A China Play No One
Talks About
by Graham Summers
September 20, 2006
The workers were getting frantic.
Some had begun building dams out of wood, debris, dirt… anything they could get their hands on.
Others were digging holes beside the river, hoping to divert some of the toxic sludge into them.
But with every second, the 60 tons of coal tar slid further down the river towards the Wangkuai Reservoir in Baoding: a city of about 10 million people.
Coal tar has been linked to cancer at certain levels. And a truck accident had just dumped 60 tons of the stuff into the Dasha River. Following the spill, in some sections of the river, levels of carbolic acid were 100 times greater than acceptable.
In other words, the primary source of water for a city of 10 million people had gone toxic.
This may sound like a scene from a Jerry Bruckheimer movie, but accidents and subsequent cleanups like this one are a regular occurrence in China. Chinese officials claim there were 76 pollution accidents in the first half of 2006.
Altogether, the Chinese Government estimates that as many as 340 million people in China are unable to get water that is clean enough to drink.
That number will continue growing as well: China produces roughly 3.7 billion tons of wastewater a year. Currently only about one third of this is treated.
A country simply cannot attain First World status without proper water. And with the 2008 Beijing games just a few years away, China is making the improvement of its water supplies a priority.
“Water is the source of life and the foundation on which the human civilization relies for survival and development,” commented Vice Premier Zeng Peiyan during the opening ceremony for an international water conference.
So far, China has relied on privately held foreign companies for aid in cleaning up and stabilizing its water supplies. Since 1992, French utility giant, Suez (SZE) has signed 18 contracts to service water in some of the more high-income areas of China. Similarly, another French company, Veolia Environment (VE), is involved in some 13 projects.
Most recently, Beijing Capital announced plans to create China’s first water industry fund. The company has already invested more than $755 million in 12 water projects in China. Now it’s looking to start a fund that would help finance future water projects for the country.
Wastewater and water infrastructure plays are going to be huge in China in the next two years. Fortunes will be made as the country dumps capital into the sector, in hopes of cleaning up its act before stepping into the international spotlight with the 2008 Olympic games.
I’ll be researching water companies over the next couple of weeks. And I’ll report to you here as soon as I find some of the more promising opportunities.
Good trading,
Graham
