This is what the world population is expected to reach in November, for the very first time. Even though birth rates are falling around the world, couples are still having babies, and later this year we’ll share the planet with 8 billion other humans, according to a new report from the United Nations Population Fund. (UNFPA).
This incredible milestone underscores the need to address a number of ongoing challenges related to population growth, but it also presents what I consider to be very attractive investment opportunities. Depending on the country, each newborn requires additional amounts of commodities and raw materials, from aluminum to zinc.
And with the rapidly growing size of the global middle class, demand for new materials is expected to remain high in the future. This favors exploration and production companies in particular, but it is also good news for companies involved in food and beverage, pharmaceuticals, healthcare, luxury goods, transportation and even more.
India’s population will surpass that of China
Among the fastest growing countries in the world, in terms of population, are emerging economies such as China and India, or “Chindia”, which are home to a total of 2.8 billion people.
China has long been the most populous country in the world, but this decade, possibly as soon as next year, India is set to overtake its northern neighbor. According to the UN, India is among a group of eight countries that will contribute more than half of the world’s total population growth by 2050, the others being the Democratic Republic of Congo, Egypt, Ethiopia, Nigeria, Pakistan, the Philippines. and Tanzania. In the table below, I include the United States for comparison.
That high population growth has shifted to emerging and developing economies should surprise no one. Globally, birth rates are the lowest since the 1950s, with fewer and fewer countries producing more than 2.1 babies per woman, which is considered the “replacement rate”. The United States, for example, has steadily fallen below this rate over the past 15 years, and in 2020 hit an all-time low of 1.6 births per woman, likely largely due to the pandemic. .
Provisional data for 2021 shows that the number of births in the United States has increased slightly from the previous year, but is still well below replacement level, despite Elon Musk’s reproductive efforts. (The Tesla and SpaceX chief called population collapse the number one problem facing civilization.)
2.97 million pounds of metals, minerals and fuels needed…per American
Even so, each hatchling means additional metals, minerals, and other resources will need to come online. By one estimate, nearly 3 million pounds of materials on average are needed to sustain each American over their lifetime, assuming a life expectancy of 77.3 years. This includes more than 17,000 pounds of iron ore, used to make steel; nearly a quarter of a billion pounds of coal; 1.32 million pounds of stone, sand and gravel; 52,000 pounds of cement; and 65,000 gallons of oil.
Not everyone in the world enjoys a high standard of living like the average American, but any amount of these resources multiplied by 8 billion people is, to say the least, a lot.
As you may have heard me say if you have attended one of my presentations, babies will continue to be born every year, even though growth has slowed, which means we will have to continue exploring for new mineral deposits. . Demand will always be there, but as we have seen following the pandemic-related lockdowns, new supply can sometimes dry up, and when that happens, prices accelerate.
I think that makes companies involved in the extraction and processing of these raw materials very attractive.
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Originally published by US Global Investors on July 21, 2022.
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