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Mongolia Wind Profits

What We Just Learned from a Meeting with the Mongolian Prime Minister

Written by Jeff Siegel
Posted September 28, 2010

Yesterday morning, General Electric (NYSE: GE) announced it was forming a joint venture with Harbin Power Equipment Company (PK: HBPWF) to manufacture wind turbines for customers in China.

In response to that announcement, I read close to a dozen comments on various message boards where people were actually blasting GE for doing business with the Chinese.

One guy, proudly wearing his Gadsden flag t-shirt in his thumbnail picture, even suggested that GE was somehow being unpatriotic by doing this deal with the Chinese:

Why is GE going to China? They are an American company. They shouldn't deal with the [expletive] Chinese! Why is it all about money. What ever happened to patriotism? Why are they doing this?”

What a load of crap!

It doesn't take a rocket scientist to figure out why GE did this deal. It's pretty simple, actually...

This joint venture will allow the company to get a piece of China's $13 billion wind energy market!

This should not be a hard concept to grasp: You see an opportunity and you act. We do it every single day here at Energy and Capital — and you better believe I'll never apologize for making a buck.

Nor will I ever apologize for passing on this next opportunity to you...

Another way to profit from China

The folks over at GE aren't stupid.

China is the world's largest wind turbine sales territory, and it's expected to grow another 500 percent by 2020 — thanks to China's electricity demands, which are growing at a rate of 12 percent a year, and strong policy support by the Chinese government.

Who wouldn't want a piece of that action?

And by the way, GE isn't new to China... The company has been supplying China with gas, hydro, and wind turbines for years.

And it's not just GE profiting from China. The fact is you'd be hard-pressed to find a single major player in the energy game that isn't doing business with the Chinese.

Spanish wind turbine company Gamesa (PK: GCTAF) recently announced plans to triple its China investments. The company actually forecasts China will account for more than 30 percent of its total sales in 2011, compared to 15 percent last year.

A couple of weeks ago, the company opened its sixth manufacturing center in Inner Mongolia. That factory — which goes online next year — will be used to manufacture nacelles for the company's G8X-2MW turbine.

Tapping the Mongolian money train

It is clear that Mongolia is quickly becoming a hot spot for wind development.

After all, about 20 percent of the electricity in Inner Mongolia today is being generated from wind. Estimates show that Inner Mongolia holds about half of China's overall wind power potential.

That's huge!

Of course, if you're a regular reader of Energy and Capital, you already know about the massive potential in Mongolian energy resources...

Thanks mostly to my colleague Chris DeHaemer, who has spent an extraordinary amount of time on the ground in Mongolia sniffing out new opportunities for his readers.

Just last week, Chris met with Mongolian Prime Minister Sukhbaatar Batbold in New York City. The Prime Minister reminded him that Mongolia is now projected to be the best performing economy in terms of GDP growth over the next five years.

But this isn't news to Chris...

After all, he is one of only a few American analysts who's been able to gain access inside Mongolia's elite inner circle.

Why else do you think Chris was able to tip his readers off to a Mongolian oil play that's already delivered gains of more than 900%?

Of course, the question today is: Where's the next big energy play in Mongolia?

Well, only Chris can answer that one. Click here to see what he's looking at now.

To a new way of life, and a new generation of wealth...

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Jeff

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