Tracey, partner since 2017 (Toronto, Ontario)
This week in charts
Freight
Air traffic
U.S. Federal spending on seniors
Crypto-mining energy consumption
Opinion: Alarming drop in mining derails drive for Net Zero
The 38th edition of the World Mining Data report, published annually by the Austrian government, finds that mining production is not meeting the hopes of governments working to increase their own domestic and friendly sources of minerals. Rather, production has roughly plateaued, with the sector yet to match the peak production of 18 billion metric tons achieved in 2019. Far from growing our outputs, we’re struggling to maintain them.
Even more troubling: more than a third of global mining production remains controlled by our two biggest geopolitical adversaries. China is still responsible for over a quarter of the total and Russia another 9.2 per cent on top of that. China is the world’s largest producer of 29 different commodities and dominates the processing and refining of many others.
In Canada, meantime, we are punching below our weight, ranking only eighth in world production, well behind our peers, the U.S. (second) and Australia (fourth). We do lead the pack in new exploration spending but our actual production of critical minerals is falling, despite renewed attention from the federal government and bilateral agreements with most of our closest allies to increase supply.
Natural Resources Canada released its annual mining production results in mid-April, confirming that in 2022 we produced fewer critical minerals — the copper, cobalt, nickel, zinc, uranium and platinum-group metals that are essential to the energy transition — than in 2019. Output of gold, which is a hedge against inflation and economic uncertainty, did increase, as did output of silver, iron and potash, a key ingredient in fertilizer. But they won’t help us hit our climate goals, and output of metals that would won’t be taking off any time soon, according to the Prospectors and Developers Association of Canada.
Governments are aware of and concerned with the problem. At the latest G7 climate and energy meeting in Japan, where critical minerals were at the forefront of discussions, Canadian Minister of Environment and Climate Change Steven Guilbeault assured reporters, “We can become a reliable provider of these resources or products for our international allies.” The key word, of course, is “become.” Because the latest data show that, despite what may be the best of intentions, Canada is not yet filling any of the supply gaps the world is suffering in reliable and affordable critical minerals. Just last month, our only rare-earths mine suspended production due to high costs and low commodity prices. High capital costs, supply chain woes, labour shortages and regulatory burdens are not uniquely Canadian problems. But they are still problems.
A Record Number of Canadians Are Trying to Restructure Their Debts
Consumer proposals, or alternative arrangements to settle debts with creditors, rose 36% from a year earlier, according to data released Wednesday by the Office of the Superintendent of Bankruptcy Canada. That brings the monthly total to 9,337, the most since at least 2011.
Total insolvencies, which also include bankruptcies, jumped to 11,768, the highest since the end of 2019. While that’s in part a rebound from near historically low levels, the jump may add to evidence that restrictive borrowing costs are starting to weigh on Canadian households as debt payments eat up a greater proportion of incomes.
“There are some very concerning trends in the data,” Charles St-Arnaud, chief economist with Alberta Central Credit Union, said by email. “It is clear that we are seeing a rise in households struggling and needing to renegotiate the terms of their loans.”
This week’s fun finds
To celebrate his retirement, Pho treated the Toronto office to lunch from one of our favourite Portuguese restaurants. It’s never fun saying goodbye to someone who’s been an internal partner for 14 years, but we’re happy for him as he starts his post-EdgePoint life. We hope he comes to visit us (especially if he comes bearing grilled chicken).
Taco Bell’s Innovation Kitchen, the Front Line in the Stunt-Food Wars
Taco Bell’s food-innovation staff, which includes sixty developers, focusses on big questions: How do you make a Cheez-It snack cracker big enough to be a tostada? What are the ideal Cheez-It dimensions to guarantee that the tostada won’t crack inconveniently when bitten into? Or consider the Doritos Locos Taco: What safeguards can be implemented to prevent the orange Doritos dust from staining a consumer’s hands or clothing? Can fourteen Flamin’ Hot Fritos corn chips be added to the middle of a burrito and retain their crunch? Can a taco shell be made out of a waffle, or a folded slab of chicken Milanese? These are all problems of architecture and scalability; fast food is assembly, not cooking.
After passing through several doors that were unlocked via a coded keypad, I sat with Rene Pisciotti, the executive chef, who is known as the Taco Whisperer; Liz Matthews, the global chief food-innovation officer; and Heather Mottershaw, the vice-president of pipeline innovation and product development. (She invented the Waffle Taco.) I was handed a plastic cup of Baja Blast soda—tropical Mountain Dew in a proprietary shade of turquoise—and a plate of hard-shell tacos. Pisciotti, a burly man with gelled hair who used to work for Barilla, the Italian food company, averted his eyes in a practiced way as I took a bite, sending an avalanche of shredded lettuce and cheese onto the floor. He then summoned several assistants, who streamed in to hand each of us a sample of a new product: a burrito with melted cheese on top. He wanted to show me an example of how his team solved a problem.
The innovation team at Taco Bell shares this zeal. Its work is intricate, the lab as much think tank as mad-scientist lair. Frito-Lay, which supplies the chain with taco shells, runs a research complex outside of Dallas that’s staffed by hundreds of chemists, psychologists, and technicians, who perform millions of dollars’ worth of research a year examining the crunch, mouthfeel, and aroma of each of its snack products. A forty-thousand-dollar steel device that mimics a chewing mouth tests such factors as the perfect breaking point of a chip. (People apparently like a chip that snaps with about four pounds of pressure per square inch.)
As menu items are developed, various iterations are tested at the Taco Bell Sensory Panel, at the company’s headquarters. Professional testers, trained by Taco Bell, along with members of the company’s broader workforce, sit in carrels at a long counter while researchers on the other side of a window slide trays of samples to them. Each tester has a silver button to push when ready for another dish. Pisciotti studies their faces in real time on a monitor and scribbles notes. “I have a camera on people—it’s not creepy, I promise,” he said. Sometimes testers pick an item up and immediately drop it. “And I’m, like, O.K., we have a temperature problem here,” he said. “We don’t want to hurt consumers.” Other times, “people just have a ho-hum look on their face.” The best scenario is when a tester eats an entire portion before saying anything.
Failure is a big part of the job. “There’s more items that don’t make it than ones that do,” Mottershaw said. “And there are things that are before their time.” Hypotheses are tested; experiments rarely pan out. The Crispy Melt Taco, introduced in 2021, “started out blue, because we made it with blue corn,” she said. “We called it Midnight Melt and Forbidden Taco, to try to give it a reason for having a blue shell. But people were confused—like, Is it made for nighttime? Is this old? What’s forbidden? What happened to it?” Pisciotti said, “The masses don’t know that blue corn is a thing—they don’t shop at Trader Joe’s.” (Other items that haven’t made the grade: the Croissant Taco, Crispy Cheese Curd Loaded Fries, Seafood Salad.) “We introduce things to the masses,” he added.
The Untold Story of the Boldest Supply-Chain Hack Ever
It was late 2019, and [Steven] Adair, the president of the security firm Volexity, was investigating a digital security breach at an American think tank. The intrusion was nothing special. Adair figured he and his team would rout the attackers quickly and be done with the case—until they noticed something strange. A second group of hackers was active in the think tank’s network. They were going after email, making copies and sending them to an outside server. These intruders were much more skilled, and they were returning to the network several times a week to siphon correspondence from specific executives, policy wonks, and IT staff.
Adair and his colleagues dubbed the second gang of thieves “Dark Halo” and booted them from the network. But soon they were back. As it turned out, the hackers had planted a backdoor on the network three years earlier—malicious code that opened a secret portal, allowing them to enter or communicate with infected machines. Now, for the first time, they were using it. “We shut down one door, and they quickly went to the other,” Adair says.
Around the time Adair’s team was kicking Dark Halo out of the think tank’s network, the US Department of Justice was also wrestling with an intrusion—one involving a server running a trial version of the same SolarWinds software. According to sources with knowledge of the incident, the DOJ discovered suspicious traffic passing from the server to the internet in late May, so they asked one of the foremost security and digital forensics firms in the world—Mandiant—to help them investigate. They also engaged Microsoft, though it’s not clear why. (A Justice Department spokesperson confirmed that this incident and investigation took place but declined to say whether Mandiant and Microsoft were involved. Neither company chose to comment on the investigation.)
In fact, the Justice Department and Volexity had stumbled onto one of the most sophisticated cyberespionage campaigns of the decade. The perpetrators had indeed hacked SolarWinds’ software. Using techniques that investigators had never seen before, the hackers gained access to thousands of the company’s customers. Among the infected were at least eight other federal agencies, including the US Department of Defense, Department of Homeland Security, and the Treasury Department, as well as top tech and security firms, including Intel, Cisco, and Palo Alto Networks—though none of them knew it yet. Even Microsoft and Mandiant were on the victims list.
