Philippa Kaur

Listen to this story. Enjoy more audio and podcasts on More

Listen to this story. Enjoy more audio and podcasts on More

Wanted: presidents for America’s top universities. Applicants must possess an unimpeachable academic record. Marc Tessier-Lavigne resigned as president of Stanford University in July 2023 after a report found serious problems with the neuroscientist’s research. They must also be able diplomats in America’s culture wars. In December Liz Magill was chastised by lawmakers in a hearing on campus antisemitism, resigning from her role as president of the University of Pennsylvania days later. Claudine Gay, whose tenure as president of Harvard University lasted six months, fell at both hurdles. She was seen as weak on antisemitism by donors and resigned on January 2nd after a plagiarism scandal erupted over her work.Changes at the helm of America’s universities are common. According to the American Council on Education, an industry association, the average tenure of a university president in 2022 was six years, indicating that hundreds of jobs change hands each year. Yet the number of vacancies at America’s most prestigious schools is striking. Yale’s president will also step down this summer after 11 years in the job; so will the chancellors of the publicly funded University of California, Los Angeles, and Berkeley. That leaves six of the top universities in the world searching for a new president. These institutions are responsible for shepherding some of the world’s biggest brains (Nobel prizewinners) and also some of its most impressionable (the coddled offspring of America’s elite). That’s to say nothing of their hospitals, thousands of administrative staff and $160bn of endowments.The search is on. At private universities, the responsibility falls on the board of trustees. Many look similar to those of America’s corporate giants, packed with financial luminaries. A broader committee, including faculty and students, is sometimes tasked with aiding the search. Specialist headhunters are often called. Fierce competition for candidates, who are usually found running big faculties or lesser universities, is not the only reason boards are daunted by the prospect. America’s universities, which are at the centre of toxic debates over free speech and diversity, are suffering from a crisis of legitimacy that has put the presidential office under a microscope, too.The top job has long had its frustrations. Beyond directing donors’ dollars and making a few big hiring decisions, university presidents wield surprisingly little formal power. Unlike the boss of a company they find their most senior employees protected by tenure, which makes it almost impossible to remove experienced faculty members. “The glib answer is that they live in a very large house and beg for money,” says Richard Chait, a professor at Harvard. A 1949 editorial in The American Scholar described the job as an exercise in “advertising, selling and hoarding”; Clark Kerr, a mid-century Berkeley chancellor, quipped that the role involved providing parking for the faculty, sex for the students and athletics for the alumni.Mr Kerr’s summation points to a deeper truth—that a university president’s job is mainly about keeping a motley crew of interested parties happy. Achieving that balance is becoming nearly impossible. Students, who are meant to be instructed by universities, are instead pushing them around. Donors are becoming more vocal, too. Some, displeased with how Ms Gay and Ms Magill handled antisemitism on campus, were instrumental in ousting them. Ken Griffin, a hedge-fund titan whose name adorns Harvard’s Graduate School of Arts and Sciences, recently said he had halted his financial contributions to the university. A 2003 paper by Edward Glaeser, an economist, suggests that as non-profit institutions become wealthier, power shifts from their providers of capital (donors) to their workers (faculty). Although that may have been a reasonable description of the decline of donors’ power during the 20th century, the financial backers of America’s universities are now reasserting their influence with a vengeance. Few think this pressure will subside any time soon.One option is to rethink the duties of the president. That could involve limiting their ability to make political statements, or reinforcing their obligation to merit and free speech. Boards are, however, more likely to approach the problem through their presidential appointments than constitutional change. And despite the challenges of the job, they will not encounter a dearth of applicants for these distinguished posts. A candidate’s ability to placate donors or appear on the congressional stage will be closely scrutinised. That they will undertake more thorough due diligence of prospects’ academic records is assured. But might boards look outside universities altogether?Some may consider a businessman an attractive choice, particularly to deal with the administrative bloat that now afflicts many universities. After all, the operating budgets of America’s largest universities are now similar to those of a Fortune 500 company. Yet America’s businesses have not shown themselves to be any better at navigating the country’s toxic culture wars. A former politician, another possibility, may know how to gladhand donors and schmooze with journalists, but would be a lightning rod for criticism from supporters of whichever party they did not represent. In both cases, the outsider would struggle to win the respect of the faculty through whom they must work.Searching for a purposeThe truth is that the background of applicants is not the problem. An identity crisis is engulfing America’s universities. They are torn between their responsibilities to learning and social justice—and that is a tension any president will find hard to resolve. This carries wider lessons for all organisations. Institutions unmoored from a clear purpose, whether that is knowledge-seeking or profit-seeking, are destined for periodic crises. Even the cleverest captain would struggle to steer such a ship. ■ More

Mining companies have spent much of the past decade in investors’ bad books. Throughout the 2000s and early 2010s the industry, betting that the surge in commodity prices brought on by China’s economic rise would persist, splurged on investments and racked up hefty debts in the process. At the height of the frenzy in 2013 the combined capital expenditure of the world’s 40 largest mining firms by market value reached $130bn, according to pwc, an advisory firm, nearly four-fifths of their earnings before interest, tax, depreciation and amortisation (EBITDA). That spending spree left mining bosses red-faced as economic growth in China slowed, causing commodity prices—and the industry’s profits—to plummet.Miners spent the years that followed cleaning up the mess. In 2015 more than $50bn-worth of assets were written down. BHP, the world’s most valuable mining firm, spun off its least-loved sites to raise money and simplify its sprawling business. Others followed suit. Cash was used to pay off debts instead of financing new projects.image: The EconomistSince then, profits and commodity prices have recovered. But investment has not. In 2022 the 40 largest miners together invested $75bn, equivalent to a mere quarter of EBITDA (see chart 1). BHP, which on February 20th reports its results for the second half of 2023, invested some $7bn last year, analysts reckon—a third as much as it spent in 2013.That is a problem. Decarbonising the global economy will require 6.5bn tonnes of metal between now and 2050, according to the Energy Transitions Commission, a think-tank. Although much attention has been paid to the lithium and nickel needed for batteries, that is only one part of the picture. Fully 170m tonnes a year of steel, comprising mostly iron ore, will be needed for everything from wind turbines to electric vehicles (EVs)—more than ten times current global production. Vast amounts of copper will be required to expand and upgrade electricity grids. Demand for aluminium, cobalt, graphite and platinum will rise substantially, too. That will require a lot of blasting and drilling, which must begin now. Why isn’t it happening?image: The EconomistOne reason miners are reluctant to loosen the purse-strings is that they are still trying to win back the confidence of investors. The value of the MSCI world metals and mining index, which tracks share prices in the industry, has risen by about 10% in the past decade, compared with a doubling in the world’s stockmarkets as a whole (see chart 2). Returns on new projects in the industry are currently around 7%. That is hard to sell to investors when the yield on investment-grade corporate bonds in America is above 5%.Wary of risky new developments, miners are prioritising expanding or selectively acquiring existing sites. Last year BHP bought OZ Minerals, an Australian miner of copper, gold and nickel, for $6.4bn. Mining firms are also handing more cash back to shareholders through dividends and buybacks than at any time since 2007, according to S&P Global, a data provider.Yet miners and their cautious investors are not entirely to blame for the dearth of activity. Mike Henry, chief executive of BHP, notes that doing business has become more difficult and expensive in recent years. Rising costs for labour and equipment have squeezed returns, says Jonathan Price, boss of Teck Resources, a Canadian mining giant. The nearly $9bn price tag to develop its Quebrada Blanca 2 copper mine in Chile, which opened last year, was almost double what it had estimated in 2019.The scope of what miners are expected to do to minimise the environmental impact of sites has also widened considerably, says James Whiteside of Wood Mackenzie, a research firm. Companies can no longer simply rely on diesel generators to power sites. They are increasingly being told either to connect to the grid or to install renewable-energy sources such as solar panels. Governments worried about water use have compelled miners to build desalination plants. All that has further increased costs.Miners, nervous of disappointing investors, have become more prone to pausing or cancelling projects when costs go up or prices come down. “You really have to have the stomach to think long-term,” says Jakob Stausholm, the boss of Rio Tinto, the world’s second-most-valuable miner. That is not always easy. On February 15th BHP said that it would write down the value of its Western Australian nickel business by $2.5bn in response to higher costs and a slump in the price of the metal due to an expansion of Indonesian supply.Another reason for miners’ lack of investment is woefully lengthy permitting processes, which delay projects and add uncertainty. In America obtaining permits often takes between seven and ten years, with companies required to consult a variety of government agencies and other interested parties. In some countries environmental concerns have led to approvals being withdrawn. The Serbian government revoked the licence of Rio Tinto, another mining behemoth, for a $2.4bn lithium mine after environmental protests broke out in 2022.One thorny issue is access to the ancestral lands of indigenous populations. In America the majority of resources—97% of nickel, 89% of copper and 79% of lithium—are either on Native American reservations or within 35 miles (56km) of them. One example is the Resolution Copper project near Phoenix, Arizona. The site, jointly owned by BHP and Rio Tinto, could meet a quarter of America’s current copper needs, but has encountered stiff resistance from the Native American community. In 2020 the former chief executive of Rio Tinto was forced to step down after the company blew up two ancient Aboriginal rock shelters in Australia, sparking public outrage. The chairman also resigned the next year.Few bosses want to tempt a similar fate; others are also put off by spending in far-flung jurisdictions where governance is poor, for fear of irking sustainability-minded investors.BlastedAs Western miners have retreated, others have piled in. Cash-rich Gulf entities are taking an interest. International Resource Holdings, an Emirati mining firm, is buying a 51% stake in Mopani, a Zambian copper miner, for $1.1bn. The government of the United Arab Emirates has agreed to invest $1.9bn to develop at least four mines in the Democratic Republic of Congo. Manara Minerals, a Saudi Arabian mining fund, is hunting for more investments after buying a stake in the base-metals unit of Vale, a Brazilian miner, for $3bn last year. The kingdom is also scouring its own vast deserts for resources and has opened itself up to foreign miners. It is making it easier for miners to operate by supporting the development of infrastructure including railways and desalination plants, says Bandar Alkhorayef, the minister for mining and industry.The bigger threat to Western miners, however, comes from China. In the first half of 2023 its firms invested $10bn abroad in mining, 130% more than in the first six months of the previous year. Nine of the world’s 40 most valuable listed mining companies today are Chinese. Firms such as CMOC, Minmetals and Zijin Mining have snapped up assets from Bolivia and Botswana to Serbia and Suriname. Many of these firms are backed by state-owned banks or investment funds. Compared with the Western majors, they face less pressure from shareholders to rein in spending.Western governments, alarmed by China’s growing control over the commodities needed for the energy transition, have turned to diplomacy. In 2022 America established the Minerals Security Partnership (MSP) with various allies in order to channel investment into the extraction and processing of critical metals. This month Japan, under the auspices of the MSP, signed an agreement with the Democratic Republic of Congo to expand “business opportunities”. America is also reportedly in discussions with the eu to team up with resource-rich countries and facilitate projects. Yet for as long as investors are timid, costs stay high and the permitting process glacial, all this will do little to get miners to dig in. ■ More

Listen to this story. Enjoy more audio and podcasts on More

Listen to this story. Enjoy more audio and podcasts on More

Listen to this story. Enjoy more audio and podcasts on More

Listen to this story. Enjoy more audio and podcasts on More