The Economist

50 Business The EconomistJuly 21 st 2018

(^2) that subscriber growth fell short of expec-
tations because none of the shows Netflix
released last quarter captivated audiences
in the way that past hits such as “House of
Cards” have. Data from Metacritic a re-
view-aggregator show its users gave Net-
flix shows released in the past quarter an
average score of just 6. 4 out of 10 well be-
low the online streamer’s historical aver-
age of 7. 2.
Markets nonetheless have reason to be
jittery about Netflix if only because it has
some of the priciest shares around. The
company’s price-earnings ratio sits at
around 170 and its annual cashflow is neg-
ative to the tune of billions of dollars. The
firm’s rise has mostly come on the back of
the promise of future growth. It is produc-
inganastonishingamount ofcontent—this
year alone it plans to spend some
$ 12 bn- 13 bnonit including 82 original or ex-
clusively licensed feature films and hun-
dreds of television programmes. Warner
Brothers a major Hollywood studio plans
to release just 23 films.
Critics have applauded; over the whole
year Netflix captured 112 award nomina-
tions the first time it has beaten its arch-ri-
val HBO. Investors will fret that much pro-
duction has been financed by borrowing.
The firm’s long-term debt has risen to
$8.3bn up from $2.4bn just two years ago
(and equivalent to more than half of Net-
flix’s total revenue of $ 14 bn over the past
year). Any indication that the firm’s
growth rate is slowingcauses concern. 7
Screen shocker
Source: Company reports
Netflix
Actual v forecast %
New subscriptions m
2016 17 18
0
2
4
6
8
10
Forecast Actual
2016 17 18
50
0
50

O

PEN a toolbox pull out a spanner and

you may be holding a bit of the an-

swer to global warming: vanadium a met-

al named after Vanadis the Scandinavian

goddessofbeauty. Used mostlyin alloys to

strengthen steel its appearance may not

live up to the romance of its name. Yet va-

nadium could become a vital ingredient in

large clean-energy batteries in which case

it will shine a lot brighter.

Its price has already been rising faster

than cobalt copperand nickel all of which

are used in lithium-ion batteries (see

chart). The main reason for the run-up is

prosaic. About nine-tenths of the world’s

vanadium is used to harden steel; China

has tightened standards on the strength of

rebar to make buildings more earthquake-

proof. Mark Smith boss of Largo Re-

sources which mines high-purity vanadi-

um in Brazil says this alone should in-

crease demand for the metal by up to

15  000 tonnes in 2018 - 19. Last year total pro-

duction was 83  000 tonnes.

But adding oomph is the incipient de-

mand for vanadium pentoxide a com-

pound that is used as an electrolyte in va-

nadium redox flow batteries ( VRBs). These

batteries are as big as shipping containers

and maybe better at storinglarge amounts

of wind and solar energy than stacks of

lithium-ion batteries. VRBs house the elec-

trolyte in tanks separate from the battery

cell and can be charged and discharged al-

most inexhaustibly over 20 years (indeed

this gives the electrolyte enough residual

value that it can be leased). Some analysts

reckon that could make them cost-compet-

itive with their lithium equivalents and

safer and more scalable to boot.

They currently use only 1 - 2 % of the glo-

bal vanadium supply but the potential

growth is producing a halo effect on vana-

dium prices. “The market just thinks VRBs

are sexy” Mr Smith says. Although the

flow batteries are too bulky for use in elec-

tric vehicles they may be ideal for station-

ary storage. China’s National Develop-

ment and Reform Commission a state

planner has called forlots of 100 megawatt

(MW ) VRBs to be built to help manage the

fluctuations of wind and solar energy. A

200 MW one billed as the world’s most

powerful battery is being built in north-

eastern China—it is twice the size of a lithi-

um-ion one installed in Australia with

much fanfare byTesla in December.

Some worry that the run-up in vanadi-

um prices will kill VRBs in their infancy.

But the metal is abundant; resources total

about 6 3m tonnes. Mostofitcomesasa by-

product from the use of iron in steelmak-

ing especiallyin China; some ofitis mined

in South Africa and Brazil.

The main bottleneck says Fortune Mo-

japelo boss of Bushveld Minerals a South

African vanadium miner is processing ca-

pacity. His firm plansto produce vanadium

pentoxide in South Africa to be used in

VRBs that Bushveld hopes to erect across

Africa. A trend toward vertical integra-

tion—from raw material to battery—is also

evident in news that VRBEnergy a Canadi-

an flow-battery manufacturer has set up a

long-term agreement with a Chinese elec-

trolyte supplier PangangGroup Vanadium

and Titanium Resources which may also

buya stake in VRBEnergy.

If VRBs are as yet little known that may

be because they lack a flashy promoter

such as Tesla’s Elon Musk. But vanadium

has at least two backers with considerable

clout. One is Glencore the world’s biggest

commodities trader which mines it in

South Africa. The other is Robert Fried-

land a cannybillionaire who controls VRB

Energy. Both are also leadingdevelopers of

cobalt. They are betting big on the beauty

ofbatteries. 7

Vanadium

Beauty and long life

Ametal used to harden steel is the latestbeneficiaryofthe batterycraze

Charging ahead

Source: Thomson Reuters

Metal prices January 1st 20 1 7=100 $ terms

2017 2018

50

100

150

200

250

300

350

Vanadium

Cobalt

Copper

Nickel

Going with the flow