The Chinese environmental market increased from $72 billion in 2005 to $162 billion in 2011 (125% growth). The average expenditure growth was $32.5 billion annually, or 1.5% of China's GDP for the respective years. Contaminated soil remediation projects were listed among five vital projects of China's 12th five-year plan for the period of 2011-2016, with the Chinese government announcing in early 2011 its plan to invest approximately $3 billion in soil investigation, remediation and improving regulations during that time. In addition to the amounts invested directly by the Chinese government, and according to the China Securities Journal, the estimated market value of soil remediation projects undertaken in China is expected to reach US$6.36 billion annually by 2015. As a result of growing demands, it is anticipated that the treatment of contaminated soil and underground water will be one of the growth drivers of China's 13th five-year plan (2016-2020).
It is estimated that there are over 600,000 contaminated sites in China and of these, 300 contaminated sites have been prioritized for remediation within the next 5 years. The average size of a contaminated site in China ranges between 100,000 - 150,000 tonnes of soil. This suggests a contaminated soil remediation market of between 30 - 45 million tonnes over the next 5 years. The Company currently has 30,000 tonnes of annual treatment capacity resident in China and expects to increase its annual treatment capacity to 150,000 tonnes by 2014 and to 450,000 tonnes by 2015.
Between 1991 and 2012, China's oil production expanded from about 2.2 million barrels a day to 4.3 million barrels a day. In 2011, China ranked as the fifth largest oil producer in the world and it is forecast that China's oil production will grow to 4.5 million barrels per day by the end of 2013. Oily sludge is generated by oil storage operations and oil tanker cleaning activities among other activities, and is one of the main sources of pollution throughout China with complex physical and chemical properties. As a result of increased oil production, the demand for oily sludge treatment services have increased and are anticipated to increase further in the coming years. Upon the completion of the Zhoushan treatment facility, the Company's annual treatment capacity for oily sludge in Zhoushan will be 50,000 tonnes.
2013 - 2014 Capital Program
The Company will require additional capital over the next two years to increase its fleet of TPS units and expand its treatment capacity for contaminated soil and oily sludge as described above, and to meet its commitments under the joint ventures and agreements described above. A summary of the capital expenditures presently planned for the next two years are as follows:
2013 Capital Expenditures
-- US$6.7 million for the construction of TPS units to increase the Company's contaminated soil treatment capacity to 150,000 tonnes per year;-- US$1.0 million for the construction of a small TPS unit to support the hazardous industrial sludge treatment operations at the Changqing project; and-- US$1.3 million for completion of the oily sludge treatment facility in Zhoushan.
2014 Capital Expenditures
-- US$16.0 million for the construction of TPS units to increase the Company's contaminated soil treatment capacity to 450,000 tonnes per year.
The Company plans to undertake multiple rounds of financing over the next 12 months to fund the cost of its China-based capital program. In particular, William Blair & Company, an investment bank with offices both in the U.S. and China, has been engaged to assist with the completion of one or more equity issues for aggregate proceeds of up to US$25 million. In addition, WMT is presently conducting a private placement of convertible debentures in Canada for proceeds up to CDN$1.5 million that will be used for general corporate purposes. Please refer to the Company's news release of February 21, 2013 for details of this financing.