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Follow China’s Richest Man to Canada’s Tar Sands

Follow China’s Richest Man to Canada’s Tar Sands thumbnail

A lot. Chinese companies are stampeding into Alberta and spending billions to get their paws on oil sands deposits. In just the last 18 months, Chinese companies have spent $15 BILLION.

Sinopec of China spent $4.65 billion to buy ConocoPhillips’ 9% stake in Syncrude Canada Ltd., the world’s biggest oil sands producer. A few months ago, CNOOC spent $2.1 billion to buy the OPTI Canada, whose main asset was a 35% interest in a Long Lake oil sands project in Alberta.

$15 BILLION is a ton of money. But research firm IHS CERA believes that foreign companies, including China, will spend an additional $100 billion on Canadian oil sands projects over the next decade.

China isn’t the only country from across the Pacific snapping up oil sands deposits. Australian and even a Thai company have invested money into Canadian oil sands projects and portfolios.

One of the big reasons oil sands are so attractive to Asians: The oil sands in Canada are not state-controlled. And they’re not government-owned so there are very few regulatory hurdles to prevent outside companies from taking control.

Now meet …

The Warren Buffett of China

He has been called chiu yan (Superman) and the Warren Buffett of China. He earned that title as one of the most successful Chinese businessman in the history of China and according to Forbes magazine, the ninth richest man in the world and the richest man in Asia.

He controls a vast telecommunications empire …a massive construction company …even the Panama Canal …yet very few Americans have heard of him.

His fortune is centered on conglomerates, Cheung Kong and Hutchison Whampoa, and through them is the world’s largest operator of container terminals, a major supplier of electricity to Hong Kong, a giant cell phone provider, a thriving retailing business, and a powerful real estate development company that has built one out of every 12 residences in Hong Kong.

And he also has a $10 billion stake in Husky Energy, which owns vast amounts of proven Canadian oil sands deposits.

The man I’m talking about is Li Ka-shing, whose fortune totals more than $26 billion and is a true rags-to-riches story.

Li Ka-shing was born in the Chinese city of Chui Chow and was the humble son of a teacher. His father died when Li was only 15 years old, and he took on the responsibility of supporting his family.

Li dropped out of school and went to work for a Hong Kong plastics company where he worked 16 hours a day. His hard work paid off because he started his own plastics company, Cheung Kong Industries, in 1950.

He then scrapped together enough financing in 1979 to buy a controlling interest in conglomerate Hutchison Whampoa. Next, he leveraged that to build a business empire that includes: Banking, construction, real estate, plastics, cellular phones, satellite television, cement production, pharmacies, supermarkets, hotels, transportation, airports, electric power, steel production, ports, shipping, and even the Panama Canal!

One of Li’s most savvy purchases was fairly unknown at the time and considered a horrible investment because of the low price of oil in 1991. Oh, how times have changed! Li’s purchase of Calgary-based Husky Energy has turned out to be a brilliant move and one of the jewels in his portfolio.

A lot of investors have made a heap of money by buying the same stocks that Warren Buffett buys for Berkshire Hathaway. That same monkey-see-monkey-do advice can work just as well — if not better — by following the Asian Warren Buffett, Li Ka-shing.

Husky Energy is a fully integrated energy company with three business segments: Upstream, midstream and refined products.

Upstream is the exploration and development division that goes out and finds the oil and natural gas. The majority of Husky’s proven reserves are in western Canada, offshore Eastern Canada, offshore Indonesia, and major offshore wells in the South China Sea. There’s that China connection again.

Midstream is where the heavy crude oil and natural gas products that come out of the ground are transformed into synthetic crude oil and transported to refineries for final treatment.

Refined products include refining of crude oil and marketing of refined petroleum products, including gasoline, diesel, and even ethanol blended fuels and asphalt.

Husky Energy is listed on the Toronto Stock Exchange (HSE.TO) but is also available on the U.S. over-the-counter (HUSKF.PK) market.

Now, please don’t consider that a rush-out-and-invest-tomorrow recommendation list. As always, you need to do your own homework and figure out if any of the companies I discussed today are appropriate for your personal situation.

Uncommon Wisdom Daily

One Comment on "Follow China’s Richest Man to Canada’s Tar Sands"

  1. DC on Tue, 27th Sep 2011 12:47 am 

    This article describes Canada’s problem perfectly. Energy resources are not nationalized, and as a result, we are the energy colony to the world. Canadians essentially do not own or control our resources. We are literally being strip-mined to feed the corrupt amerikan, and no chinese empires. The tar-sands is a perfect example of how loss of energy can make a ruin of a nation. The amerikans get there dirty-oil, and an an area bigger than many US states gets turned into a poisoned, cratred wastedland. No US taxpayers have to look at the tar-sands or its deadly pollution. They get to keep there 6000 pound SUV.s and Canada gets the tailing ponds visible from space.

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