2. Overview
"Water is the new oil": A major new theme in global investment markets.
水資源已成為全球投資市場的一個注目新焦點，石油大亨布恩˙ 皮肯斯更認為： 『水資源是新的石油』
China is ground zero for this ecological crisis and investment theme, not only in terms of
overall scarcity but also due to severe internal water resource imbalances.
中國的水資源問題尤其嚴重，不僅是因為整體的水資源缺乏，也由於嚴重的區域供水不平衡。
China's government and the private sector recognize the urgency, and plan to devote tens
of billions of USD to related infrastructure investment and capital expenditures.
察覺到水資源的迫切需求，中國政府和私人企業計畫投資數百億美元來建造相關的基礎設施。
This investment/expenditure will be diversified across several techniques and sectors,
with major projects in regional pipelines, local water filtration/sewage treatment,
industrial wastewater recycling, and desalination.
這項投資將涵蓋多項技術和層面，包括輸水管、淨水廠、污水處理廠、工業廢水回收再利用、及海水淡化等
主要項目。
We've identified a number of Taiwan firms with direct experience in these areas, many of
which have longstanding presence in China.
有幾家台灣企業在這些領域當中都非常專精，其中有許多在中國已經營多年：
國統(8936)，中宇(1535)，康那香(9919)，鉅邁(8435)，千附(8383)
3. "Water Is the New Oil"
• Water "stress" – the ratio of
annual water withdrawals to
renewable water resources –
has been increasing steadily
and has disparate impact
around the world.
• 2.8 billion people live in areas
of severe water stress.
• Driven by population, a
growing global middle class,
shifting dietary consumption
patterns and innovations in
energy exploration.
• Just 10 countries control 60%
of the world's fresh water,
including Brazil (13%), Russia
(10%), and the US, Canada and
China (7% each).
• Water has become a US$300bn
global industry.
Source: Döll, P., via Wikimedia Commons
4. China'sWaterIncreasingly
ScarceandImbalanced
• Overall per-capita water use of
~400 m3/year already ½ of the
internat'l definition of water
stress (per The Economist).
• In 2009, the World Bank
already estimated that water
scarcity cost China 2.3% of GDP.
• By 2030, China's Ministry of
Water Resources projects water
supply will not be able to meet
demand at current rates.
• 80% of water is in the south,
but half the population, two-
thirds of farmland and most
heavy industry and power
generation are in the North.
• The industrialized north
suffers p/c water scarcity on par
with Middle Eastern countries
like Saudi Arabia.
Sources: China Water Risk; HSBC
5. WaterConstrainsChina's
PresentEnergyOutput...
• Coal, accounting for 77% of
current power generation, is
water intensive both at the
extraction phase (mining and
washing) and in end power
generation (plant cooling).
• China plans 450 new coal-fired
power stations, half being built
in areas of high or extremely
high water stress.
• New coal capacity will require
an additional 9bn tonnes of
water per year.
• As a foreign house recently put
it in a bluntly titled report:
"No water, no power."
Source: HSBC
6. ...And Its Energy Future
• To break away from polluting
and inefficient coal, China is
looking to new sources like
shale gas; it's estimated to have
some of the largest such
reserves outside of North
America.
• But these reserves are largely
found in areas of high water
stress as well.
7. Rerouting Supply
• South-to-North Water
Diversion Project planned to
cost US$80bn, stretch across
3,000 km and move 45bn m3/yr.
• First (downstream) leg to be
completed by year-end, moving
14.8bn m3/year over 1,200 km.
• Next (midstream) leg of similar
scope, slated for October 2o14.
• Third leg most controversial,
impinging on Himalayan water
that flows to India and SE Asia.
• Criticized for inefficiency;
same amount of water could be
desalinated more cheaply.
• Relevant Taiwan concept stock:
Kuo Toong Int'l (國統 , 8936)
• Also investigate cement and
engineering firms that may
have similar project experience.
Source: BBC (http://news.bbc.co.uk/2/hi/8545321.stm)
8. Water Treatment and Recycling
• Only ~40% of industrial
wastewater currently recycled,
half as much as in Europe;
household water <9% reused.
• China's preferred membrane
bioreactor (MBR) reclamation
and reuse technology is
projected to see installation
CAGR of 29% in 2010-2017...
• ...as the current 5-year plan's
budgeted US$1.1bn by
government is more than
matched by US$2.6bn in
private investment.
• Relevant Taiwan concept stocks:
China Ecotek (中宇, 1535)
Kang Na Hsiung (康那香, 9919)
Zimmite Taiwan (鉅邁, 8435)
• Also investigate chemical and
technology companies with
ability to move into water
testing and treatment.
Source: Frost & Sullivan
9. Desalination
• Though it still constitutes the
most expensive option for
water sourcing, increasing
water stress and advancing
technology have made
desalination more feasible.
• China aims to triple desal
capacity to 2m m3/day by 2015,
70% of associated upstream
products to be locally sourced.
• For 2013, government
announced eight new pilot
cities and zones for desal
plants.
• Private US firm NanoH20 will
invest US$45m in a China desal
membrane plant.
• Relevant Taiwan concept stock:
Chen Full Int'l (千附, 8383)
• Also investigate firms that may
have experience with similar
high tech filtration materials
and equipment.
Sources: China Water Risk; Global Water Intelligence
