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Business Companies Reach for Blue Gold

The Asahi Shimbun
19 November, 2001

By

Ryosuke Ono and Harunori Maruyama

Translated By: Ryosuke Ono

     The Blue Lake, full of crystal pristine water, is surrounded by a coniferous forest.

     Five years ago, a Canadian businessman from Vancouver came to the City of Sitka, a small town with 9,000 people in southeastern part of the State of Alaska. "Let me export the water in the Blue Lake," he said. The State government gave him the right to take nearly 4.5 billion gallons of lake water per day and issued a license for exportation.

     The businessman, Mr. Fred Paley, 61, CEO of the Global H2O Resources, is now getting closer to a final contract to export water to China. After spending many years in oil industry, Mr. Paley, as a natural resource expert, strongly believes that water will be highly precious commodity in the near future.

     Negotiation after negotiation, Mr. Paley entered into a Letter of Intent with a Chinese beverage company in Fujian Province. If they finalize an official contract, the first tanker loading 10 million liters of water will depart Sitka in the coming spring at the earliest. According to Mr. Paley’s plan, the water will be bottled and distributed in China with a Blue Alaska label on a half liter PET bottle.

     Like Global H2O Resources, many venture companies, in various parts of the world, have started taking action to change water into money by exporting in bulk.

     In Norway, an American Company obtained right to take a vast quantity of groundwater in a fiord area for 99 years. Its plan is to transport water in tanker to the US and bottle. Company’s European representative predicts that within a decade, a great number of tankers carrying water come and go all over the world.

     Value of pristine freshwater is soaring as a water scarcity spreads and contamination of water sources gets more serious. For business people in the world, Blue Gold is becoming more and more attractive.

Ambition for pioneering water trade

Venture Companies go first

     The WaterBank is an online water-brokerage company in New Mexico. The WaterBank brokers not only water rights inside the US but it also deals with bulk water internationally. Since its establishment in 1999, seventeen listings of bulk water for sale have been received.

British Columbia, Canada – 189,000 cubic meters per day.
New Zealand – 9.6 million cubic meters per year.
Greenland – unlimited.

     "All listings are from those who obtained rights of bulk water in each country. They are looking for markets and customers," says Dr. William Turner, CEO of the WaterBank.

     Though the companies now trying to make water business are very enthusiastic and ambitious, most of them lack in capital. Finalizing contract is very difficult for them unless specific condition is met. Dr. Turner thinks that the chance, at this moment, is very narrow. So far, no deal has been done.

     "But new businesses have always been pioneered by those small venture companies," says Dr. Turner. "Big companies come only after they knew that water trade makes money,"

     The Global H2O Resources is also a small company. The biggest reason for choosing the Blue Lake in Sitka as a source was that the city had penstock pipe which was formerly used by pulp mills running from the Lake to ocean.

     Transporting water by tanker is expensive. Chartering a 50,000 dead weight ton tanker may cost tens of thousands of dollars per day. Investment for loading and unloading facilities are also required. Most of experts point that bulk water export by tanker is far from economical.

     The Global’s way is to minimize expenses for infrastructure. That’s why Mr. Paley chose a partner company in China which is located in port area of Xiamen and has a bottling plant there. Price of the Blue Alaska may will still be slightly more expensive that local brands. But Mr. Paley thinks that by selling the water as the purest glacier water, it will make a market.

     Sitka responded quickly to the Global’s offer. The City hopes that the Global will successfully finalize the contract with Chinese counterpart. It is estimated that the city will get huge amount of revenue once the Global starts taking water from the Lake. Recently, the City was obtained an export license from the State of Alaska for 12.5 million gallons a day. The license is for the second Global to come and buy water.

     Canada has about 25% of world’s fresh water. The water superpower. But the Canadian government is shifting its policy on water toward total banning bulk water export. Controversies on whether or not to export bulk water have been arisen every time drought takes place in thirsty neighbor, the US. Water export is a very sensitive issue in Canada.

     When the North American Free Trade Agreement, or NAFTA came into effect in 1994, Canadian environmental NGOs and anti-globalization groups accelerated movement. They warned that Canadian water would be taken away once the government allowed foreign company to export. The warning has caught hearts of Canadian people.

     Opponents argue that water is a commodity and but life of all living things, if it is treated as a commodity, the market will decide everything and water will flow only to rich. They also argue that current quantity of water constitutes environment. There is no surplus water.

     As if pushed by public opinion, Canadian government in 1999 announced Strategy to Prohibit Bulk Water Removal. But in Canada where ownership of water in rivers and lakes in principle belongs to province except boundary water like the Great Lakes, the federal government’s strategy only applies to 15 % of water in the country.

    Proponents of bulk water export have been demanding the government to change the policy saying that when water is turned to oil in the 21st century, a million lakes in Canada will become a huge gold vein. It does not make sense to seal them.

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