Although not stated directly in the AGM announcement, I was not overly surprised to read about the appointment of those two Chinese directors, as I got a sense that this move was being signalled at the AGM.
During the meeting, Zhang was seated at the front with the management, and there were about ten staff from China present, a number of whom were introduced.
Mickem recently made mention of the video that appeared on the company website last week, and after watching it, I can confirm that this was the video that was shown at the AGM. If you watch the video you can see right away that it was put together by Phoslock's Chinese employees, it does have of something of a 'communist world' feel.
As mentioned in an earlier post, from my perspective the video unnecessarily ate up time at the AGM, but I have a suspicion that the intent of the video was to signal the increasing involvement of Chinese staff in the company.
It is worth noting that, though it is immediately apparent that the video was produced in China, what might be less obvious is that some of the language used in the video - the term 'ecological civilisation', mentioned at least a few times in the video, as well as the phrase 'clear water, green mountain is equal to mountains of gold and silver' towards the end- have been taken directly from speeches by China's leaders, past and present.
The term 'ecological civilisation' was coined by China's former president, Hu Jintao in 2007. The phrase 'Clear water, green mountain' was first mentioned in a 2005 speech by the current Chinese president, Xi Jinping, when he was a high-ranking official.
This would indicate that Phoslock's Chinese staff are well aware that they are doing the work of the Chinese government, and while you might optimistically describe the relationship between Phoslock and the Chinese government as a partnership, Phoslock would definitely be the junior partner in the relationship. I suspect that the appointment of the new Chinese director is reflective of this.
I decided to take a shot of the map that is shown in video depicting the areas of China in which the company has a presence, to get a clearer look.
Based on the large area of the map shaded green, it looks promising at first glance. It is, however, hard to know what those provinces marked with a star represent: do they have a major project going on here, or does it just mean that the company put some phoslock in a fish-pond in the province one time?.
Similarly, while the mention by Laurence Freedman of the c. $100 million Chinese project pipeline, sounds promising, during the meeting he also made the point that the 'pipeline' often referred to by the company was open at both ends, and so they might end up with nothing if it falls out the other end. Certainly, in the past the company has made references to a 'strong pipeline' but with nothing eventuating.
So, based on the information the company has put out, you could be inclined as much towards pessimism as optimism, depending on the aspects you choose to focus on.
However, one report I came across yesterday on an English-language Chinese news site might offer some support for a more optimistic take. I have pasted the relevant extract below.
Chinese authorities have announced great strides in the effort to boost the country's water conservation capacity.
The State Council said Thursday that the construction on key projects was advancing smoothly nationwide. Authorities confirmed that 132 projects have been commenced, with a total investment in construction of over one trillion yuan (0.15 trillion U.S. dollars). The government said these projects have played an important role in national strategies around economic growth and poverty alleviation.
A group of landmark projects have been commenced in succession and are now under construction, including the Yangtze River to Huaihe River Water Division Project and Central Yunnan Water Diversion Project, among others. In the meantime, 23 key water conservation projects have been completed one after another, effectively improving the water security capability of the basin area.
“We have made the decision and deployment to speed up 172 key water conservation projects. Generally speaking, we will make every effort to put all projects into construction by the end of the 13th Five-Year Plan period (2016-2020). We will ensure that most of the key water projects are completed and play a great role in improving flood and drought prevention and control by 2025,” said Wang Annan, chief planner of the Ministry of Water Resources.
While the article is about water conservation projects, based on other reports I have come across, most of the work the company is involved with in China could potentially fall under this umbrella: for example, one of the stated goals of these conservation projects, poverty alleviation, is partly being achieved through improving drinking water safety in poor regions, as noted in an update on a Chinese government website from October. And you would assume the large wetlands projects would clearly form part of these water conservation effort.
Going off the aforementioned report, last Thursday the Chinese authorities had confirmed that 132 of such projects had commenced, with another 23 having been already completed. Additionally, the government was speeding up the progress of 172 projects.
This point is worth bearing in mind when you consider that map in the video showing the Chinese provinces the company is involved in, as well as the mention of the $100 million pipeline of work in China, and also the recent appointment of the BEWG executive to the board. If you join the dots, it sounds as if the company is probably involved with a number of these 172 projects.
Taking this report into account, I am inclined a little more to the 'glass half full' view.
(20min delay)
