Three Investment Clean-Air Plays in China Ahead of the Olympics
Companies / Resources Investing Mar 05, 2008 - 01:36 AM GMT
Tony Sagami writes: Even though August is a long way off, I have been very busy preparing to travel to the 2008 Olympic Games in Beijing. And while every trip takes preparation, this cross-continent journey is taking more planning than usual!
I shouldn't complain though. After all, my preparation pales in comparison to the planning being done by the International Olympic Committee and the Chinese government.
Much has been written about the amazing structures being built for the Olympics, such as the bird's-nest-like National Stadium and the eggshell-shaped National Grand Theater.
However, the Chinese government has gone to great lengths to ensure that far less ink has been spilled covering what is turning out to be the most expensive and important pre-Olympics project in history. And investors who sit up and take notice stand to make a killing. I'm talking about ...
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| Poor air quality will be a major problem for China's Olympic Games. |
A Race to Solve China's Most Embarrassing Problem: A Lack of Clean Air
I've told you about China's horrendous pollution problems before. Heck, the air is so filthy in China's largest cities that I don't even bother booking hotel rooms above the 10th floor because you can't see anything.
So it came as no surprise to see that China had the dubious honor of passing the U.S. to become the world's largest emitter of greenhouse gases in 2007.
Some more facts:
According to the European Space Agency's indisputable satellite images, China has the planet's worst levels of air pollution.
The World Bank said China is home to 16 of the planet's 20 most air-polluted cities.
A study from the Chinese Academy on Environmental Planning blamed air pollution for 411,000 premature deaths.
Clothes hung out to dry can be covered in black soot before their water evaporates.
According to China's own government-controlled numbers, there were 51,000 demonstrations or riots of a hundred or more people protesting the country's horrible pollution problems.
No wonder the Ministry of Public Security has ranked pollution among the top five threats to China's peace and stability.
Chinese Government Desperate to Solve Pollution Problems Before the Games Begin
The air pollution is so bad in Beijing that the International Olympic Committee is worried that it may have to cancel some events if the pollution doesn't improve.
To make matters worse, Haile Gebrselassie, the men's marathon world record holder, is threatening not to run if conditions are not safe.
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| Haile Gebrsellasie has threatened to not run in China if the conditions are unsafe. |
As a result, the Chinese government is so desperate to reduce pollution before the Olympics that they are attempting — and spending hundreds of millions in the process — to do something that man has never been able to do: Control the weather.
The Chinese think they can summon rain storms to clear the pollution.
In fact, China employs 50,000 people and is spending an estimated $100 million a year on rainmaking!
Beijing is circled by rainmaking installations with anti-aircraft guns and rocket launchers that can blast the sky with silver iodide. All told, the Chinese have installed 6,781 artillery guns and 4,110 rocket launchers to do the job.
Sound silly? Chinese scientists claim to have increased rainfall from 1995 to 2003 by 210 billion cubic meters, enough to meet the annual needs of 400 million people.
And that's not the only measure Beijing is taking. It will also pull millions of cars off the roads and shut down the most polluting factories in the weeks leading up to the Olympics.
There are several culprits, but the biggest source of the pollution is coal-fired power plants. Currently around 80% of China's electricity is generated by coal-burning plants and that translates into some very dirty air.
So, in Chinese environmental circles, coal-fired power plants have been labeled Public Enemy #1.
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| Companies that can help China solve air pollution stand to make a fortune. |
That means in the months and years to come, there will be an explosive demand for alternative energy sources to coal AND companies that can help clean up China's extremely polluted air.
Bottom line: If you are able to identify the companies that are helping China solve their pollution problems, I think you can make a bundle.
So, here are ...
Three Environmental Mega Winners Poised to Turn Green to Gold
Mega Winner #1:
China National Offshore Oil Corporation
You may remember CNOOC (NYSE: CEO) for its unsuccessful bid to buy Unocal in 2006. But here is what you need to know about CNOOC now — it is the largest natural gas supplier in China, and the Chinese government has pledged to increase its use of cleaner-burning natural gas.
I do think CNOOC is a little expensive right now. But when warmer weather returns, natural gas prices should drop and that would allow CNOOC's stock to get cheaper.
Mega Winner #2:
Cameco Corporation
China currently has 11 working reactors that generate 8.8 gigawatts of electricity (1.5% of China's total power capacity). What's more, the Chinese government has stated that it plans on increasing its nuclear energy production to 4% (generating 40 gigawatts of nuclear power by 2020. And it expects another three-to-four-fold increase to 160 gigawatts by 2030!
Cameco (NYSE: CCJ) has been called the " Saudi Arabia of uranium" because it's the biggest producer of uranium in the world, accounting for 20% of global supply. If you're looking for a great alternative energy play, check out Cameco.
Mega Winner #3:
The little company that could!
This one is a small, unknown company on the verge of becoming a big, big company.
Reason: It has proprietary technology that helps coal-powered utilities clean their emissions from boilers, incinerators, furnaces and other stationary combustion sources before going into the air.
This company recently received a $9.3-million contract for four newly constructed coal-fired plants in Jiangsu Province and another $2.6-million order for Beijing.
More importantly, these orders were from China Huaneng Group, the largest coal-based power generator in China. In other words, this is just the tip of the iceberg in terms of Chinese orders.
China is opening the equivalent of two coal-fired plants a week and will double its coal consumption within ten years to three billion tons annually!
To put that into perspective, the U.S. uses slightly more than a billion tons of coal a year.
You can see why I think this company's profits and stock price will explode.
It is only a $20 stock now, but I expect it to at least double by 2010. My long-term target is $100!
Heck, I recently told my Asia Stock Alert subscribers to load up when the stock was under $17 a share. So they should be sitting on a 20% open gain in just a few weeks. And I think that's just the beginning.
So whenever you hear about the Olympics in China ... remember that Olympic athletes aren't the only ones who will be taking home the gold from Beijing. China is a very polluted country, and some companies are going to win the race to help it become more green.
Best wishes,
Tony
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