an environmentally responsible way as well.

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A study by Ricardo and Environmental Defense Fund for the P4G Getting to Zero Coalition Partnership finds that South Africa holds an untapped opportunity to supply the global shipping industry with zero carbon fuels. The production of green hydrogen-derived fuels can help to meet decarbonization targets and act as a catalyst for the countrys economy opening new export markets, supporting an equitable transition, and creating the jobs of the future. The study explores the economic and environmental potential for the implementation of zero carbon shipping fuels through the shipping sector of South Africa.International maritime transport is on the verge of an energy revolution. Within this decade, the shipping industry must start to replace traditional heavy bunker fuel with new zero carbon shipping fuels generated from renewable energy to meet decarbonization targets. South Africa has vast renewable energy sources, and the country has committed to reach net zero emissions by 2050.

Our study shows that South Africa has an abundance of renewable energy potential. It is enough to supply the countrys domestic electrical demand as well as the production of zero carbon fuels to supply commercial vessels refueling in its international ports. The adoption of zero carbon propulsion technologies at South Africas ports could attract investment of between 122 and 175 billion Rand in onshore infrastructure by 2030. All that is needed to unlock this investment is the right policy incentives set at the International Maritime Organization, says Aoife OLeary, Director, International Climate, Environmental Defense Fund.

The report finds that South Africas geographical location and economic development make it particularly well suited to distribute zero carbon fuels for the South African shipping sector, and export to international markets.

South Africa has the opportunity feed into the growing global demand for decarbonized materials, products and services by offering bunkering capability for zero carbon fuels to vessels of all types. With access to busy shipping routes, abundant renewable energy potential, and experience handling these and other fuels, South Africa is in a great position to produce the shipping fuels of the future, access a growing global market, and thus catalyze a new low carbon economy, says Olivia Carpenter-Lomax, future energy specialist and project lead, Ricardo.

It is easy to make a generalization that many developing countries are positioned to gain from a future hydrogen economy and hydrogen derived fuel use in shipping. This report goes into the important specifics of that opportunity for South Africa and finds not just why this is necessary, but the numerous reasons to be optimistic and seek to accelerate progress towards this future, says Tristan Smith, Reader in Energy and Shipping, University College London.

Several zero carbon fuels can potentially be used in shipping. The abundance of renewable energy resource in South Africa means that shipping fuels can be derived from renewable electricity generation.

The report identifies hydrogen and ammonia as the most suitable options for large commercial vessels while South Africas small domestic vessels can be supplied through direct electrification using onboard batteries and motors. Shippings demand for zero carbon fuels could provide a constant long-term revenue stream, which is an attractive feature for investment, says Ingrid Sidenvall Jegou, Project Director, Global Maritime Forum.

The adoption of zero carbon shipping fuels depends on global market requirements. In order for a successful adoption of zero carbon shipping fuels, South Africa should look globally. Vessels adopting zero carbon fuels bunkering in various ports around the world must have the opportunity to refuel along their journey.

The transition to a zero emission future is for and about people. Achieving an inclusive, globally scalable transition requires a systems-oriented, transparent approach. This requires standards to be set by the maritime industry to encourage the zero carbon transition not only for vessels but for global ports. South Africa can be a part of driving international standards as an important player in the international shipping sector and as a pioneer in zero carbon fuels, says Margi Van Gogh, Head of Supply Chain & Transport, The World Economic Forum.

Adopting zero carbon shipping fuels has significant benefits and synergies for South Africa far beyond the shipping sector and is in line with South Africas commitment to reach net zero carbon by 2050.

Zero carbon fuels may also be used in wider industries such as fertilizer and steel production and could act as a catalyst to achieving South Africas overall carbon commitments. There is the potential to create a wide range of jobs within the supply chains of zero carbon fuels, which can support South Africas just and equitable transition as jobs in coal mining and coal-based electricity generation decrease.

The report highlights the ports of Saldanha Bay, Ngqura (Coega) and Richards Bay as great examples of how South African can capitalize on a zero carbon fuel transition due to established shipping routes and significant port export hubs.

Zero carbon shipping presents South Africa with the opportunity to usher in a new economy in a new global reality, to quote President Ramaphosa in our national Economic Reconstruction and Recovery Plan. For this, the SBIDZ supports this research in its efforts to stimulate solutions and investment into a global megatrend that is becoming the agenda of our time. It will require sustainable capital investment into new technologies, new vessel designs, new landside infrastructure and a shake-up of the services and logistics sub-sectors. This is exactly the work the SBIDZ is vested in as a catalyst for economic growth and transformation, and the unique potential of the Port of Saldanha Bay as the first Freeport in South Africa, says Kaashifah Beukes, Chief Executive Officer, Saldanha Bay Industrial Development Zone.

Download the full report here: South Africa: fueling the future of shipping - South Africas role in the transformation of global shipping through green hydrogen-derived fuels.

ABOUT THE GETTING TO ZERO COALITION

The Getting to Zero Coalition, a partnership between the Global Maritime Forum, Friends of Ocean Action and World Economic Forum, is a community of ambitious stakeholders from across the maritime, energy, infrastructure and financial sectors, and supported by key governments, IGOs and other stakeholders, who are committed to the decarbonization of shipping. The ambition of the Getting to Zero Coalition is to have commercially viable zero emission vessels operating along deep-sea trade routes by 2030, supported by the necessary infrastructure for scalable net zero-carbon energy sources including production, distribution, storage, and bunkering.

ABOUT P4GP4G Partnering for Green Growth and the Global Goals 2030 - is a global delivery mechanism pioneering green partnerships to build sustainable and resilient economies. P4G mobilizes a global ecosystem of 12 partner countries and 5 organizational partners to unlock opportunities for more than 50 partnerships working in five SDG areas: food and agriculture, water, energy, cities and circular economy.

ABOUT THE GLOBAL MARITIME FORUMThe Global Maritime Forum is an international not-for-profit organization dedicated to shaping the future of global seaborne trade to increase sustainable long-term economic development and human wellbeing.

ABOUT FRIENDS OF OCEAN ACTIONFriends of Ocean Action is a unique group of over 55 global leaders from business, international organizations, civil society, science and academia who are fast-tracking scalable solutions to the most pressing challenges facing the ocean. It is hosted by the World Economic Forum in collaboration with the World Resources Institute.

ABOUT THE WORLD ECONOMIC FORUMThe World Economic Forum is the International Organization for Public-Private Cooperation. The Forum engages the foremost political, business, cultural and other leaders of society to shape global, regional and industry agendas. It was established in 1971 as a not-for-profit foundation and is headquartered in Geneva, Switzerland. It is independent, impartial and not tied to any special interests.

ABOUT ENVIRONMENTAL DEFENSE FUNDEnvironmental Defense Fund Europe is an affiliate of Environmental Defense Fund (EDF), a leading international non-profit organization that creates transformative solutions to the most serious environmental problems. Since 1967, EDF has used science, economics, law and innovative private-sector partnerships to bring a new voice for practical solutions.

ABOUT UNIVERSITY COLLEGE LONDON ENERGY INSTITUTEUniversity College London Energy Institute Shipping Group aims to accelerate shipping transition to an equitable, globally sustainable energy system through world-class shipping research, education and policy support. The group specializes in multi- disciplinary research anchored in data analytics and advanced modelling of the maritime sector.

ABOUT INTERNATIONAL ASSOCIATION OF PORTS AND HARBORSThe International Association of Ports and Harbors (IAPH) was formed in 1955 and over the last sixty years has grown into a global alliance representing over 180 members ports and 140 port related businesses in 90 countries. The principal aim of IAPH revolves around promotion of the interests of Ports worldwide, building strong member relationships and sharing best practices among our members.

ABOUT RICARDOAt Ricardo, our vision is to create a world where everyone can live sustainably: breathing clean air, using clean energy, travelling sustainably, accessing clean water and conserving resources. Adopting zero carbon shipping fuels would bring the world closer to these ideals. Since the 1950s, Ricardo has worked to deliver improvements in air quality and pioneered the use of renewable energy technologies. We are currently working on the implementation of the Paris Agreement on climate change, helping countries to realize their plans for reducing greenhouse gas emissions.

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Study Shows South Africa is Well Placed to Lead the Production of Zero Carbon Shipping Fuels - Environmental Defense Fund

WASHINGTON, June 23, 2021 The World Bank's Board of Executive Directors today approved a $35 million Development Policy Credit to support Bhutan's efforts to alleviate the health, social and economic impact of COVID-19, and sustainable and inclusive growth in the aftermath of the pandemic.

"COVID-19 has significantly affected Bhutans economy and peoples livelihoods ", stated Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan. Through this operation, we provide direct support to the relief and resilient recovery efforts of the country.

The Bhutan COVID-19 Crisis Response Development Policy Credit will help strengthen economic resilience and environmental sustainability through a focus on domestic resource mobilization, debt transparency and management. It will also support immediate relief measures through actions aimed at providing credit to the private sector, establishing the institutional framework to distribute COVID-19 vaccines, and mitigating the risks of gender-based violence.

The operation builds on the previous Strengthening Fiscal Management and Private Sector Employment Opportunities Development Policy Credit series, which supported critical reforms focused on fiscal management and growth and was approved in April 2020.

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World Bank Helps Bhutan Alleviate Impacts of COVID 19 and Achieve Economic Resilience and Environment Sustainability - World Bank Group

Editor's Note:The Role Of Battery Recycling In The Circular Economy is a three-part series. Part 1 focuses on Key Technologies. Part 2 focuses on the Battery Supply Chain, Logistics and Profitability. Part 3 focuses on Challenges and the Role of Policy.

The current battery supply chain is shown in red in Figure 2. Low grade (e.g. 50%) material from mines is refined by a smelter to 97-99%, and further upgraded to battery specifications (99.9% or greater), before being sent to cathode manufacturers. As of 2019, upstream/mining (23%), midstream chemical refining (80%), cathode/anode production (66%), and downstream lithium ion battery cell production (73%) are all primarily located in China [10], with Europe slowly becoming the second largest Li-ion battery producer. In Europe, more than 1,000 GWh of cell manufacturing capacities have been announced as of March 2021. Elements such as nickel and cobalt are increasingly mined in the Democratic Republic of the Congo (DRC) by Chinese-owned companies, with forced child labor issues at many mines [11]. By 2030, cathodes made of NMC-811 and LFP will likely dominate production to increase nickel content in order to achieve high energy density and lower reliance on cobalt. Nonetheless, there is an anticipated 50% deficit for elements like cobalt in the next 5-10 years as low cobalt and cobalt-free cathodes are still under development.

The companies discussed in this article are shifting away from the traditional supply chain and working towards a more circular, diversified supply chain to decrease waste output, gain more price control, and avoid geopolitical negotiations. By collecting multiple materials that are inputs to batteries, recycling facilities can be set up like the perfect mines, with better unit economics and co-location of all the critical materials (see Figure 2 in green).

Figure 2. Incumbent battery production chain compared to the circular loop explored by companies in this article.Note battery manufacturing, high-volume users, and aggregators

While all focused on the same challenge, the companies interviewed have adopted multiple different approaches to their business models and value proposition. Key considerations for profitability and scope include: rate and volume of take-back and adoption, transportation costs (shipping, handling, storage), safety requirements (shredding, separation, purification, need for inert conditions), value of waste output (disposal tipping fee) and recycled inputs (grade, purity), and location of buyers and sellers. For some companies (Nth Cycle), modularity allows for flexibility in location, low initial take-back volume, and customization to each customers feedstock. For others (American Battery Metals Corporation, Redwood Materials), centralization near battery producers or car manufacturers allows for large volume processing, ease of coordination, and onsite recycling.

Li-Cycle relies on a spoke and hub model, distributing the pre-processing into different collection points and centralizing the post-processing (see Figure 3). The spoke portion feeds in batteries and outputs black mass, and the hub portion feeds in black mass and outputs battery-grade materials. Compared to Li-ion batteries, black mass is easier to transport and safer due to fewer hazardous waste concerns. Li-Cycle has developed extensive IP around their spoke development to avoid dismantling, sorting, and discharging batteries. Instead, they shred under a neutralizing solution to absorb the energy generated in a safe manner. The current spokes located in Kingston, ON and Rochester, NY have 5,000 tons/yr capacity for an estimate of recycling demand of ~100,000-500,000/yr now (largely from manufacturing scrap), approaching 1-5 million tons in 2030. Note that based on Li-Cycle estimates, manufacturing scrap currently represents 29% of the battery waste stream, but is expected to increase to 68% by 2025, with auto OEMs also representing a high percentage (16 to 25%).

Figure 3. Spoke and Hub model for discarded Li-ion batteries.

Li-Cycle will soon have a network of three spokes to feed the $175 million commercial hub at the Eastman Business Park (formerly housing Eastman Kodak, Xerox and Bausch & Lomb) in Rochester, with the plan to eventually hit economies of scale at one hub per continent. The locations of where spokes and hubs are built are related to where batteries are, EV penetration, and proximity to battery manufacturing to collect scrap. At their hubs, Li-Cycle utilizes hydrometallurgy to produce battery-grade lithium, nickel, and cobalt at >95% recovery rate. Li-Cycle has 12 formalized trade secrets in converting black mass into battery grade materials, with cobalt, nickel, and lithium all undergoing crystallization processes. In addition to the battery materials, significant revenue can also be obtained by building a fully circular loop of all key components. For example, Li-Cycle is also able to collect plastics for reuse or fuel production as well as copper and aluminum foils. These materials provide additional revenue streams which help the companies buffer themselves against changes in commodity pricing that impact the core cathode/battery materials.

American Battery Metals Corporation (ABMC) is currently exploring both mechanical-hydrometallurgical-based battery recycling and primary extraction of battery metals from virgin resources. This relies on the assumption that low-impact extraction methods for battery metals from virgin primary resources, in addition to recycling, will be necessary to meet demand at scale. ABMC is currently constructing a plant in Nevada with the ability to recycle 20,000 tons of batteries annually. Redwood Materials also operates in Nevada, close to Teslas Gigafactory and the expected high volume of end-of-life EVs from California.

Table 1. Comparison metrics for companies and organizations interviewed. Note hydro refers to hydrometallurgy and electro refers to Nth Cycles electrochemical extraction process.

Although recycling is crucial for sustainability, mining will continue to play a central role in providing minerals for Li-ion batteries as long as the rate of new batteries being manufactured and entering the market is greater than the rate of batteries reaching end-of-life and leaving the field. This is expected to be the case for several more decades. As a result, new mines will need to be established, a lengthy procedure of exploration and discovery, excavations, resource estimation, feasibility studies, pilot plants, obtaining environmental permits, and construction of processing plants. This whole process can take over a decade. The Cauchari-Olaroz lithium brine, for example, began construction in 2010 and anticipates first production in 2022. To improve the pace and efficacy of natural resources exploration, KoBold Metals, founded in 2018, plans to apply statistical modeling, big data aggregation, and foundational ore-deposit science.

Even after a mine is established, extraction of the minerals can also be a very slow process. For lithium brines, for example, the brines are pumped from underground aquifers into shallow holding ponds to be evaporated under sunlight which can take several months. To expedite this process, Lilac Solutions, founded in 2016, developed a new ion exchange technology which uses hydrochloric acid to produce lithium chloride. This direct lithium extraction method drastically reduces the extraction time and can increase the lithium recovery rate from 40% (using evaporation ponds) to 99% [12].

Avoiding the costs of exploration and excavation, battery recycling plants are expected to have lower CAPEX than conventional mines. Moreover, given the high concentration of the minerals, recyclers should also have lower operating costs. Additionally, battery recycling plants can optimize their location near consumers, whereas mines tend to be in remote areas, increasing transportation costs. While a mine typically only produces one or two elements per location, a battery recycling facility can produce all of the elements needed to manufacture a new battery in the exact ratio of elements needed. These economic disadvantages are in addition to the geopolitical considerations and labor practice issues for many mines. Furthermore, recycling is estimated to reduce GHG emissions by 90% (using hydrometallurgical processes or electro-extraction, closer to 50% for pyrometallurgy).

A recycling facility [is] essentially the "perfect mine" from which to harvest materials at a lower cost, lower environmental footprint, and enhanced security of supply compared to primary mines. - Ryan Melsert, CTO, ABMC

Resources

[10] China controls sway of electric vehicle power through battery chemicals, cathode and anodeproduction. (2020, May 6). Benchmark Mineral Intelligence.https://www.benchmarkminerals.com/membership/china-controls-sway-of-electric-vehicle-power-through-battery-chemicals-cathode-and-anode-production/

[11] Findings on the Worst Forms of Child Labor - Democratic Republic of the Congo | U.S.Department of Labor. (2019). Bureau of International Labor Affairs.https://www.dol.gov/agencies/ilab/resources/reports/child-labor/congo-democratic-republic-drc#:%7E:text=Children%20in%20the%20Democratic%20Republic,or%20abduction%20by%20non%2Dstate

[12] Corporation, L. S. D. (2021, April 13). Lilac Solutions Achieves 99% Lithium Recovery With IonExchange Process. PRNewswire.https://www.prnewswire.com/news-releases/lilac-solutions-achieves-99-lithium-recovery-with-ion-exchange-process-301267282.html

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Lithium-Ion Battery Supply Chain, Logistics and Profitability - waste360