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Experts reassure on cobalt demand even as batteries lower use of mineral

Energy

Power Forecast Briefing: Fleet Transformation, Under-Powered Markets, and Green Energy in 2018

Trading Of US Linear TV Advertising Shifting To Programmatic Trading

Every Industry Is Now A Technology Industry

Online Video Bolstering Consumer Home Video Spend, Spearheaded By Subscription Streaming


Experts reassure on cobalt demand even as batteries lower use of mineral

Analysts and hopeful producers reassured investors at the Perth, Australia, leg of the Benchmark World Tour on Sept. 17 that fears about batteries using less cobalt in the future, while partly true, lack context, and that the world is becoming more reliant on the Democratic Republic of Congo-sourced material.

Cairn Energy Research Advisors' Managing Director Sam Jaffe told conference delegates that while "everybody's trying to get less cobalt in batteries because it's the most expensive part," and battery manufacturers were moving into an NCM (nickel-cobalt-manganese) cathode content split of 6-2-2 and 5-3-2 in the near-term, "eventually it will just be 8-1-1, which means less and less cobalt."

However, Jaffe conceded that the overall battery market is increasing so rapidly that cobalt demand will remain strong even in the long-term, a point also emphasized by Benchmark Mineral Intelligence analyst Caspar Rawles.

Rawles told S&P Global Market Intelligence just before his presentation on how cathode materials are evolving to deal with the cobalt conundrum that while "people talk about 8-1-1 as kind of the holy grail in battery improvements," the 6-2-2 configuration already provides much of the cost savings.

"With 8-1-1 the thermal runaway point — where the cell gets to a temperature where it can't cool itself effectively and catches fire — is lower, so you need better thermal management within the pack. That's something Tesla has done well, and why they have thousands of cells.

"People get scared because they say you're going from 30% to 10% cobalt [in the batteries], but volume of sales is the most important thing here, rather than the reduction."

ASX-listed, Namibia-focused Celsius Resources Ltd.'s Managing Director Brendan Borg noted at the conference that 52% of cathodes currently don't have cobalt in them, and by 2025 that will drop to about 19%, so the amount of cathodes that have cobalt in them will actually increase over that time.

Rawles said the market's misunderstanding was not helped when Tesla Inc. CEO Elon Musk said in response to a question on reducing battery costs in May, "we think we can get cobalt to almost nothing."

Cobalt prices started their downward trajectory later that month in a sharp correction, with LME cobalt falling from US$90,500 per tonne on May 22 to US$54,500 on Aug. 7 having risen "too quickly", as Rawles described it, due to a number of factors, including trade war concerns.

Concerns over the DRC

That sentiment is often detached from reality, and Rawles said this has been particularly the case with the Democratic Republic of Congo, which many non-DRC focused cobalt players mentioning concerns about the country's political instability, legal opacity and child labor in mining.

TSX-Venture-listed Fortune Minerals Ltd. Robin Goad even joked at the Benchmark conference about two-thirds of global cobalt coming from "the not-so-Democratic Republic of the Congo", in promoting his company's NICO cobalt, gold, bismuth and copper project, which is vertically integrated with a mine and concentrator in Canada's Northwest Territories and a refinery in Saskatoon where it will conduct processing to produce cobalt sulfate.

Fortune, which has spent C$130 million on NICO to date, announced Sept. 17 that its Pyrolysis Roast process can successfully remove arsenic from concentrate, making it more salable and not subject to arsenic penalties.

"BNP Paribas is forecasting 240,000 tonnes of demand by 2025, with about 67% of production coming from the not-so-Democratic Republic of the Congo, about 60% of refinery production out of China, 80% of refined cobalt chemical supply is dominated by China, and 98% of cobalt is sourced as a byproduct of either copper or nickel," Goad said.

Goad said Fortune has about 35 confidentiality agreements with major companies including banks, battery and car companies that are interested in looking at an independent source of supply outside the DRC and China.

However, Rawles also said in an interview that the DRC provided 66% of the world's cobalt in 2017 and Benchmark forecasts that by 2021 it will rise to three quarters, mainly due to Glencore PLC's Katanga Mining Ltd. having ramped up production and Eurasian Resources Group B.V. looking to start production soon at Metalkol RTR and should ramp up in 2019.

Shalina Group Ltd subsidiary Chemaf SPRL will also be introducing a new source of cobalt through a solvent extraction-electrowinning plant at Mutoshi producing up to 16,000 tonnes of cobalt.


Watch: Power Forecast Briefing: Fleet Transformation, Under-Powered Markets, and Green Energy in 2018

Steve Piper shares Power Forecast insights and a recap of recent events in the US power markets in Q4 of 2017. Watch our video for power generation trends and forecasts for utilities in 2018.


Technology, Media & Telecom
Trading Of US Linear TV Advertising Shifting To Programmatic Trading

Oct. 08 2018 — Both buyers and sellers of traditional linear TV advertising, not including connected TV or over-the-top video, are moving toward the adoption of programmatic trading. In 2017, Kagan estimates that $690 million or 0.9% of total linear TV spend was traded programmatically. Within the next five years, that figure is expected to climb to $9.76 billion or nearly 12% of total linear TV advertising revenue. MVPDs are forecast to trade the greatest percentage of their ad inventory programmatically in 2022 with 30% of ad revenue from programmatic trading.

Kagan defines programmatic trading as being automated and data-enhanced, not just one or the other. Trading may be through a private or open marketplace and does not have to be through an auction, which is more common in digital video advertising.

There are several issues holding participants back from programmatic trading. Unlike digital programmatic marketplaces, where there is a seemingly unending supply of ad inventory, linear TV has a finite supply. Demand for TV inventory exceeds the supply, so there is still an attitude of "If it isn't broken, don't fix it." TV ads are also bought well in advance, not immediately.

While many agencies have experimented with the programmatic trading of linear TV, not all are on board. Many of the advertisers and agencies are interacting directly with the supplier platform rather than going through a demand-side platform, or DSP, today. In their experiments, the agency needs to use separate platforms to aggregate inventory and tie it together, which is a lot of work.

The lack of inventory is one factor holding back programmatic trading. The only way it takes off is to make linear TV inventory available in some type of buyer platform that can combine the various supply platforms. It is even more complicated when the buyer wants to bring in connected TV (OTT).

Agencies do like the automation capabilities of programmatic, particularly where the process takes a lot of time. An algorithm may do better in areas such as weighting estimation, the first pass at scheduling and the negotiation process as well as postings and billings. The process of buying inventory is not difficult, but computing where a buyer will be able to find its preferred audience is. Therefore, interest in automating the planning and analysis to find an optimal audience is high.

We forecast a gradual uptake for programmatic trading with continued testing in 2018. Broadcast stations and networks, cable programmers, and MVPDs need to add more inventory to programmatic platforms before agencies begin using it in earnest. It will take time for all parties to feel comfortable transacting in a new way.

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Technology
Every Industry Is Now A Technology Industry

Highlights

And every company is now a technology company.

Sep. 28 2018 — As machine learning (ML), artificial intelligence (AI), and robotics become commonplace and enter the operations of mainstream organizations, leadership teams are finding that failure to harness and leverage AI puts them behind the competition. Repeatable tasks are carried out by bots in a fraction of the time and employees are more focused on adding value, which means companies on the forefront of technology can be more reliable, more user-friendly, and faster to market.

In this highly disruptive environment, one traditional truth of business has withstood, or has perhaps even guided, these technological advances: above all, the customer experience is king. More than ever before, businesses have effective technologies at their fingertips to quickly and effectively address customer pain points, while at the same time dramatically improving their internal operations.

At S&P Global Market Intelligence, we strive to get beyond the buzzwords and truly deliver essential insight. And second to this, we strive to adopt real operational efficiencies into our delivery that are paralleled by the workflow efficiencies we promise to our customers. To that end, we are committed to remaining on the cutting edge of emerging technologies, first through optimization, then automation.

Download a recent analysis of how we’re applying new technology like natural language processing to structure data, robotic process automation to deliver insights faster, and predictive analytics to stay ahead of the market.

You can also view this analysis in Spanish, Portuguese, Mandarin, and Japanese.

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Natural Language Processing – Part II: Stock Selection

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Natural Language Processing, Part I: Primer

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Technology, Media & Telecom
Online Video Bolstering Consumer Home Video Spend, Spearheaded By Subscription Streaming

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Sep. 20 2018 — Spending on home entertainment is rising toward levels not seen since 2004, when consumers spent $24.37 billion building massive home-video libraries of DVDs and VHS cassettes. Since then, the optical-disc market saw more than a decade of significant declines as consumers shifted to digital entertainment. By 2012, total spending on home entertainment was down to $20.13 billion, with $4.13 billion coming from online video while DVDs and Blu-ray discs accounted for $12.88 billion and multichannel PPV/VOD contributed the remaining $3.13 billion.

Fast forward to 2017 and the mix of consumer spending has changed significantly. Consumers spent a total of $22.62 billion on home entertainment from multichannel, online and disc retail/rental sources. Online spending accounted for $13.00 billion of that total while spending on discs dropped to $6.84 billion and multichannel PPV/VOD shrank to $2.79 billion.

While the data might seem like good news for traditional providers of home entertainment, a key component of the growth in digital spending is the rise of subscription video on demand. The majority of online spending is going to over-the-top services like Netflix, Hulu and Amazon Prime, which increasingly have focused on creating original programming (mainly episodic TV) rather than licensing content from Hollywood studios.

Removing subscription streaming from the consumer spending pool paints a less favorable picture for traditional content providers. In 2012, consumers spent just $1.43 billion on non-subscription online video purchase/rental, and a total of $17.44 billion excluding the SVOD component. By 2017, while consumer spending on online video overall had risen to $13.00 billion, some $10.47 of that came from streaming subscriptions versus $2.53 billion from online video purchase/rental, and total home-entertainment spending was just $12.16 billion excluding SVOD.

Spending on sell-through home video peaked in 2006 when consumers shelled out $16.53 billion for DVDs and VHS cassettes. Since then spending has declined by hundreds of millions (sometimes billions) each year. In 2017, consumers spent $6.50 billion on DVD and Blu-ray sell-through and electronic sell-through. This seems to suggest that people are becoming less and less interested in adding to their home-video libraries and are turning to the more affordable streaming options. The story is similar for the home-video rental segment, which saw consumer spending peak in 2001 at nearly $8.45 billion before dropping to $2.87 billion by the end of 2017.

This has to be a somewhat unsettling trend for the major film studios, and is likely a key factor in shifting their strategy to focus on major franchise films and low-cost genre fare. The former tend to have broad worldwide appeal and can still move enough video units to help offset their high production and distribution costs. The low-cost genre fare, on the other hand, may be more risky and not sell as well internationally, but has a fair chance to break even. If the latter films lose money, the successful franchise films typically cover the losses.

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US Online Video Outlook To Eclipse $15B In 2018

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DVD, Blu-ray Spending Down $1B-plus For 11th Year In A Row

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