Construction Begins on Landmark Hydropower Dam in China’s Tibet

HONG KONG/SHANGHAI: Chinese Premier Li Qiang has announced the commencement of construction on what is set to become the world’s largest hydropower dam, according to the official Xinhua news agency. The massive project, situated on the eastern edge of the Tibetan Plateau, is estimated to cost approximately $170 billion. This development marks China’s most ambitious hydropower initiative since the construction of the Three Gorges Dam on the Yangtze River. The new facility is expected to begin operations 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 metres (6,561 feet) within a short span of 50km (31 miles), offering huge hydropower potential.

India and Bangladesh have already raised concerns about its possible impact on the millions of people who live downstream, while NGOs have 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.

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

Wang Zhuo, partner of 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," Wang said.

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

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

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

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

Downstream impact

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 report on Saturday.

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 theYarlung Zangbo project or how it would affect the local ecosystem.

NGOs including the International Campaign for Tibet say the dam will irreversibly harm the Tibetan Plateau and that millions of people downstream will face severe disruptions to their livelihoods.

The Yarlung Zangbo becomes the Brahmaputra River as it leaves Tibet and flows south into India's states of Arunachal Pradesh and Assam and 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