China starts building world’s largest hydropower dam in Tibet

[SHANGHAI] Chinese Premier Li Qiang announced that construction had begun on what will be the world’s largest hydropower dam, located on the eastern rim of the Tibetan Plateau and estimated to cost around US$170 billion, the official Xinhua news agency reported.

The dam is China’s most ambitious hydropower project since the Three Gorges Dam on the Yangtze, with operations expected to commence sometime in the 2030s.

Made up of five cascade hydropower stations, the dam will be located in the lower reaches of the Yarlung Zangbo. A section of the river falls a dramatic 2,000 m within a short span of 50 km, offering huge hydropower potential.

India and Bangladesh have already raised concerns about the project’s possible impact on the millions of people who live downstream. NGOs, including the International Campaign for Tibet, have said the dam will irreversibly harm the Tibetan Plateau and that millions of people downstream will face severe disruptions to their livelihoods.

NGOs have also warned of the risk to the environment, one of the richest and most diverse on the plateau.

Beijing has said the dam, with the capacity to produce 300 billion kilowatt-hours of electricity annually, will help meet power demand in Tibet and the rest of China without having a major effect on downstream water supplies or the environment.

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China’s CSI Construction & Engineering Index jumped as much as 4 per cent to a seven-month high. Power Construction Corporation of China and Arcplus Group jumped by their 10 per cent daily limit.

Wang Zhuo, partner at Shanghai Zhuozhu Investment Management, said the project offered investors both long-term investment opportunities and a theme for short-term speculation. “From an investment perspective, mature hydropower projects offer bond-like dividends.”

But he cautioned that speculative buying into related stocks triggered by the announcement would inflate valuations.

In a note to clients, Huatai Securities said the project will drive demand for construction and building materials such as cement and civil explosives, benefiting related companies.

Shares of Beijing-listed Hunan Wuxin Tunnel Intelligent Equipment, which sells tunnel construction equipment, surged 30 per cent. So did shares of Geokang Technologies, which produces intelligent monitoring terminals.

Cement maker Xizang Tianlu and Tibet GaoZheng Explosive, which makes civil explosive materials, both jumped their maximum 10 per cent.

The Chinese premier described the dam as a “project of the century” and said special emphasis “must be placed on ecological conservation to prevent environmental damage,” Xinhua said in its Jul 19 report.

China has not given an estimate on the number of jobs the project is likely to create. The Three Gorges Dam, which took almost two decades to complete, generated nearly a million jobs, state media reported, though at least a similar number of people were displaced by the massive project.

Authorities have not indicated how many people would be displaced by the Yarlung Zangbo project, or how it would affect the local ecosystem.

The Yarlung Zangbo becomes the Brahmaputra River as it leaves Tibet, flowing south into India’s states of Arunachal Pradesh and Assam, then finally into Bangladesh. China has already started hydropower generation on the upper reaches of the Yarlung Zangbo, which flows from the west to the east of Tibet.