It has been a 'Waiting for Godot' year for Phoslock shareholders so far. We are now three-quarters through the year, and still awaiting news of a significant new contract.
Looking back over the announcements last year, I noticed in the November update (23/11/17) the company seemed to suggest there could be more work in the near future from a few regions, with bullet points (pg 10) referencing a number of potential projects in Brazil, a large pipeline of lake applications in Canada... and a strong pipeline of medium and large applications in Europe....
They did announce some additional orders in Brazil worth $500k earlier this year, plus a couple of small jobs in Britain, and of course there was lake Goldap, worth $1.3 million, at the end of last year, but so far apparently nothing new from Canada, since the lake Bromont update over a year ago. In the latest update they seemed to think that there was likely to be a new project or two in Canada before the end of the year, so hopefully those won't end up getting dragged out into the new year.
Admittedly, the significant China wetlands project upgrade in May was welcome. But putting that aside, it seems that the last new major contract announcement was at the end of 2017.
I am still optimistic, though: I tipped PET in a stock-picking competition last week, as I think the company could pick up a few significant projects in the last quarter of 2018.
Over the past month I have been keeping an eye out for news reports of relevance to this company
that might be of some interest here, and I think the two detailed below could provide some assurance that there could be some good news pending.
The first report I noticed, from a couple of weeks ago, was from Reuters, relating to the water pollution situation in China:
SHANGHAI, Sept 21 (Reuters) - China will provide a few cities with an additional funding of 600 million yuan ($87.73 million) each until 2020 to help them tackle chronic “black and stinking” pollution in rivers, the finance ministry said on Friday.
China uses the phrase “black and stinking” to describe water rendered unusable as a result of heavy pollution.
The 'few' cities mentioned above is actually about 20 in total, as noted subsequently in the article, with the money used to implement new engineering solutions and pollution control measures. It is a reasonable expectation that some of this extra money could translate into more work for the company in China.
The second report I came across relates more to the particular heading of this thread: the problematic blue-green algae in Europe last summer.
Early last week, there was a feature article from the respected German news organisation Der Tagesspiegel, with the German heading of the piece translating to: How blue-green algae ruined a summer
Contrary to what you might expect, the story was not about the numerous 'blaualgen' problems in Germany over the summer, but about another German-speaking nation that I had completely overlooked: Luxembourg.
The article notes that over the summer the blue-green algae situation was even more distressing in Luxembourg than in Germany, for while 12 of the 39 swimming spots in Berlin were unfit for swimming, residents there at least had other options. By contrast, in Luxembourg
...the whole country has only three swimming waters: the reservoir, an excavator pond at the southeastern border triangle to France and Germany and the lake of Weißwampach at the northern tip of the country. And this is also algae contaminated. For Luxembourg has exactly one natural swimming spot left. One for 600,000 inhabitants and an area two and a half times the size of Berlin...
The Obersauer Reservoir, one of the the water bodies that was impacted, is a popular tourist destination, that normally attracts visitors from France, Germany and Belgium during the warmer months. This year, however, blue-green algae turned out to be the grinch that stole summer.
The blue-green algae problem isn't just an issue for the local tourism industry, as apparently more than 50% of the water supply of Luxembourg is sourced from one of the contaminated reservoirs.
Interestingly, the excessively warm summer temperatures don't seem to have been the primary culprit in this instance, as one local microbiologist who was quoted in another article on the same topic noted:
"The good weather is not the main cause of the spread of blue-green algae so early in the season," says expert Christian Penny of the Luxembourg Institute of Technology (List). «We need to protect our water resources to avoid negative impacts on our economy and our tourism. We must limit the supply of nitrogen and phosphorus by improving wastewater treatment and dialogue with farmers in the watersheds. "
We know that Phoslock already has the technology to reduce both phosphorous and nitrogen farm runoff (as noted in this article, for example) and there is no reason to think that this company wouldn't be able to prevent these blue-green algae problems recurring in Luxembourg next summer.
Although Luxembourg may be small in size and population, it certainly punches above its weight when it comes to prosperity: According to IMF estimates, Luxembourg has the second highest GDP per capita in the world. So it doesn't sound like cost is likely to be a barrier for them when the local authorities start to investigate counter-measures to ensure the problem doesn't recur in the new year.
(20min delay)
