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Covanta equity partnership in China +3
Covanta has announced that it will be a project equity partner on a new EfW facility about 200 miles south of Beijing. Construction is expected to begin in early 2020 with completion in less than two years, and Covanta will provide construction oversight services.
The immediate effect on the balance sheet is unclear, but Covanta has operated successfully in China before. I will have a look at the 8-K when it becomes available and follow up if that changes the situation. Management has been hinting more and more at the potential of the Chinese market of late, and spells out the continued potential here, saying that China's:
Five-Year Plan calls for
approximately 600,000 tonnes per day of EfW
capacity by the end of 2020 – a doubling of the
installed capacity as of the end of 2015.
China's EfW capacity targets are supported by a
preferential tariff on the purchase of
electricity from EfW facilities and other
beneficial regulations that prioritize
development of EfW infrastructure. In light of
these policies, over 200 new EfW facilities are
expected to be built between 2020 and 2030.
Even so, I must admit that I did not expect a deal
this quickly. Obviously more deals could follow, but
I also have to wonder if this will open up any
external metal opportunities. CVA is back above $15
on the news, and still rising.