Desalination Companies in the Gulf States

Written By Nick Hodge

Posted September 9, 2010

The time for discussing a looming water shortage has passed.

It’s no longer looming; it’s here.

The World Bank now reports 80 countries facing “water shortages that threaten the health of their citizens and economies.”

From the American Southwest to the Middle East to China’s Northeast… population growth, food needs, and drought are straining water resources to the max.

And the solution to these problems are going to present myriad investment opportunities.

I covered the Chinese angle a few weeks ago. Today we’re going to peek under the water veil of the Middle East.

Hot, dry, and lucrative

I can’t state clearly enough how desperate the water situation is in the Middle East.

According to a report out this week by Arabian Business, Kuwait is consuming more water than it can produce: “the Gulf state is using an estimated 399 million gallons a day, just one million gallons short of [its] total daily production capacity.”

The Ministry of Electricity and Water plans to add an additional 40 million gallons of desalination capacity to cover demand for this year, but warns more capacity will be needed in 2012 and 2013.

Last week, the Ministry of Environment and Water in the United Arab Emirates called on the public to “rationalize water consumption to stop the drainage of ground resources and protect the environment,” adding that it’s “taking additional measures to achieve this goal, including banning the use of tractors and other traditional irrigation systems from next year.”

Last year, the UAE spent $3.21 billion desalinating water for its citizens. That budget is expected to increase.

Similar spending is being done in Saudi Arabia. Over the long weekend, the country announced plans to build a $3.9 billion power plant with an integrated desalination facility.

Pay attention, because this is where it gets good for investors…

Familiar countries, familiar companies

The Saudis awarded the desalination part of the contract — valued at $1.46 billion — to South Korea’s Doosan Heavy Industries and Construction (KOREA: 034020).

(Another company I follow, Energy Recovery (NASDAQ: ERII), has a history of desalination parts orders from Doosan. It may be worth a look on the news of this contract.)

And the remaining $2.44 billion has been awarded to China’s Sepco III Electric Power Construction Corp. to build the power plant.

As more and more such plants are built, it seems a few countries and companies are taking center stage.

Countries like Kuwait, Saudi Arabia, and the UAE are obvious because of booming populations and desert location. But increasingly, China and South Korea have been taking a leading role when it comes to building and operating these plants.

And there’s an easy way to play this trend.

I’ve found a company that’s partnered with a Chinese firm to build and sell nuclear powered desalination units as a complete package.

Instead of paying two companies nearly $4 billion to construct a power plant/desalination combo unit, Saudi Arabia could’ve waited just a bit and bought a complete turnkey system from this company for only $3 billion.

But the units aren’t quite ready yet, which is good news for you.

It means you still have time to buy the stock before they go on sale.

What’s more, the same company is finalizing a deal with Korea to import a new type of nuclear reactor. In fact the UAE has already bought four of them for $20 billion.

Like I said, there is a common thread emerging between nuclear energy, desalination, and the countries mentioned in this article.

It’s all a bit complex, so I’ve put together a simple video to convey just how big the profit potential is here. The video details how I found out about this company, its plans in both the desalination and nuclear industries, and how you can still get in for less than $1.00 per share.

It’s no longer time to sit and ponder solutions to severe energy and water problems facing the entire world…

Not only is this company ready to act now, but it’s one of the best profit opportunities I’ve seen in a long time.

Call it like you see it,

Nick Hodge

Nick

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