China Advances $167 Billion Tibet Mega-Dam Despite Risks
(Bloomberg) -- The massive economic stimulus and boost to clean power from a 1.2 trillion yuan ($167 billion) mega-dam in Tibet has proven alluring enough for Chinese leaders to set aside concerns about potential damage to biodiversity and relations with India.
Chinese Premier Li Qiang launched construction of the hydropower project on the lower reaches of the Yarlung Tsangpo river on Saturday, and unveiled the China Yajiang Group, a new company that will be charged with managing the dam’s development, according to the official Xinhua News Agency.
While much is still unknown about the project, its cost alone shows the epic scale engineers are envisioning, with the estimate more than four times larger than the $37 billion the Three Gorges Dam cost upon completion in 2009. That promises an economic jolt for sectors like construction, cement and steel, and a major new source of clean power that could eventually help the country reach its goal of net zero emissions by 2060.
Power Construction Corp. of China and China Energy Engineering Corp. both rose by their daily limit of 10% in Shanghai, while China Energy Engineering’s Hong Kong shares surged as much as 51%. Huaxin Cement Co. more than doubled in Hong Kong before giving up some gains, while Anhui Conch Cement Co. gained as much as 7.6% in Hong Kong. Chinese commodity futures for steel rebar and hot rolled coil also rose on the news.
The project carries risks, as well. The dam could become a source of tension between China and India, as the Yarlung Tsangpo runs through the state of Arunachal Pradesh in northeast India and feeds into one of its major rivers, that then goes into Bangladesh.
Environmentalists in China have long worried about the irreversible impact of dam construction in the Yarlung Tsangpo gorge, where the river drops 2,000 meters (6,560 feet) in elevation over a 50-kilometer (31-mile) stretch. The area is home to a national nature reserve and is one of the country’s top biodiversity hotspots.
There are also challenges involved in getting materials and workers to such a remote site, while stringing power lines to get the electricity where its needed will add costs.
Beijing has said that there won’t be any adverse impact to downstream areas and has promised to put in place measures to ensure safety and environmental protection.
The project will consist of five cascade dams and be located around the city of Nyingchi in the southeast of the autonomous region of Tibet, Xinhua said. Engineers will figure out ways to straighten some of the river’s bends and divert water through tunnels, according to the report.
State engineers have said the gorge has the potential for 70 gigawatts of electricity generation — more than triple that of Three Gorges, the world’s largest power project, and in excess of the total power capacity of Poland.
It’s also unclear how the Yajiang Group will finance what’s likely one of the world’s costliest ever infrastructure projects, but given China’s history of lending for dams and the ability of future hydropower sales to help repay loans, that seems unlikely to be a problem.
Earlier this year, the National Development and Reform Commission included construction of a dam on the lower reaches of the Yarlung Tsangpo River in Tibet and a power transmission project from there to the Hong Kong area in its annual report to the National People’s Congress.
(Updates with stock and commodity moves in fourth paragraph and adds project details in ninth paragraph.)
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