Baoxiaodao

Myth, I think you meant you were low on cash right? I do not think this stock is only about playing mining. The environmental issues are very real in any exploration activities. I once watched something on the TV about this. The locals gave concessions to the companies that promised good prospects, but only were disappointed when juniors found nothing and left a mess to them. Those activities are very pollutive and it will take years if not decades to clean it up. When we read a junior company's presentation on how many meters it has drilled over a year, have we ever thought about the influences on those local poor people? Local governments are very eager to sell the rights and let the common people bear the consequences. Is it fair? Definitely not. Can they do anything about it? Well, no companies want uncooperative local residents. I never thought the way AAOI did when he said the organizational structure running man-portable is different from running traditional rigs. I do not know if he is right, but from experience, I think this makes sense. For any incumbent, there are always conflicts of interest preventing them from developing new technologies or adopting new equipments. However, I am also fully aware of the fact that EGD will not become a first-class franchise since this industry is very competitive. For first class, I meant to have a strong brand(or exclusive technology) AND lowest cost(economies of scale). Most of the time, one of those contributes will make your efforts worthwhile. A lot of work to do. Again, thanks AAOI to bring such a detailed account of EGD to get me start with. I have been looking at this on and off for a year and finally decided to take a hard look of this.

Well, good to see you here AAOI. I will definitely let you know my questions. Expect a lot of them!

I like anything mining-related, except for miners. The recent writeup on VIC is well worth a read. I do not have a position yet, but this one has the potential to meet my hurdle rate. http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/56340

Well said, Oec2000. The key word is adaptability.

Will do!

Please do not put copyrighted material on the board...only a link! Usually, if you do a google search, the first topic gives a free view for the WSJ. Cheers! Fund Goes Down Blind Alley - WSJ http://online.wsj.com/article/SB10001424052970203405504576599273589255198.html

Small Factories Take Root in Africa Article Video Slideshow Comments (12) MORE IN AFRICA » Email Print Save ↓ More smaller Larger By PETER WONACOTT ANKETRAKABE, Madagascar—After a bumpy two-hour truck ride and a river crossing by canoe, Tim McCollum reached this village set beside a canopy of cacao trees, the first link in a supply chain that would help boost production at his small African chocolate factory. The good news was that Mr. McCollum's Madécasse Chocolate LLC. had located a rare source of premium cocoa before another competitor. That was also the bad news. Mr. McCollum learned villagers had zero experience dealing with global customers—one 71-year-old told him he was the first white man he'd seen here since Madagascar gained independence from the French in 1960. Then there was the river. Nobody on his team was sure how to move a ton of cocoa across it in a canoe. But after meeting with the local farming cooperative, Mr. McCollum became convinced that cocoa grown here could make the 600-mile journey to his factory and be shipped to U.S. supermarkets from Madagascar, an island off Africa's southeast coast. "There's a solution," insisted the 34-year-old year old entrepreneur from Brooklyn, N.Y., clutching an armful of cocoa leaves to be tested back home. "It just takes a little more time and a little more thought, but there's no reason it can't be done." Tasting Madagascar's Chocolate View Slideshow Peter Wonacott/The Wall Street Journal Though wages aren't high, the chocolate factory offers steady employment in Madagascar's struggling economy. More photos and interactive graphics Across Africa, scores of tiny manufacturers have been going where most multinationals fear to tread. They not only make chocolate in Madagascar, but also leather shoes in Nigeria and hot sauce in South Africa. They're testing whether a continent with the highest share of unexploited resources in the world, and the lowest per-capita income, can be fertile terrain for industry. Madecasse, the Brooklyn-based gourmet food company, is going to great lengths to find sources of premium cocoa, including traveling to a remote corner of Madagascar. WSJ's Peter Wonacott reports from Anketrakabe. "For decades, Africans have produced what they do not consume and consumed what they do not produce," says Andrew Rugasira, a Ugandan entrepreneur. Two years ago, his company, Good African Coffee, broke ranks with local bean exporters to open the country's first instant-coffee plant. Why Africa doesn't make more stuff has been an enduring mystery of the global economy. As wages rose in manufacturing powerhouses such as China, many economists predicted that factories would flock to cheaper pools of labor in Africa, helping to spur the same sort of rapid industrial growth that lifted living standards across Asia. It hasn't happened. Africa's economy has averaged solid 5% annual growth over the past decade, thanks to rising commodity prices and new consumer demand. The continent, however, accounts for just 1% of global manufacturing, compared with Asia's 25%. Africa's share of labor-intensive manufacturing—a vital source of jobs for underemployed farmers—is actually shrinking, according to a July United Nations report. The situation so alarmed the World Bank that it began talks with Chinese trade officials on how to move more factories to Africa from China, according to World Bank President Robert Zoellick. The bank estimates there are now 85 million manufacturing jobs suited for unskilled workers in China, out of a population of 1.3 billion, but only 10 million in all of Africa, population 1 billion. Western multinational manufacturers mostly have shied from the continent even as they have plunged into other developing countries. A report by UBS Investment Research concluded that China's share of low-end manufacturing exports—including toys, clothes and shoes—has peaked, but production was moving to other low-cost countries in Asia, such as Vietnam and Bangladesh. Africa is regarded as a riskier destination. Many countries are plagued by corruption. There have been repeated clashes between ethnic groups. And this year's civil conflict in the Ivory Coast demonstrated once again how power struggles can damage promising economies. And yet, executives on the ground note improvements in local governance and say Africa is becoming more conducive to private investment. Rwanda lost nearly a million lives in a 1994 genocidal conflict, but it is now among east Africa's fastest-growing economies. "The dysfunction of Africa has become part of business folk memory that keeps Western multinationals from doing anything," says Paul Collier, director at the Center for the Study of African Economies at Oxford University. "But Africa of the 1980's and '90s is not the same Africa of today." Those Western multinationals that are expanding in Africa are doing so mainly to reach an emerging class of consumers. The South African unit of Nestle SA is spending about $56 million to expand production of instant noodles and cereals such as Cheerios. The Swiss conglomerate is also opening an instant noodle factory in the Democratic Republic of the Congo, one of Africa's poorest countries. Before Nestle invests in a new African country, it sizes up access to water and electricity. The company will also walk away at the first hint of corruption, according to executive vice president Frits van Dijk. "We have lost opportunities where we had to say no because of that," he says. Nestle aims to have 33 factories on the continent by 2015, up from 28 now. Enlarge Image Rival Kraft Foods Inc., the U.S. snacks giant, earns about $1 billion in annual sales from Africa, where it also manufactures. But it must contend with the continent's constraints. Chief among them: an acute shortage of skilled labor that forces Kraft to rely on expatriates. "If you want to pull off large-scale manufacturing projects you bring in expats, which drives up costs," says Johan van Zyl, manufacturing director in Johannesburg for Sub-Saharan Africa. Smaller manufacturers can't match the production muscle of a multinational. But they are usually quicker to spot opportunities and gutsier in pursuit of them, according to Mark Paper, chief operating officer of Business Partners International, a South African financial institution specializing in lending and investing in smaller companies. One of the companies Business Partners is backing is Primolitos, a South African supplier of hot sauces and condiments that in May opened a glistening new factory in Johannesburg. It hasn't been smooth sailing. During an unrelated metal workers strike, a brick came through the company's conference-room window. Trucks transporting its condiments have been hijacked. But Primolitos is now among the few local food manufacturers that can meet standards for global customers. Earlier this year, Wal-Mart Stores Inc. struck a $2.4 billion deal to acquire a majority stake in South Africa's Massmart Holdings Ltd., making Primolitos a supplier to the global retailer. Primolitos wants to use the deal as a springboard to global exports, which now only account for 5% of its sales. "Wal-Mart," says 42-year-old founder Roberto Vasconcelos, "was a wake-up call." Not many African manufacturers are so ready for the global economy. Mthuli Ncube, chief economist at the African Development Bank Group, estimates that one-quarter of Africa's gross domestic product—about $450 billion—comes from 65 million small and medium-sized enterprises. But the contribution from manufacturers is tougher to measure; many are tiny cottage factories that sell goods in open-air bazaars to avoid paying tax. Africa's industry isn't so different from the modest roots of China's own industrial revolution. In the 1980s, Chinese farmers invested in factories to make goods for rural consumers. Multinationals arrived later to fuel an export boom, according to Zhang Chunlin, an economist at the World Bank in Pretoria who specializes on private-sector development. China's challenge was "to develop in an imperfect environment," says Mr. Zhang, who once worked at a village brick kiln in the northern China. "That is also Africa's challenge." Many small manufacturers in Africa not only survive but thrive in imperfect environments. To maintain shoe production, Fut Conceptus Manufacturing Nigeria Ltd. runs four electric generators, at a cost of $500 in fuel a day. The chronic power outages have scared off bigger Chinese shoemakers and allowed Fut Conceptus to build up a brand in west Africa, according to Olumide Wole-Madariola, the factory's 44-year-old Nigerian founder. It makes men's moccasins and ladies' sandals out of Nigerian leather that used to be sold only abroad. "Nobody was ready for what we were doing," says Mr. Wole-Madariola. "Nobody was ready for "Made in Nigeria." Tim McCollum's company, Madécasse Chocolate, sought to exploit a paradox. Africa produces 60% to 70% of the world's cacao, but most of the chocolate is made outside the continent. Mr. McCollum and his partner Brett Beach, who had served together as Peace Corps volunteers in Madagascar, thought they could create jobs and alleviate poverty by making chocolate there. "If Africa could sell the world chocolate…it wouldn't solve all the continent's problems, but it could make a big dent," said Mr. McCollum. Messrs. McCollum and Beach ran up $97,000 in credit-card debt and borrowed heavily from friends and got a substantial investment from Prosperity Equity Partners, a Cape Town, South Africa, venture capital fund, to get the company off the ground. Mr. Beach bought a nonrefundable ticket to Madagascar in March 2009 to search for a factory that could make chocolate. He arrived in the capital, Antananarivo, just in time for Madagascar's military to overthrow the democratically elected president. From his hotel room, Mr. Beach said he heard street protests and the pop of rubber bullets. Back home in Brooklyn, would-be investors weren't impressed. Nobody dared commit capital to a plan that seemed more an altruistic adventure than a business. "First red flag was that we were in Africa. Second was when we told people there had just been a coup," recalls Mr. McCollum of his meetings with potential investors. But during his trip to Madagascar, Mr. Beach engineered a coup of his own. He found a local contract manufacturer, chocolatier Shahin Cassam Chenai, who understood the company's direction. The new partners developed odd but evocative combinations of chocolate bars: pink pepper and citrus, among others. In the U.S, the bars retailed for about $6 each. As production took off, Madécasse convinced big retailers, such as Whole Foods Markets, to peddle its bars. Last year, the company's sales more than doubled to $480,000 from $200,000 in 2009. But success in the U.S. came with setbacks in Africa. In their absence from Madagascar, Messrs. Beach and McCollum said they discovered an employee had embezzled cash and sold their cacao to other buyers. The company lost about $15,000, they said. "It was quite a blow," admits the 36-year-old Mr. Beach. In August, Mr. McCollum arrived in Madagascar to smooth out production issues. Not least of the problems was that Madécasse's lead taste tester, factory owner Mr. Cassam Chenai, had developed an allergy to chocolate. Madécasse had been rushing to develop a new bar made from Madagascar coffee and another with cinnamon and hot pepper ahead of a late-September food show in South Africa, but Mr. Cassam Chenai, who is of Indian descent and grew up here, said he could taste very little of it because he would break out in a skin rash. "That's why product development is taking so long" said Mr. McCollum. The company also needed to secure new sources of cacao to ramp up production. He received leads from his employees who worked with the region's farmers. Madagascar produces less than 1% of the world's cacao, but a significant portion is of high quality. Mr. McCollum learned that tests around Anketrakabe village area suggested an unusually high 10% of the cacao there could be the premium variety known as Criollo, the most expensive on the market. Madécasse wasn't able to alert Anketrakabe residents about its visit because, it turned out, the closest cell-phone signal was about three miles away on top of a hill. Even so, the head of the local farming cooperative, George Jaomiarana, was glad to see Mr. McCollum. Villagers believed they could get better prices dealing with foreign customers, rather than local middlemen who took cuts on cacao sales before passing onto exporters. Speaking in French and the national Malagasy language, Mr. McCollum held out the prospect of investing in new storage and fermentation facilities for cacao beans and training farmers how to use them properly. He peered into one storage bin to see wasps and spiders crawling among the beans. "Gross," he said in English. But examining the cacao trees just beyond the village, Mr. McCollum grew upbeat about what he saw. Huge blood-red pods loaded with beans drooped from branches. He took out his pocket knife to cut leaves for more genetic tests. After returning to Brooklyn, Mr. McCollum pledged to buy one ton of cacao per month from the farmers starting as early as next month. If things went well, Madécasse would purchase two tons a month—in dollar terms about triple what the cooperative is selling now. At some point, Mr. McCollum ventured, they would talk about building a bridge across that river. "We'll canoe it for a while," he said. —Nicholas Bariyo in Kampala, Uganda, and Devon Maylie in Johannesburg contributed to this article. Write to Peter Wonacott at peter.wonacott@wsj.com

Thanks for pointing out that. I am a Chinese and I am used to getting books for free. I can easily afford books I like, but like most Chinese, I would like to get things for free whenever possible. I do not understand why sharing books would attract wrong kind of people. A guy on this board(thank you!) just give me a website library.nu where a lot of books are available in PDF format. Are you suggesting those who went there are the wrong kind of people? I am not saying what I was asking is right. But your comment is way off the mark, at least for me.

Sorry if I let you feel offended.

I understand. The problem for me is that I read quite a lot of books per year and the bills really add up. Last week audiobooks was for sale on Audible.com and I bought 25 of them. Books are getting more expensive even on Kindle. The money could be spent on something else.....

Hey guys, I liked all the books you guys listed in that section. However, I am wondering if it is possible to actually attach a digital book to your recommendation? Of course, you only do so when you have it. The only inconvenience living in a Nordic country today for me is the access to the English books. So I'd appreciate if you guys do this. And if you have the books on the kindle, we can probably exchange our books. Does anyone know how to lend a audiobook from Audibles.com? I have a collection of them.

[amazonsearch]23 Things They Do Not Tell You About Capitalism[/amazonsearch] I am listening to this guy's book, "23 things they do not tell you about capitalism". The more I listened, the more I was amazed by his unconventional thinking. It has been a long time since I read or listen to such a refreshing book. Highly recommended. I am still wondering why I never heard this guy before. But it is still not too late.

Eric, I loved it. Thanks for posting.

I wonder how you did that Parsad. It is hard to pull a lot of rabbits from the hat recently. Salute!

Excellent post. Thank you!

China's New Lenders of Last Resort Article Stock Quotes Comments (3) MORE IN BUSINESS » Email Print Save ↓ More smaller Larger By LINGLING WEI WENZHOU, China—Dai Weidong's gold-plated cellphone has been ringing off the hook lately with local entrepreneurs looking for financing help. But Mr. Dai, as his choice of phone suggests, is not a conventional banker. He is a member of a fast-growing sector that has sprung up through the cracks in China's state banking system: private guarantors who offer to help small-and-medium-sized enterprises get bank loans by pledging to repay the loans if borrowers default. They also lend directly to credit-starved businesses, or invest in them. Enlarge Image Guarantors have become the lenders of last resort to small manufacturers who increasingly are getting squeezed by tight credit as well as soaring wages and other production costs. These private operators, using money raised from property developers, coal miners or other cash-rich individuals, aim to fill the funding void left by state banks that many say have all but stopped lending to small businesses. In return, they charge their clients a fee on top of high interest rates imposed on the loans. As of the end of June, about 287.5 billion yuan ($45 billion) of loans were arranged by 3,366 nonbank institutions specializing in small letters of credit, according to official data. By comparison, 124.9 billion yuan of loans were issued by 1,940 such firms a year earlier. Industry experts say the actual figures are much larger, because not all of the private lending is reflected in the official statistics. But these firms are lightly regulated, critics say, and many traditional banks refuse to do business with them. China today has become what many call a two-track economy, with a state-owned sector flooded with cash and a private one starved of funding. The financial woes of the private sector could have an impact on Chinese growth: By some analyst estimates, it includes some 40 million companies and accounts for 80% of the country's jobs and more than half of economic output. For years, the Chinese leadership has sought to encourage private entrepreneurship as a way to boost employment and domestic income. Deng Xiaoping, the late leader who started China's economic reform in the late 1970s, famously declared: "Getting rich is glorious." But even as the private sector has expanded, large state-controlled enterprises have remained the focus of Chinese policy makers, especially in times of crisis. At the end of 2008, when the world economy started to wobble, Beijing responded by pumping in some $586 billion of credit to keep its economy humming at a rate close to 10% a year. Most of that money, though, has gone to railways and other state-run projects. China's big banks, led by Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp., posted record profits in the first half of this year, buoyed in part by a greater focus on business that generates fee income, such as credit cards and wealth-management products. While some of the large banks reported bigger small-business lending volumes, many private companies—particularly small manufacturers—say credit overall has remained tight and expensive since the central government started tightening bank lending last year to contain inflation spurred by the massive investment stimulus. Already, funding problems have pushed into bankruptcy a few small manufacturers in coastal provinces Guangdong and Zhejiang, the traditional hubs for China's private economy. Credit guarantors like Mr. Dai often work in conjunction with banks by taking on the risk of a loan from a bank to a small business in exchange for a fee—anywhere from 1% to 10% annually of the loan amount. Interest rates on these loans in places like Wenzhou have surged to as high as 15%, or twice the benchmark lending rate. In 2007, Mr. Dai gave up a manufacturing business he had run for years and switched to credit guarantee, a change of course he jokingly calls "prescient" in light of the funding plight facing small manufacturers now. His firm, Jinmao Guarantee Co. Ltd., was registered with the Wenzhou government with 30.2 million yuan ($4.7 million) in capital, mostly his own. Describing himself as a "bridge" between small businesses and banks, Mr. Dai arranges loans from banks to his business clients by pledging to repay the loans if his clients can't. Mr. Dai charges his clients a 0.1% monthly fee, or 1% a year, for every loan guaranteed by his firm. To control risk, he only provides guarantees for companies that are willing to put up their hard assets such as machinery, as collateral for the loans. Jinmao Guarantee hasn't had any delinquent loans in the past four years, Mr. Dai says. However, even with the guarantee and the collateral, he says, many banks are still unwilling to lend to small businesses. "I want to make it big, but banks have no money," Mr. Dai says, referring to the sharply raised reserve requirements on Chinese banks that have limited their lending ability to only 78.5 yuan for every 100 yuan in deposit. The potential high returns on private funding, in turn, have made the credit-guarantee business an attractive investment for the ample amount of cash floating around China. And because these firms are not deposit-taking institutions, they aren't subject to the same regulatory scrutiny as banks. "Regulation is very weak, opening doors for fraud and the flow of capital into the very sectors the government is trying to rein in, like real estate," says Zhang Yi, a regional sales manager at BOC Fullerton Village Bank, a joint venture between Bank of China Ltd. and a unit of Temasek Holdings, a Singaporean sovereign-wealth fund. The venture, representing the growing interest among foreign investors in providing small-business financing in China, plans to open up to 400 rural banks in rural China in the next five years. Zhu Chaoping, head of research at ChinaScope Financial, a market-research firm in Hong Kong, noted that credit-guarantee firms in China are supposed to be supervised by governments of the regions where they are registered. "But local governments usually lack the skills and experience needed to secure the stability of the lending system," he said. Still, in Wenzhou alone, where residents have been blamed for pushing up housing prices during the boom times, the number of guarantee companies has expanded dramatically in recent months, to over 200, according to official and industry estimates. "The investment of choice for people in Wenzhou is no longer real estate," says Zhou Dewen, deputy director of the China Association of Small- and Medium-sized Enterprises, who lives in Wenzhou. "It is credit guarantee."

Thanks for posting. Any chance make a EPUB attachment?

It has been tough for C for the last 20 years. We are also not anywhere near the end of the tunnel.

Packer, thanks a lot to bring this to us. I do not know if there is anyone who can give the case better than Mr. Martin. Marc Faber said Fed is an evil institution. This sounds now like a understatement to me. I am pondering if I should buy his two books. Anyone has read that? There are annual reports from 1999 on the website. It looks like I do not need find new stuff read for a while.

My feeling is that metallurgical coal miners will be disappointed in the next 10 years. But thermal coal producers will do well. After all, you can only build that much infrastructure. However, when infrastructure is there and living condition improves, the need for electricity will continue to rise. I talked to my mother the other day and recounted how little electricity we used back then. There was just no way to use it. And now? They are planning to put a third air-conditioner in the apartment. I almost forgot, a mac and a notebook. My parents used to scold that we kids should play less with computers. Now they cannot live without them once they learned how to use them. Coal's Glow Attracts Major Miners Article Stock Quotes Comments MORE IN HEARD ON THE STREET » Email Print Save ↓ More smaller Larger By ANDREW PEAPLE For mining companies, the black stuff is now the right stuff. The sector's confidence in emerging market demand for coal, especially the sort used in steel making, is keeping deal activity brisk. Four of the 10 largestmining-sector mergers and acquisitions in the first half of this year were for metallurgical coal assets, according to PwC. Total deal value so far this year, at nearly $19 billion, is already close to last year's $22 billion total. Peabody Energy and ArcelorMittal's $5 billion agreed bid for Macarthur Coal late last month is unlikely to be the last transaction. Anglo American, which was in the running for Macarthur, remains on the prowl for acquisitions, as do other mining majors. The attraction of coal assets has increased partly due to rising imports from China over the last two years. Coal prices remain high despite concerns about the global economy. Contract prices for the third quarter, at $315 per ton, are at their second-highest level ever, according to Macquarie. For miners, buying existing coal assets provides a quick way to bulk up and perhaps diversify geographically—key for a commodity where supply this year has been disrupted by flooding in Australia. Existing players should enjoy savings in areas like procurement. But strong demand and a scarcity of top-notch coal assets can lead to punchy valuations. Acquirers this year have paid 13.2 times trailing operating profit for coal companies, compared with an 11.2 times average over the previous decade, according to IHS Herold. Peabody and ArcelorMittal are paying 20.8 times trailing operating profit for Macarthur. Macarthur's price reflects the quality of the asset, according a person close to the deal. It is the world's largest producer of pulverized metallurgical coal, and requires no extra spending on infrastructure. Fears of a rival bid from Macarthur's 31%-owners China's Citic and Korea's Posco may also have pushed up the price. But it suggests other potential targets for companies like Anglo, which is looking for bolt-on acquisitions worth around $5 billion, may be undervalued. The U.S.'s Walter Energy trades at 7 times expected 2012 earnings while Australia's Whitehaven Coal trades at 10.4 times, compared with Macarthur's 15.2 times, according to Factset data. Even if market volatility brings a pause to deal making, coal M&A should stay red hot.

Oil Found Near French Guiana Article Stock Quotes Comments MORE IN BUSINESS » Email Print Save ↓ More smaller Larger By JAMES HERRON LONDON—A consortium of energy companies Friday reported a large oil discovery off the coast of French Guiana, opening up a potentially massive frontier of petroleum development along the northern coast of South America. The discovery, made by Tullow Oil PLC, Royal Dutch Shell PLC and Total SA, could buoy hopes about the extent of the world's untapped crude-oil reserves. Most of the barrels still underground are believed to be in the hands of a few countries that restrict access or are trapped in hard-to-exploit regions like the Arctic. Analysts were closely watching the progress of the well, the first ever drilled in that offshore area just north of Brazil. Other offshore areas in South America have proven to be oil-rich, including Venezuela, Trinidad and Tobago, and more recently offshore Brazil. But the new discovery lies in a hitherto unproven region, relatively isolated from the continent's main oil-producing areas. "This is opening a whole new frontier," turning a region that currently lacks significant oil production into one of the world's hottest spots, said Francisco Bello, an analyst with DIInternational, an energy consultancy. London-based Tullow has made a name for itself opening up oil producing areas offshore Ghana and in Uganda. Its success has often made it subject to takeover rumors, although no public offer has ever been made. On the French Guiana news, Tullow shares surged 15% to £14.13 ($22.53) in London trading Friday, defying a broader market slump that pushed Shell down 2% to £20.18 and Total American depositary shares down 3.2% to $45. Tullow, which holds a 27.5% stake in the discovery, operated the well and said oil from the reservoir should be relatively easy to extract. The company also said the discovery proves its theory that major oil finds in offshore West Africa can be replicated in South America. More The Source: How Big Oil Could Shake Off Torpor Large oil fields have been discovered off the coast of Ghana, yielding a type of crude that is coveted by refiners because it is easier to convert into precious fuels like gasoline. Geologists have long suspected that the area off the coast of French Guiana could be just as prolific because hundreds of millions of years ago, it hugged up against what is now West Africa. When the Atlantic Ocean was just a narrow sea, those rock formations were joined before drifting apart as continental plates shifted. Tullow hasn't offered an estimate of the size of field where the well was drilled, but the company said that new geologic system is even bigger than offshore Ghana, where it has discovered 1.4 billion barrels in the Jubilee field. There are several other prospects around French Guiana, and if drilling on these is also successful, Tullow and its partners could be sitting on 3.5 billion barrels of new oil resources, said Angus McCoss, Tullow's exploration director. Tullow also plans to explore offshore neighboring Suriname and Guyana, starting next month. While French Guiana is largely an unknown territory for the oil industry, the find could give a jolt to oil-exploration efforts. In recent years, there has been much talk about the end of the era of easily accessible and abundant oil. But executives and officials in international energy circles have begun to rethink that calculation following major finds in the Arctic and deep offshore, along with rising speculation about the prospects of "shale oil," an unconventional oil source found in rock-like formations. Tullow managed fairly quickly to bring oil from the Jubilee field offshore Ghana, drilling the first well in June 2007 and extracting oil initially in December 2010. This portends well for South American discoveries sharing a similar geology, while contrasting sharply with more challenging frontier areas, such as the Arctic. When ExxonMobil Corp.and OAO Rosneft signed a major agreement to explore offshore Russia's Arctic coast, they said production wasn't expected until early next decade. "The importance of this result cannot be overstated," said Oriel Securities analyst Richard Rose, referring to Friday's news. Shell is the largest partner in the new discovery, with a 45% share. Total holds 25% and Northpet has 2.5%. With these major oil companies as partners, "certainly we've got the financial muscle and strategic mindset to move fast on this," Mr. McCoss said.

In a parallel world, Y2K might have had caused a lot of problems. WFC in 1992 might rhythm with BAC in 2011, but they are still different situations. The more I learn, less certain I am with the future. I will second Kraven's argument.

I have high respect for this guy. Thanks.

Can the World Still Feed Itself? Yes, says Nestle's chairman Peter Brabeck-Letmathe, but not if we burn food for fuel, fear genetic advances and fail to charge for water. Article Comments (35) MORE IN OPINION » Email Print Save ↓ More smaller Larger By BRIAN M. CARNEY Vevey, Switzerland As befits the chairman of the world's largest food-production company, Peter Brabeck-Letmathe is counting calories. But it's not his diet that the chairman and former CEO of Nestlé is worried about. It's all the food that the U.S. and Europe are converting into fuel while the world's poor get hungrier. "Politicians," Mr. Brabeck-Letmathe says, "do not understand that between the food market and the energy market, there is a close link." That link is the calorie. The energy stored in a bushel of corn can fuel a car or feed a person. And increasingly, thanks to ethanol mandates and subsidies in the U.S. and biofuel incentives in Europe, crops formerly grown for food or livestock feed are being grown for fuel. The U.S. Department of Agriculture's most recent estimate predicts that this year, for the first time, American farmers will harvest more corn for ethanol than for feed. In Europe some 50% of the rapeseed crop is going into biofuel production, according to Mr. Brabeck-Letmathe, while "world-wide about 18% of sugar is being used for biofuel today." In one sense, this is a remarkable achievement—five decades ago, when the global population was half what it is today, catastrophists like Paul Ehrlich were warning that the world faced mass starvation on a biblical scale. Today, with nearly seven billion mouths to feed, we produce so much food that we think nothing of burning tons of it for fuel. Or at least we think nothing of it in the West. If the price of our breakfast cereal goes up because we're diverting agricultural production to ethanol or biodiesel, it's an annoyance. But if the price of corn or flour doubles or triples in the Third World, where according to Mr. Brabeck-Letmathe people "are spending 80% of [their] disposable income on food," hundreds of millions of people go hungry. Sometimes, as in the Middle East earlier this year, they revolt. "What we call today the Arab Spring," Mr. Brabeck-Letmathe says over lunch at Nestle's world headquarters, "really started as a protest against ever-increasing food prices." Mr. Brabeck-Letmathe has extensive experience at the intersection of food, politics and development. He spent most of his first two decades at Nestlé in Latin America. In 1970, he was posted to Chile, where Salvador Allende's socialist government was threatening to nationalize milk production, and Nestlé's Chilean operations along with it. He knows that most of the world is not as fortunate as we are. Enlarge Image Terry Shoffner "There is a huge difference," he says, "between how we live this crisis and what the reality of today is for hundreds of millions of people, who we have been pushing back into extreme poverty with wrong policy making." First there's the biofuels craze, driven by concerns over energy independence, oil supplies, global warming and, ironically, Mideast political stability. Add to that, especially in Europe, a paralyzing fear of genetically modified crops, or GMOs. This refusal to use "available technology" in agriculture, Mr. Brabeck-Letmathe contends, has halted the multi-decade rise in agricultural productivity that has allowed us, so far, to feed more mouths than many people believed was possible. Then there is demographics. Recent decades have seen "the creation of more than a billion new consumers in the world who have had the opportunity to move from extreme poverty into what we would call today a moderate middle class," thanks to economic growth in places like China and India. This means a billion people who have "access to meat" for the first time, Mr. Brabeck-Letmathe says. "And the demand for meat," he says, "has a multiplier effect of 10. You need 10 times as much land, 10 times as much [feed], 10 times as much water to produce one calorie of meat as you do to have one calorie of vegetables or grain." Even so, we are capable of satisfying this increased demand—if we choose to. "If politicians of this world really want to tackle food security," Mr. Brabeck-Letmathe says, "there's only one decision they have to make: No food for fuel. . . . They just have to say 'No food for fuel,' and supply and demand would balance again." If we don't do that, we can never hope to square the drive for biofuels with the world's food needs. The calories don't add up. "The energy market," Mr. Brabeck-Letmathe argues, "is 20 times as big, in calories, as the food market." So "when politicians say, 'We want to replace 20% of the energy market through the food market,'" this means "we would have to triple food production" to meet that goal—and that's before we eat the first kernel of what we've grown. Even if we could pull this off, we will never get there by turning our backs on genetically modified crops and holding up "organic" food as the new gold standard of safety, purity and health. Organic production is all the rage in the rich West, but we can't "feed the world with this stuff," he says. Agricultural productivity with organics is too low. "If you look at those countries that have introduced GMOs," Mr. Brabeck-Letmathe says, "you will see that the yield per hectare has increased by about 30% over the past few years. Whereas the yields for non-GMO crops are flat to slightly declining." And that gap, he says, "is a voluntary gap. . . . It's just a political decision." And it's one thing for rich, well-fed Europe to say, as Mr. Brabeck-Letmathe puts it, "I don't want to produce GMO [crops] because frankly speaking I don't want to produce so much food." That, he says, he can understand. What's harder for him to understand is that Europe's policies effectively forbid poor countries in places like Africa from using genetically modified seed. These countries, he says, urgently need the technology to increase yields and productivity in their backward agricultural sectors. But if they plant GMOs, then under Europe's rules the EU "will not allow you to export anything—anything. Not just the [crop] that has GMO—anything," because of European fears about cross-contamination and almost impossibly strict purity standards. The European fear of genetically modified crops is, he says, "purely emotional. It's becoming almost a religious belief." This makes Mr. Brabeck-Letmathe, a jovial man with a quick smile, get emotional himself. "How many people," he asks with a touch of irritation, "have died from food contamination from organic products, and how many people have died from GMO products?" He answers his own question: "None from GMO. And I don't have to ask too long how many people have died just recently from organic," he adds, referring to the e. coli outbreak earlier this year in Europe. Nestlé itself has at times been painted as an enemy of the world's poor—for 30 years it has contended with a sporadic boycott movement over the sale and marketing of infant formula in the Third World, a push that some rich Westerners find unethical. On the other hand, under Mr. Brabeck-Letmathe, Nestlé's corporate strategy has emphasized that all food markets are intensely local. Americans may increasingly buy all drinks by the gallon and chocolate bars by the pound, but in many parts of the world a trip to the store might yield a single Maggi cube—the Nestlé-made bullion cubes that are ubiquitous in many countries. In these countries, single servings of many products are sold in little foil packets to allow people to match their spending to their cash flow. This is, Mr. Brabeck-Letmathe contends, an extension of Nestlé's original reason for being. Nestlé exists, Mr. Brabeck-Letmathe says, because as Europe's population "urbanized," as people moved to the cities and traded their ploughshares for time cards, "somebody had to ensure that people" who worked 12 hours a day in a factory could feed themselves. For the first time in history, "you need[ed] a food industry. You need[ed] somebody who takes a product, who treats it so that its shelf life allows it to be transported, to be brought into the consumption center. That's why we have canning, that's why we have pasteurization, that's why we have all these things." The vast majority of us would have no idea any longer how to feed ourselves if we turned up one day to find the supermarket empty. We rely on industrialized food production, distribution, preservation and storage to make our urban lifestyles, our very lives, possible. And "it was not the state that took care of this thing. It was private initiative." Today, Nestlé employs some 300,000 people, takes in some $100 billion a year in revenue—and yet represents just 1.5% of a global food industry that feeds billions. But for private initiative to work that kind of miracle, you need a market. Mr. Brabeck-Letmathe even worries about the absence of a functioning market for water. Some 98.5% of the fresh water the world uses every year goes to agricultural or industrial use. And in most cases, there is no market for how that water is allocated and used. The result is waste, overuse and misuse of the water we have. If we don't do something about that, Mr. Brabeck-Letmathe fears, we will soon run ourselves dry. Up to now, he says, our response to water shortages has focused "on the supply-side": We build another dam, or a canal to bring water from one place to another. But "the big issue," he contends, "is on the demand side," and the "best regulator" of demand is prices. "If oil becomes scarce," he notes, "the oil price goes up. But if water does, well, we still pump the same amount. It doesn't matter because it doesn't cost. It has no value." He drives this point home by connecting it back to biofuels: "We would never have had a biofuel policy—never," he contends, "if we would have given water any value." It takes, Mr. Brabeck-Letmathe says, "9,100 liters of water to produce one liter of biodiesel. You can only do that because water has no price." He cites Spain as an example of an agricultural sector in need of adjustment. "The total [output] of the Spanish agricultural system," he says, "is less in value than the subsidies they receive between the Common Agricultural Policy, the subsidies for tax relief, the subsidies for water." 'Take away the emotion of the water issue," Mr. Brabeck-Letmathe argues. "Give the 1.5% of the water [that we use to drink and wash with], make it a human right. But give me a market for the 98.5% so the market forces are able to react, and they will be the best guidance that you can have. Because if the market forces are there the investments are going to be made." The world's population is projected to hit nine billion by mid-century, up from 6.7 billion today. So, can we feed all those people? Mr. Brabeck-Letmathe doesn't hesitate. "We can feed nine billion people," he says, with a wave of the hand. And we can provide them with water and fuel. But only if we let the market do its thing. Mr. Carney is editorial page editor of The Wall Street Journal Europe and coauthor of "Freedom, Inc.," (Crown Business, 2009).

In Africa, U.S. Watches China's Rise Ethiopia and Zambia Are Among Fans of Continent's New Top Trade Partner; Washington Presses for Accountability Article Comments (31) MORE IN AFRICA » Email Print Save ↓ More smaller Larger By PETER WONACOTT China is expanding its economic and political ties with countries across Africa, resulting in a rapid rise in influence here that has sparked concern from the U.S. government. Enlarge Image Per-Anders Pettersson for The Wall Street Journal Construction workers from China and Ethiopia late last year during the construction of new African Union headquarters in Addis Ababa, Ethiopia. China is footing the $200 million cost. More Shunned by West, Zimbabwe Finds a Friend in Beijing Beijing's investment and aid to African countries aims to tap both natural resources and a growing middle class. As China burrows into local economies, leaders from South Africa to Ethiopia have been touting its model for development—one that stresses state-led growth, validates tight-fisted political control and offers a powerful counterpoint to the free-market democracy mantra promoted by the U.S. The embrace of China in Africa's capitals stands in contrast with complaints also voiced around the continent about Chinese firms' treatment of workers and concerns over some companies' environmental records. In Zimbabwe, even opponents of President Robert Mugabe welcome China's focus on commerce that doesn't link aid to politics. "China's model is telling us you can be successful without following the Western example," said deputy prime minister Arthur Mutambara, a member of an opposition party locked in awkward coalition with Mr. Mugabe, who has deep ties with Beijing. The U.S. is the largest foreign donor to Zimbabwe, according to the Organization for Economic Cooperation and Development, which doesn't count China as a member. The U.S. funnels much of its assistance through nongovernmental organizations, some of which are critical of Zimbabwe's government. That hasn't gone down well with many officials. "China is my favorite country," said Mr. Mutambara a 45-year-old politician who attended U.S. universities. Washington has taken notice. Some U.S. officials say the number of governments in Africa finding favor with China's path of development gives Chinese firms an edge over U.S. competitors and reflects Beijing's strategic ambitions for the continent. "It's quite clear that the model of state-led capitalism is being used as an instrument of China's soft power," said Robert D. Hormats, the U.S. State Department's Under Secretary for Economic Affairs. "It's part of a broad notion that China's economic model is successful and can be used elsewhere." Enlarge Image Mr. Hormats said Chinese investments in Africa came up at a recent meeting known as the U.S.-China Strategic and Economic Dialogue. U.S. officials have supported Chinese investment and aid to African economies, but they have argued that Beijing should adopt more transparent financing to combat corruption and impose stricter environmental and labor standards to hew to global norms. Such practices could serve China's interests, U.S. officials say, because big projects wouldn't be tied to particular governments or officials. "Our argument is that China can play a constructive role in Africa as investors—but they need to be responsible investors," said Mr. Hormats. China says it is simply doing business, largely to support an economy back home, and engaging African governments. Beijing isn't promoting a particular development model to counter a Western alternative, said Liu Guijin, China's special representative on African affairs. "What we are doing is sharing our experiences," he said in a May interview. "Believe me, China doesn't want to export our ideology, our governance, our model. We don't regard it as a mature model." Many African leaders feel otherwise. Ethiopia, which has received more than $4 billion in assistance from the U.S. government since 2007, has praised China's growth and criticized Western "band-aid" approaches to development. Ethiopian Prime Minister Meles Zenawi has lashed out at "extremist neo-liberals" for criticizing his tough stance on dissent, such as jailing journalists and lining the capital with surveillance cameras, which were purchased from a Chinese security company. South Africa has been sending top officials to Beijing's Communist Party School to learn how to run state-owned companies more profitably. China is also helping Algeria, Nigeria, Zambia and other African nations build special economic zones to attract foreign investment—similar to the laboratories for industrial reform that spurred its own opening to the world. Chinese textile makers, real-estate developers and restaurateurs have followed China's state-owned firms onto the continent. That combination of state-driven capitalism and entrepreneurial zeal has set an alluring example for many African leaders seeking ways to generate investment in their emerging economies. "The China model is appropriate because Africa needs investment," says Raman Dhawan, managing director for Tata Africa, an Indian conglomerate with projects dotted around the continent. China is now the continent's largest trading partner, edging out the U.S. Last year, its trade with Africa reached $114 billion, up from $10 billion in 2000 and $1 billion in 1980, according to China's State Council, or cabinet. On a continental scale, China's deal-making pace far exceeds the U.S.'s, according to Mthuli Ncube, Chief Economist at the African Development Bank Group. He estimates Chinese firms accounted for 40% of the corporate contracts signed last year, to 2% for U.S. firms. Unlike the U.S., which often sends aid money to non-governmental groups, China mostly routes aid through government entities, usually in consultation with leaders about what their priorities are. In September 2010, China and Ghana signed infrastructure-related loans and other projects valued at about $15 billion, just as the West African nation begins pumping crude from a massive new oil field. In 2009, China signed a $6 billion loan agreement with mineral-rich Congo for infrastructure projects. In Angola, a top supplier of crude to China, Chinese banks have extended about $9 billion in loans and other types of financing, according to a 2010 report from the African Development Bank. In Addis Ababa, for example, Ethiopia, hundreds of Chinese and Ethiopians have been building the headquarters to the 53 member states of the African Union. China is footing the tab for the $200 million tower and conference center. While the building is a symbol of tightening ties with Africa, Chinese officials aren't vying with the U.S. for influence, they say here. "It's not China versus America. It's whatever helps the Ethiopians," says Zeng Huacheng, who has been managing the project as a counselor at the Chinese embassy in Ethiopia. "If we don't help, Africans will suffer."