Aurelia Butler

Europe is blessed with many things but abundant and accessible mineral wealth and processing infrastructure are not among them. Industrially, Europe has positioned itself as a centre of excellence for research and development and high-end manufacturing, insulated from the challenges of extracting and processing raw commodities. Politically, Europe has driven the global agenda in environmental, social and governance best practices. These policies have to an extent reinforced the region’s separation from the world of commodities. All of this made sense in a world where supply chains were globally integrated. But the invasion of Ukraine has highlighted the risks of being too far removed from sources of supply.Europe’s immediate priority is to find alternative sources of energy, given its dependence on Russian oil and gas. However, if the region is to remain globally competitive in manufacturing, most notably cars, then it also needs to secure reliable access to raw materials. Rare earths, industrial and battery metals are vital areas to prioritise, given the importance of lithium, nickel, copper and cobalt to electrification.

Decarbonisation of the global economy has been a cause that Europe has rightly championed. The region has developed the most sophisticated carbon credit market. It has also been the first to set clear thresholds for recycled content in electric battery manufacturing. The world is following the lead that Europe has established.But European companies need reliable and affordable commodities to produce the goods required by a decarbonised world. In this respect, Europe finds itself not only far less naturally well-endowed than the US or Canada. It has also fallen far behind China which has been systematically building its supply chain in these critical minerals. In the long term, China is unlikely to want to merely sell Europe battery materials or even batteries, but rather the consumer goods that they power. China understandably wants to retain as much of the associated value creation from its own investment in electrification. This poses a far more existential threat to Europe’s manufacturing base than the short-term gas shortage or even longer-term energy price inflation. In order to be able to secure supplies of these critical minerals, European manufacturers must fundamentally review how they approach procurement. Western mining companies also need to rediscover their own appetites for risk. The exploration and development departments of the western miners have been systematically downgraded over the past two decades. There has been an increasing focus on existing large-scale mines operating in developed countries, particularly North America and Australia. This trend has been far more pronounced within metals than in the energy markets. Even Latin American democracies such as Chile have come to be seen as being unacceptably high risk in terms of incremental capital. Yet it is an unavoidable fact that the vast majority of reserves of critical minerals are not located in first-world geographies. The west, particularly Europe, cannot afford to neglect developing markets in this way. Investors and NGOs should both recognise that their influence here has been and remains substantial. There is an opportunity for Europe to take the lead in reconnecting the best exploration and development projects with capital where it is most abundant and responsible. The ESG leadership Europe has championed need not be sacrificed, rather it should form a blueprint for the development of emerging markets, particularly Africa, where so much of the incremental supply resides.There are also substantial opportunities for Europe to help develop the processing sectors in these emerging economies. This will enable developing counties to share more of the total value of the underlying materials mined there. Initiatives such as the Fair Cobalt Alliance should be supported and replicated.

Perhaps the DRC will not yet manufacture European cars, but there is no reason why it should continue to export unrefined ore, wholesale, to China. European manufacturers must also reassess how they secure reliable long-term supply of materials. This will perhaps include direct investments in mining assets. Europe also needs to rebuild its own refining and smelting capacity, especially given the increasing importance of recycling to decarbonisation. The current “not in my back yard” position can only be changed by government policy. Energy costs will remain an issue, but this must be balanced with security of supply. Europe can no longer afford to outsource everything which is challenging, dirty or can be done cheaper elsewhere. Europe collectively needs to address the challenges made evident by the war in Ukraine or it risks becoming a manufacturing museum and merely a holiday destination. Paul Smith is the non-executive chair at Trident RoyaltiesThe Commodities Note is an online commentary on the industry from the Financial Times More

Your browser does not support playing this file but you can still download the MP3 file to play locally.Far-right leader Marine Le Pen has put in an unexpectedly strong showing and looks set to go head to head with Emmanuel Macron in the second round of France’s presidential election. Gideon talks to the FT’s Anne-Sylvaine Chassany and Bruno Cautrès of Sciences Po about the issues French voters care about and what happens next.Clips: Reuters, HuffPost, France interwww.ft.com/rachman-reviewWant to read more?French election polls: the race for the presidencyRightwing presidential candidates’ immigration ‘obsession’ belies reality of modern FranceEmmanuel Macron warns he could lose French election to the far rightFrance votes: Macron’s frontrunner status conceals deep rifts in societySubscribe to The Rachman Review wherever you get your podcasts – please listen, rate and subscribe.Presented by Gideon Rachman. Produced by Fiona Symon. Sound design by Jasiu SigsworthRead a transcript of this episode on FT.com See acast.com/privacy for privacy and opt-out information.Transcripts are not currently available for all podcasts, view our accessibility guide. More

Not many people would list “unafraid of spiders” on their CV. Yet, in Sydney, home of the world’s most venomous spider to humans, not being perturbed when asked to expel an unwanted arachnid is a skill that can be monetised. Airtasker — an Australian online marketplace that connects people who need jobs done with cleaners, carpenters, gardeners and more — has found there is also a market for spider removalists, as opposed to full time fumigators. A woman posted that she would pay A$35 to anyone that could immediately evict a large spider from her home. Within hours her post had been copied multiple times, and a niche industry was born. For Tim Fung, founder and chief executive of Airtasker, the rise of the spider catchers is evidence of the sort of services that people did not realise they needed. “Certain skills are recognised but others aren’t,” he says. “But not being scared of spiders is a skill. Every single person has unique things that they can do.” Tim Fung: ‘Every single person has unique things that they can do’Specialist tasks — such as Ikea furniture assembly, Lego tuition and bathroom tap replacement — may seem niche but, in aggregate, have become lucrative sidelines for the “taskers”, and big business for the marketplace.Fung gives the example of one tasker, known as the “Trampoline Whisperer”, who earns tens of thousands of dollars a year installing trampolines for parents wanting to surprise their kids, who are unwilling or unable to do it themselves.The idea for Airtasker came in 2012, when Fung asked a friend to help him move house. That friend had a truck, normally used to transport frozen chicken nuggets. As he moved his chicken-scented possessions into his new home, Fung asked himself why he was roping in a reluctant friend to help — and why an eBay-like marketplace for odd jobs didn’t exist.Ten years on, and Airtasker has 150,000 taskers that have served 1.2mn paying customers, taking it to 292nd place in the FT ranking of high-growth Asia-Pacific companies.The value of the jobs booked through the ecommerce company since its inception is now A$1.1bn. From 2008 onwards, it has expanded into the UK, New Zealand, Singapore and the US, taking it into competition with near-rivals, such as US platforms TaskRabbit and Thumbtack.Strict lockdown measures in Australia during the pandemic hampered Airtasker’s progress as, in many places, its taskers were not allowed to enter people’s homes to do odd jobs. That hit its shares, which have halved in value since October.But the company has started to recover since those measures were lifted. Airtasker’s revenue rose 10 per cent to A$13.9mn in the first half of this year and, although it remains lossmaking, it has raised its growth prospects for the year.Fung’s journey into the world of start-ups was unusual. The Sydney-sider spent five years at Macquarie, the Australian bank and asset manager, but decided to switch careers. Having been a child model, he first joined a fashion agency in 2009. There, he encountered Peter O’Connell, a telecoms industry veteran who was setting up Amaysim, a virtual mobile network operator, and Fung joined in 2010 to get what he calls an “MBA in how to grow a start-up”.The biggest criticism of Airtasker — similar to that levelled at other gig economy companies — is that the tasker is not paid adequately, compared with a fully-employed professional. Unions have argued that companies such as Airtasker are exploiting a subclass of workers.

Fung admits the company was once guilty of focusing on building its customer base and not thinking of the taskers’ perspective. “If you think about Uber or Deliveroo, it’s very much ‘how do we make this cool customer thing’ and, ‘we’re going to have put a bunch of pressure on a bunch of riders and drivers to make that true’,” he acknowledges.However, his company works with taskers with good reputations to avoid a race to the bottom. Fung says 70 per cent of jobs posted on the platform are not handed to the cheapest bid, indicating customers are willing to pay more for service quality. He recalls watching Uber founder Travis Kalanick talking about how his company would make more money when autonomous cars were able to operate without a driver. Fung says it would be a bad thing for his company, and the taskers, if robots replaced human cleaners and other jobs. Airtasker is also sometimes criticised by professionals who say their income has been undercut by enthusiastic amateurs, who take small bites — such as replacing a tap — out of their businesses. But Fung does not expect Airtasker to replace household services such as plumbing or cleaning, despite competing with them for small jobs. He believes the value of Airtasker is in the “long tail of niche services” that will expand the overall size of household services, as people apply skills to small jobs — such as spider removal or getting a drone out of a tree.With Airtasker, Fung hopes to make it easier for people to get these odd jobs done: “In five to ten years time we will look back and think ‘wasn’t it crazy that it was so hard?’” More

When upmarket Waitrose is scrapping with Asda over its value range, it’s clear no one is immune from the effects of the cost of living crisis. Supermarkets aren’t going to be at the sharp end. But they’re in for a squeeze nonetheless. Grocers sometimes do well out of inflation. Consumers are primed to expect price rises, and supermarkets have in the past been successful at passing them on. Both Tesco and J Sainsbury have profited during previous periods of increasing prices. This time is going to be different, and not just because anti-poverty campaigner Jack Monroe will call out any egregious rises. The effects of inflation on the supermarket sector can be complex. But broadly, a little light inflation is good so long as purchasing power holds up, as was the case during the Brexit-induced food price rise of 2017. We are clearly well past that point now. The UK faces the biggest one-year fall in living standards in more than 60 years. Food prices, already rising at their fastest annual pace in more than a decade in February, are likely to advance further. Almost 60 per cent of food and drink producers said they had to pass on increases in March, more than any other sector. A third of Britons are already buying less when grocery shopping. Consumers will trade down. The big four of Tesco, Sainsbury’s, Asda and Wm Morrison insist they have learnt the lessons of the financial crash, when they passed on price rises, maintained margins — and permanently ceded market share to discounters Aldi and Lidl, which went from bit-players to the driving force of the UK grocery market. Former Tesco boss and now Morrisons chair Sir Terry Leahy said earlier this year that the UK was “past the peak of the disruptive effect of discounters”. Supermarkets, he said, had learned how to compete. They might know how, but it is going to come at a cost. The big four understand they have to convince consumers of their value credentials to keep as much of the spend in store as possible. Consumers prefer not to switch. “The priority for grocers is to offer a broad enough range of both premium and lower-priced budget options in key product categories so customers can trade down in those categories where they want to save,” explained Kien Tan, a senior retail adviser at PwC. But the two German groups are now within touching distance of 20 per cent market share, figures from NielsenIQ show. Sales declines at Asda and Morrisons, meanwhile, have been particularly brutal, down 9.9 per cent year-on-year at Morrisons and 8.7 per cent at Asda. The traditional players have narrowed the price gap with the discounters, once up to 25 per cent, thanks to what HSBC analyst Andrew Porteous calls a decade of “restructuring and repositioning”. But Asda and Morrisons, both traditionally catering to value-conscious consumers, were perceived to have fallen behind on their budget offerings. Asda’s investment of £45mn in its new “Just Essentials” range unveiled last week is evidence it understands some pain on prices is needed to shore up sales. Debt burdens assumed in their private equity buyouts over the past two years may constrain both retailers, however, even if Asda last week reported annual profits for 2021 of £1bn. Higher petrol prices — and fuel margins — will cushion only some of the blow. As much as the discounters, though, the other big problem for the sector is one of their own: Tesco. Tesco has been on a tear. Most groups have suffered declining market share — but Tesco’s held steady over one year and increased over two. That gives it even more of an advantage than its scale already brings when negotiating with constrained suppliers. Analysts expect it to report its biggest annual pre-tax profit in eight years next week. Discounts offered through its Clubcard Prices loyalty scheme already make it the cheapest of the bunch, but more than anyone else it can afford to swallow inflationary cost increases in an effort to capture extra customers.Where Tesco goes, others will have to follow. Investment in narrow value ranges is one thing, but a resurgent Tesco could apply pressure to hold back prices far more broadly. Even something short of a price war could inflict pain across the sector. Prepare for a [email protected]@catrutterpooley More

A spate of lockdowns in Shanghai and other Chinese cities is piling severe pressure on transport and logistics across the country, exacerbating the economic fallout of the government’s commitment to its zero-Covid policies as cases continue to soar to record levels.The disruption has affected the trucking industry in particular, which plays a critical role in transporting goods between cities and to some of the world’s biggest ports but is now subject to severe restrictions on drivers and deliveries to locations with positive cases.“Trucking is the main issue we have,” said Mads Ravn, executive vice-president and global head of air freight procurement at DSV, one of the world’s largest freight brokerages. He added that booking truck services was close to impossible and that flight activity into Shanghai Pudong airport was just 3 per cent of its rate last month with air cargo shipments limited to essential goods such as medicine.“Basically everything else is not moving but is being diverted away from Shanghai to other parts of China. It’s affecting every commodity you can think of,” he said. “It will have a global effect on almost every trade.”China is grappling with its worst coronavirus outbreak since it first emerged in Wuhan more than two years ago. On Wednesday, the country recorded 20,614 confirmed cases in the previous 24 hours — its most cases in a single day. In late March Maersk, the Danish shipping company, warned that the city’s lockdown measures would reduce trucking services in and out of Shanghai by 30 per cent. But since then, restrictions, which were initially supposed to cleave the city in two for a staggered nine-day lockdown, have grown more severe and overrun, enveloping the whole city at once. It is unclear when the measures will be relaxed.Danish shipping group Maersk warned last month that Shanghai’s lockdown measures would reduce trucking services in and out of the city by 30% © Qilai Shen/BloombergThe measures, which in Shanghai have led to a chorus of complaints over the difficulty of obtaining food as drones survey empty streets, have also been more widely implemented in China as officials struggled to contain the worsening outbreak. Nomura, the Japanese bank, this week estimated that 23 cities and almost 200m people were under full or partial lockdown.“These figures could significantly underestimate the full impact, as many other cities have been mass testing district by district, and mobility has been significantly restricted in most parts of China,” said Ting Lu, chief China economist at Nomura.Bo Zhuang, a Singapore-based analyst at Loomis Sayles, an asset manager, said: “Many of the entry and exit points on the highways between provinces are blocked, and there has not been a co-ordinated effort between the various provincial governments to ease the supply chain crunch.”

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Express delivery companies in Anhui and Jiangsu provinces, both in the east of the country and close to Shanghai, told the Financial Times that packages could not be delivered to any areas reporting locally transmitted cases, including Shanghai. Orders from Taobao, an online marketplace popular with Chinese consumers, were subject to delays because of lockdown measures.Apart from domestic disruption, analysts warned that any inland logistical bottlenecks would eventually result in ocean shipping delays because of the build-up in goods and orders — and that the associated costs would surface when the measures were finally loosened.“Once Shanghai reopens, it’s déjà vu of the story we’ve seen so many times,” said Lars Jensen, chief executive of Vespucci Maritime, a consultancy. “There will be a surge of volumes and upwards pressure on spot rates.”On Wednesday, the latest economic data signalled the effects of the recent escalation in controls, with the China Caixin service PMI showing the worst month-on-month contraction in March since early 2020.

There is no evidence of unusually long vessel queues outside of the world’s largest port in Shanghai, which authorities said was operating a “closed loop” system where workers did not leave their work premises after their shift ended. But cargo volumes through the port tracked by FourKites, a supply chain data firm, had dropped by about a third since March 12 as importers and exporters rerouted freight. China Daily, a state-run newspaper, said that goods were increasingly being sent into Shanghai by sea because many neighbouring cities had blocked truck drivers from entering. Maersk said last week that it could provide services via “barge or rail as alternative solutions for the corridor between Shanghai and nearby cities”.But Bo said this was only a “temporary solution” because as the virus spreads to more cities and provinces, those diverted channels would probably also be blocked off by lockdown measures.Additional reporting by Wang Xueqiao in Shanghai, Nian Liu in Beijing and Andy Lin in Hong Kong More

BENGALURU (Reuters) – The U.S. dollar will remain dominant for now so long as the Federal Reserve stays a hawkish course on interest rate hikes and its intentions to unload some of its pandemic-related bond purchases, according to a Reuters poll of forex strategists.The dollar index, which gained nearly 7% against major currencies last year, continued its stellar performance and has risen another 4% so far this year, with about half of those gains in March alone.Much of that strength was driven by comments from Federal Reserve officials who in addition to calling for 50-basis point rate rises are also speaking openly about forcefully reducing the size of its nearly $9 trillion balance sheet.That has driven U.S. Treasury yields to multi-year highs and investors into dollar-denominated assets, a key part of the strong dollar trade that is not expected to fade any time soon, keeping the currency well-bid.Market speculators’ net long bets on the dollar rose to an 11-week high in the latest week, according to U.S. Commodity Futures Trading Commission data released on Friday.More than two-thirds of analysts who answered a separate question, 37 of 53, said the strong dollar trade would last for at least another three months, including 17 who said more than six months. Thirteen respondents said under three months and the remaining three said the trade is already over.”We’ve got some aggressive tightening coming up this year from the Fed. We think the fed funds rate will probably hit 3% in the first quarter of next year, but (they could) even be cutting rates by the final quarter of 2023,” said Chris Turner, global head of markets research at ING.”I think the dollar could hold onto its gains for a lot of 2022…(and) we shouldn’t be starting to look for weakening in the dollar until perhaps, next spring-summer 2023.” (Graphic: Reuters foreign exchange poll – April 2022 – https://fingfx.thomsonreuters.com/gfx/polling/znpneqmwxvl/Reuters%20foreign%20exchange%20poll%20-%20April%202022.png) That view lines up with median forecasts in the April 4-6 poll of over 80 forex strategists who expected the greenback to eventually cede some of its gains to other currencies.But there are plenty of reasons for delay, not least of which is the Russia-Ukraine war, which has sent the cost of energy and commodities spiralling higher, with Europe in particular feeling the pinch. “We see developments in the energy market as the most important upfront negative for EUR/USD – elevated prices are not going away any time soon,” noted George Saravelos, global head of FX research at Deutsche Bank (DE:DBKGn).”On the flipside, further Fed repricing is becoming incrementally less beneficial to the dollar, the ECB has exceeded our (hawkish) expectations and Europe’s fiscal response to offset the near-term growth impact looks sizeable.”The euro was forecast to erase its over 4% losses for the year and rise to $1.14 in 12 months, a view analysts have held onto for more than two years. The common currency has not gained against the dollar for three months in a row since September 2020.(For other stories from the April Reuters foreign exchange poll:) More

ORLANDO, Fla. (Reuters) -The U.S. dollar’s share of world currency reserves continues to ebb slowly – but reserve stashes are only one measure of its dominance of global finance, and there’s no realistic scenario where that gets derailed any time soon.Central banks and private businesses need their rainy day funds to be in liquid assets that are easily accessible, in currencies that are widely accepted and in plentiful supply, and in jurisdictions with an internationally recognized rule of law. The dollar meets all those criteria. No other currency comes close, even though the share of central bank reserves and global trade flows is increasingly being spread across a wider range of currencies.The International Monetary Fund’s latest cut of central bank reserves shows that the dollar’s slice of the pie at the end of last year – before Russia’s invasion of Ukraine and freezing of Moscow’s FX reserves – was 58.8%. That’s down from 59.2% the prior quarter and the lowest since comparable data were first tracked in 1999/2000. This is a long-term trend – the dollar’s share of known, or ‘allocated’ reserves was over 70% in 2002. Bank for International Settlements data show that the dollar was bought or sold in roughly 88% of global foreign exchange transactions in 2019. That has remained pretty steady over the past 20 years.A U.S. Federal Reserve paper in October showed that about 60% of international and foreign currency liabilities and assets – primarily claims and loans, respectively – are denominated in dollars. This share has remained pretty stable since 2000.On trade, around 40% of global transactions in goods are invoiced in dollars. Global trade hit a record high of $28.5 trillion in 2021, according to the United Nations Conference on Trade and Development.The 2000-2020 period was marked by China’s rise to global economic superpower, surging dollar reserves demand from Asia after the 1997 crisis, and an explosion in globalisation and cross-border capital and trade flows. These forces will be nowhere near as strong in the next 20 years, so demand for dollars will ebb, even if only slowly and at the margins – but so too will demand for all other reserve currencies. And in the relative world of currencies, that doesn’t mean the greenback will lose out.”You still need an alternative. Don’t forget, it took two World Wars and loss of Empire for sterling to lose its status as the world’s No. 1 reserve currency,” said Paul Donovan, chief economist at UBS Global Wealth Management.”UNASSAILABLE” Debate over the dollar’s future reserve status has intensified, with both sides broadly represented by two leading academics – University of California, Berkeley, professor Barry Eichengreen, and Columbia University professor Adam Tooze. Eichengreen and his colleagues argue that the dollar’s unique status will gradually diminish as a more multipolar world takes shape. Central bank reserve managers have been undertaking “active portfolio diversification” into ‘non-traditional’ currencies for years, they said in an IMF working paper https:// last month. Tooze doesn’t dispute this, but argues https:// that many of these currencies – such as Canadian and Australian dollars – are “very much part of America’s extended financial security system,” protected and bolstered by dollar swap lines between their central banks and the Fed. If the United States was in direct economic or military conflict with Russia or China, it’s clear which side most of these countries would be on. The only two credible, long-term rivals to the dollar for official reserves or ‘vehicle currency’ use – invoicing in a currency that is neither that of the importer or exporter – are China’s yuan and the euro. But there are myriad reasons why it will take years before they are viewed as safe, liquid, and accessible as the dollar.The euro has a shortage of high-quality assets central banks can use as a store of value, there is still no euro zone-wide government-backed asset, and some international investors may be put off by the internal politics of a 19-nation bloc.In China’s case, it could be decades – the yuan is not fully convertible overseas and it is highly doubtful Beijing would welcome the currency appreciation that would likely follow.Joey Politano, an analyst at the U.S. Bureau of Labor Statistics and author of a personal economics blog, simply states that the dollar’s reserve currency status is so strong “as to be nearly unassailable.” No other country has the “proper mixture of deep capital markets, clear rule of law, massive economic size, and technological dynamism.”Related columns:- Russia central bank freeze may hasten ‘peak’ world FX reserves: Mike Dolan (Reuters, March 2)- China may balk at unnerved reserves seeking yuan: Mike Dolan (Reuters, March 18)(The opinions expressed here are those of the author, a columnist for Reuters)(By Jamie McGeever; Editing by Andrea Ricci) More