By Jennifer Yousfi
Managing Editor

He made his fortune as an oilman, but yesterday (Tuesday) legendary investor T. Boone Pickens unveiled a plan to cut U.S. dependence on foreign oil through the power of alternatives such as wind and natural gas.

“We’re paying $700 billion a year for foreign oil. It’s breaking us as a nation, and I want to elevate that question to the presidential debate, to make it the No. 1 issue of the campaign this year,” Pickens said, USA Today reported.

Pickens launched a Website titled “Pickens Plan,” which went live yesterday, to outline what he calls a “bridge to the future” to help cut foreign oil imports by focusing on wind-generated power and natural-gas burning autos. 

And Pickens isn’t being shy about taking his plan to the politicians.

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“Neither presidential candidate is talking about solving the oil problem. So we’re going to make ‘em talk about it,” Pickens said.

“Nixon said in 1970 that we were importing 20% of our oil and that by 1980 it would be 0%. That didn’t happen,” Pickens added. “It went to 42% in 1991 with the Gulf War. It’s just under 70% now. Where do you think we’re going to be in 10 years when our economy is busted and we’re importing 80% of our oil?”

Pickens’ plan aims to cut down on oil imports in a two-prong strategy. First, he recommends the construction of wind power plants to free up natural gas that is currently being used to generate 22% of the United States power supply. That natural gas can then be used to power cleaner-burning automobiles.

Pickens’ Wind Power Project

Wind power could supply up to 20% of the United States’ energy requirements, according to Pickens. Calling the Great Plains region of the United States the “Saudi Arabia of wind,” the former oil tycoon has already started an eventual $10 billion alternative energy project that has the potential to become the world’s largest wind farm in the Texas panhandle.

Picken’s Mesa Power LLP plans to purchase 667 wind turbines from General Electric Co. (GE). Each turbine can produce 1.5 megawatts of electricity. The first phase of the project, currently under construction, will produce 1,000 megawatts, enough energy to power 300,000 homes. GE will begin delivering the turbines in 2010, and current plans call for the project to start producing power in 2011.

Ultimately, Mesa Power plans to have enough turbines to produce 4,000 megawatts of energy. Overall, the Pampa project is expected to cost $10 billion and be completed in 2014.

As an investor, if you’re looking to cash in on Pickens’ wind-power mandate, the manufacturers of wind turbines might be a good choice. Two of the largest include the aforementioned GE and Siemens AG (ADR: SI). GE has already received a $2 billion order from Pickens and expects another $6 billion in orders from the planned 4,000 MW Pampa project alone.  Siemens will supply the turbines for a 500 MW wind farm planned in the United Kingdom.

News and Related Story Links:

• Website:
  Pickens Plan

• USA Today:
  Texas oilman T. Boone Pickens wants to supplant oil with wind

• MarketWatch:
  Energy vision or Boone doggle?

• Reuters:
  Natgas, wind could slice U.S. oil imports: Pickens

• Money Morning:
  Former Oilman T. Boone Pickens Makes a $2 Billion Bet on Alternative Wind Energy

T. Boone Pickens made his fortune in oil. But now the Dallas oilman and famed former corporate raider is betting $2 billion that he can have the same success with a new source of energy – wind.

Pickens’ Mesa Power LLP yesterday (Thursday) unveiled the first phase of an eventual $10 billion alternative energy project that has the potential to become the world’s largest wind farm.

"You find an oilfield, it peaks and starts declining, and you’ve got to find another one to replace it," Pickens, who once operated one of the largest independent oil-and-gas production companies in the country, said of the deal. "It can drive you crazy. With wind, there’s no decline curve."

Mesa Power will purchase 667 wind turbines from General Electric Co. (GE). Each turbine can produce 1.5 megawatts of electricity. The first phase of the project will produce 1,000 megawatts, enough energy to power 300,000 homes. GE will begin delivering the turbines in 2010, and current plans call for the project to start producing power in 2011.

"T. Boone Pickens’ commitment underscores the ability of wind technology to help meet the country’s need for diverse sources of energy," said Jeffrey R. Immelt, GE’s chairman and CEO. "As America’s demand for energy escalates, it is clear that wind can and will play a bigger part in meeting that need. We’re excited to partner with an energy visionary like T. Boone Pickens to bring our wind technology to the marketplace."

Ultimately, Mesa Power plans to have enough turbines to produce 4,000 megawatts of energy, the overall project is expected to cost $10 billion and be completed in 2014.

Mesa Power has leased sparsely populated land in the Texas panhandle, where the wind often blows during daylight hours when energy needs are highest. Texas’ Competitive Renewable Energy Zones (CREZ) transmission lines will deliver what Pickens hopes will be "cost effective and reliable electricity generated by renewable energy power projects."

"We have had a great response to this project," Pickens said. "We are making Pampa the wind capital of the world. It’s clear that landowners and local officials understand the economic benefits that this renewable energy can bring not only to landowners who are involved with the project, but also in revitalizing an area that has struggled in recent years."

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"Alternative" Energy No Longer Just an Alternative

At a time when oil is costing upwards of $125 a barrel, alternative energy sources are no longer just for the environmentally conscious, but for the cost conscious, as well.

"The development of alternative energy projects, especially renewable resources such as wind power, is critical for the future of the country in the face of declining world oil resources," Pickens said.

For years, emerging economies such as China have chosen "cheap" over "clean" when it comes to energy sources. But with the cost of traditional fuel sources such as oil and coal skyrocketing, environmentally friendly choices are becoming more appealing.

When it comes to China investments, "the smart money is in the clean money," says Money Morning Investment Director Keith Fitz-Gerald.

And when it comes to alternative energy, wind power isn’t the only option. The Solar Energy Industries Association (SEIA) says that solar power will provide 50% of all new electricity in the United States within eight years, creating tens of thousands of new high-tech jobs, while helping to conserve natural gas and saving American taxpayers billions in energy costs.

And while that estimate might be a bit ambitious, it’s certainly true that solar power use is on the rise, both domestically and abroad.

One of the solar power stars is First Solar Inc. (FSLR), which designs and manufactures solar modules using a proprietary thin-film semiconductor technology. With that know-how, the company’s average cost for making a solar module is among the lowest in the world.

Another up-and-comer is LDK Solar Company Ltd. (LDK), which expects to complete a brand-new silicon plant with a 1,000-ton production capacity this summer. And another plant with a production capacity of 15,000 tons per year is set to come online sometime next year.

If you prefer the built-in diversification that mutual-fund-type investments offer, consider an exchange-traded fund (ETFs) that focuses on such "clean" technologies as solar and wind power. One of the top ETF names is PowerShares WilderHill Clean Energy (PBW).

If you’re the type of investor who prefers cool breezes to sunny skies, you could invest in the makers of wind turbines.

Two of the largest include GE and Siemens AG (ADR: SI). GE just received the $2 billion order from Pickens and expects another $6 billion in orders from the planned 4,000 MW Pampa project alone. And Siemens will supply the turbines for a 500 MW wind farm planned in the United Kingdom.

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• Forbes:
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• Reuters:
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• MarketWatch:
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• PR Newswire:
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Most experts view the pollution problem in China as one of the world’s biggest problems. But General Motors Corp. (GM) Chief Executive Officer Rick Wagoner views it as one of the world’s biggest business opportunities.

With incomes soaring and a new wave of middle-class consumers emerging across China, car and truck sales are soaring. But with clouds of pollution roiling the atmosphere, the market could very quickly migrate to such new technologies as alternative fuels and hybrid-powered automobiles.

GM is taking a decisive step to capitalize on that shift.

The Number One U.S. carmaker on Monday announced plans for a $250-million research and development center in Shanghai, The Associated Press reported.  The center will develop eco-friendly technology, including alternative fuels, hybrid cars, and more-efficient power trains, including those utilizing new technologies.

The R&D center will also serve as headquarters for GM’s China and Asian-Pacific operations. The main goal of the venture will be to help alleviate China’s surging pollution problems, while also capitalizing on the fastest-growing auto market in the world.

China has already become the world’s second-largest auto market after the United States. In the first nine months of this year, there were 4.58 million vehicles sold there, a 23.84% increase from a year ago. GM, working in conjunction with Shanghai Automotive Industry Corp. and Liuzhou Wuling Motors Ltd., expects to sell more than 1 million vehicles in China for the first time this year. That would be a 20% jump from the 830,000 sold in 2006. 

But there’s a problem: A recent report from the State Environmental Protection Administration said vehicle emissions accounted for 79% of the contamination in China’s most polluted cities.

China is home to 16 of the 20 most-polluted cities in the world. So the fact that it recently overtook the United States as the Number One emitter of greenhouse gases on the planet – a title the U.S. held for more than 100 years – is hardly a surprise.  

With the new R&D facility, Wagoner, the GM CEO, is banking on the hope that the Chinese government, and China’s consumers, will increasingly demand vehicles that are more fuel efficient, and less harmful to the environment.

"We believe China has the potential to become a leader in the adoption of alternative propulsion systems," he told reporters during a visit to Beijing on Monday.

According to Wagoner, what happens in China will have a major impact on the global auto industry’s adoption of environmentally friendly technologies. If China accepts hybrids and other alternative technologies, 50% of auto sales could be environmentally friendly vehicles in five to six years, versus 10% today.

The General Motors Center for Advanced Science and Research would have the explicit mandate of helping China overcome its reliance on fossil fuels. According to the AP, Wagoner said GM picked China for the research center because of the country’s fast-growing vehicle market and the government’s push to develop alternative energy sources.

"We see a lot of [government] interest in working with auto manufacturers to bring those to market as quickly as possible," he said.

A solid foothold in the Chinese market and the blessing of the government in Beijing might be just what General Motors needs to reclaim its position as the world’s Number One automaker, a post that Japan’s Toyota Motors Corp. (TM) has snatched away. 

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Many investors are convinced that it takes sophisticated investment strategies to rack up big returns.

That’s just flat out wrong.

In fact, the simplest strategies are often the best, and can produce major returns – especially if you align yourself with powerful global trends, such as energy.

Among the best examples of this overall approach that I’ve seen lately are the Canadian Royalty Trusts, or "CanRoys" for short.

These particular investments kick off a nice monthly income, and can offer some alluring tax-sheltering benefits. And those are just gravy. The main course is the huge upside returns that each of these trusts can generate over the next few years.

In Canada We Trust

In case you’re not familiar with the CanRoys, here’s how they work. In one respect, the CanRoys are essentially gas-and-oil companies structured as open-ended trusts. Because they are set up as trusts instead of corporations, there is no taxation at the corporate level, which means that they can – and often do – pay out gobs of cash to their unit holders. Yields of 10% to 20% are not uncommon.

Many so-called investment "experts" seem to think that the CanRoys are all but done, given the Canadian government’s recent decision to tax trusts at the corporate level beginning in 2011. But I disagree.

In fact, I believe the CanRoys will continue to outperform other energy-related investments for the next 12 months or more for two very important reasons:

1. First, because of a concept known as "currency translation," the more the U.S. dollar declines versus its Canadian counterpart, the more valuable the CanRoys-generated income becomes. In other words, the higher the Canadian dollar rises, the more greenbacks each one can buy when the Canadian currency is translated back into U.S. dollars. Over time, this can really add up – especially when the dollar has plunged to historic lows against the Canadian Loonie, and is likely to fall further still.
2. Second, because the newly emergent (and increasingly wealthy) China and Middle East economies are awash with cash, they going on a global shopping spree. Not only are the CanRoys alluring investment opportunities for some of that capital, they may also be takeover targets as the Abu Dhabi National Energy Co.’s proposed $5 billion buyout of the PrimeWest Energy Trust (PWI) recently demonstrated.

Now for the inevitable caveat: Not all trusts are the same.

We want to stick with those trusts that have deep reserves and proven management. As we near 2011, and the tax laws begin to change, many trusts will either cease operations altogether, or will start funneling previously distributable earnings into new property acquisitions – which will lower their effective payout yields.

Moreover, the trusts that lack both experienced management and the needed major reserves will find themselves crippled, and will see their valuations plummet like a stone.

However, the trusts that I favor – those that are well positioned and well run – should receive a nice tailwind as the industry consolidates.

Among the many trusts that I follow are two of my longtime favorites – the "Dynamic Duo" of Canadian Energy Trusts:

• Enerplus Resources Fund (ERF), which recently yielded 11.05%.
• And Canetic Resources Trust (CNE), which recently yielded 14.72%.

Enerplus is one of the oldest and best run trusts available to investors today. It not only possesses very experienced management, it also has deep reserves and a solid grasp on what it will take to grow over the next few years.

Similarly, Canetic is a trust with experienced management and a reserve pool that’s much deeper than most trusts. Plus, they’re on the hunt, having recently acquired Titan Exploration, which helps consolidate their hold on the strategic and energy-rich southwest Saskatchewan region.

There are loads of trusts to choose from, but now that oil is trading above $90 a barrel and the dollar is so weak, I can’t think of a single good reason to exclude either of these two great trusts from your investment portfolio.

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Readers may well have missed the news that Ukraine is currently putting together a new coalition government led by reformist Julia Tymoshenko.

“So what?” you may ask. “I can’t know everything. And besides, how do you ever expect me to make a buck out of Ukrainian politics, a murky affair at best?”

Well, let me tell you a secret to emerging markets investing: The really big returns are made by spotting new markets as they begin to emerge, and then surfing the long wave of their emergence. The story of the independent countries that split from the Soviet Union is mostly a sad one, but there are a few gems beginning to emerge. There isn’t much to plunge into yet, particularly as a U.S. investor, but they’re well worth keeping an eye on.

Beginning first with all those confusing ones called “-stan” – I have to look up whether there are four or five of them. Uzbekistan, Tajikistan and Turkmenistan are backward dictatorships with few redeeming features, only modest amounts of resources and close ties to Vladimir Putin’s mob in Russia.  Kyrgyzstan is an emerging semi-democracy, with an almost functioning free market. Alas, it has only 5 million people, a puny Gross Domestic Product (GDP) of $10 billion, a modest growth rate, and no oil.

Kazakhstan’s the one with the oil. Unfortunately, it also has one-party government, high corruption and close ties to Putin. Nevertheless, with 15 million people, a much chunkier GDP of $53 billion and a growth rate of 10.6% in 2006 there’s money being made there. It has oil pipelines to the Black Sea and to China, so it’s not dependent on Russia to get its principal export to market. An international consortium led by Italy’s Eni SpA is currently drilling at the Kashagan oilfield, a huge project expected to have cost $130 billion by the time it comes on-stream in 2010. Since the Kazakh oil company Kazmunaigaz is state owned, Eni, itself (E), which has a price-earnings ratio of only 10 (well, NOBODY trusts the Italian government, which owns 39% of Eni), is worth looking at – what’s more, you get to share Eni’s new investment in Libya, another fun place with lots of oil!

The Baltic States – Estonia, Latvia and Lithuania – are well known; all three are now members of the European Union (EU), and have enjoyed rapid growth. They’re small, though, and there’s not much for U.S. investors to buy there. Estonia is the most exciting, with a growth rate of around 8%; Latvia, with a similar growth rate, also has a huge balance of payments deficit, which is rather worrying. Lithuania is growing somewhat less fast, and is the least glossy of the three.

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Armenia and Azerbaijan fought a war with each other only a decade ago, which doesn’t fully rule them out, but is still a factor to be considered. Armenia has a population of 3 million, a GDP of $6 billion, and a 13% growth rate; Azerbaijan has a population of 8 million, a GDP of $14 billion, and had an astounding growth rate of 34% in 2006 – that’s what opening a new oilfield will do for you. Unfortunately, neither country has any companies with American Depository Receipts (ADRs), nor does there seem any obvious way to play them – BP PLC (BP) is the most important oil company in Azerbaijan, but it’s a small part of its business.

Then there are the two non-Baltic, ex-Soviet republics that are showing signs of becoming real democracies: Georgia and the Ukraine (though Armenia and Kyrgyzstan are fairly close).

Georgia is small – 4.6 million people and a $5.3 billion GDP – but it has a splendid pro-free-enterprise government under Mikheil Saakashvili and a growth rate of 9.3% per annum that is dependent on real effort, not just oil prices. The other good news about Georgia is that it is the least corrupt country in the former Soviet Union (except for the Baltic states). Alas, that’s a bit like saying someone’s the least evil mobster in the Bambino crime syndicate, but at #79 on Transparency International’s Corruption Perceptions Index, Georgia is only just below India and China. The Bank of Georgia is probably the best way to play the country; regrettably that is listed in London (BGEO) but not in the US.

The Ukraine is much larger: It’s got 46 million people, an $82 billion GDP, and had a decent growth rate of 7% in 2006. For those who haven’t been following, Ukraine’s shaky democracy has recently been the scene of a huge tug of war between the pro-Russian east and the pro-Western, pro-democracy west. The Orange Revolution of December 2004 was supposed to mark the victory of pro-free market forces, but President Viktor Yushchenko proved feeble, and his first democratic government, with Julia Tymoshenko as prime minister, experienced its demise.

Since then, there has been an uneasy coalition between Yushchenko, as president, and the Putin-supported Viktor Yanukovich as prime minister. However, in last month’s election Tymoshenko – once again allied to the remnants of Yushchenko’s support – won a small-but-decisive majority and now seems poised for form a government.

Julia Tymoshenko made an oil-and-gas fortune in the 1990s, and is a very tough cookie. Imagine a cross between Madonna and Hillary Clinton and you have her style. (Amusingly for onlookers, there was a very old-time-Chicago series of delays in counting the election results, as first Donbass, controlled by Yanukovych, and then downtown Kyiv, controlled by Tymoshenko, had unexpected delays in announcing their results – in each case, a landslide for the local favorite with suspiciously high turnout!).

Putin hates her, which is a worry since Russia, through Gazprom, has the ability to turn off Ukraine’s heating every January. Fortunately, in doing so, they turn off half the EU’s heating as well, so there may be limits on how rough Putin wants to play.

However, Tymoshenko understands how a free economy works, and is determined to clean up the corruption in Ukrainian business, so prospects for Ukraine’s emergence currently look good. Don’t forget, the country has a 99.4% literacy rate and 15% rate of college graduations, yet a per capita GDP of only $7,800 – even at purchasing power parity – so there’s a hell of a lot of room for growth.

Like the other ex-Soviet states, Ukraine doesn’t have a lot of ADRs. It makes sense for a country with EU ambitions to list its shares in London first, but the hugely expensive requirements of the Sarbanes-Oxley Act must also be a factor. Even when ADRs are available, they don’t trade – the big electric power company Centrenergo (CTEUY.PK), for example, last traded 3 months ago. What’s more, there aren’t any mutual funds with more than a small share of their investments in Ukraine.

That’s bound to change, however, as the country opens up. We at Money Morning will keep an eye on the Ukraine, and will report back to you if and when their rapid growth inevitably brings investment opportunities. When that happens, the Ukraine will probably be well-worth buying.

Even in the apparent basket cases of the non-Russian former Soviet Union, there are growth opportunities and investments worth buying. The wise emerging-market investor must cast a wide net.

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Officials at solar-cell-maker LDK Solar Co. Ltd. (LDK) were apparently confused about the quality of the silicon in the firm’s inventory- just as an ex-finance official has alleged- according to an audio recording of an internal conference call obtained by The Wall Street Journal, the newspaper reported yesterday.

LDK, based in southern China’s Jiangxi province, makes the silicon solar wafers used to convert sunlight into electricity. But it depends on a mix of both new and recycled batch silicon, and that requires the company to be very specific about the source and the age of the silicon that’s in its inventory.

However, in e-mailed messages to regulators and to KPMG, Charley Situ, LDK’s former financial controller, has accused the solar-cell maker of reporting inflated figures for its silicon feedstock, The Journal reported. Specifically, Situ alleges there is a discrepancy between LDK’s reported inventory and the amount of "usable" silicon that’s actually available.

And The Journal says the recording of the Sept. 13 conference call that it obtained seems to support the contention of Situ, the ex-LDK official. In the recording, Situ and two other LDK officials- Yao Qiqiang, the vice president of accounting, and Liu Yizheng, an accounting manager- openly discussed the quality of the "feedstock" silicon with Jack Lai, LDK’s finance chief.

On the call, Situ estimates that two-thirds of the feedstock in question is older than 180 days, making it unsuitable for use producing the solar-panel wafers- something LDK should reflect by taking a write-down that will appear on its financial statements, affecting its financial position, the newspaper reported.

After finance chief Lai ask why that feedstock isn’t usable, account manager Liu explained that the inventory is leftover bits of the silicon that had already undergone testing by the production team. According to The Journal, Lai then said that "I think you should do some careful data analysis" to determine the quality of the inventory.

Yao said that "what the accounting department needs to do is a categorization of the inventory in terms of life and ways in which it was purchased…and hand it over to the technology team for a review. Let them decide whether it is usable or not," stated the newspaper report.
LDK says that Situ’s allegations are without merit, and described him as a disgruntled ex-employee who was fired. He says he resigned, the newspaper reported.

In its initial public offering on June 1, LDK raised nearly $500 million. By Sept. 26, the shares hit their all-time high of $73.95, leaving the company with a market value of $1.3 billion- nearly a three-fold increase. It paved the way for a handful of other China-based solar-power firms to go public, as well. [To read Money Morning's full report on all the China-based solar-energy firms that have gone public in the past year, please click here. The report is free of charge.]

LDK’s shares plunged $3.24 each, or 7.24%, to close at $41.51 yesterday (Thursday). Some U.S. shareholders are traveling to China to visit the company’s headquarters to assess LDK’s prospects, the newspaper reported.

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Shares of high-flying LDK Solar Co. Ltd. (LDK) plunged 26.4% to close at $37.50 yesterday (Monday) – extending losses from last week – based on continued concerns that the China-based maker of solar wafers has serious production problems.

The shares of the Jiangxi, China-based LDK are now trading at less than half their 52-week high of $76.75 a share. However, they remain about 39% above their June IPO price of $27 a share. LDK’s stock plunged 26% last week after news leaked out that a former financial controller had challenged LDK’s inventory controls.

The shares of other solar power developers – until now, an apparent emerging strength for China – fell in response yesterday. China Sunergy Co. Ltd. (CSUN) dropped 9.52% to close at $10.08; Yingli Green Energy Holding Co. Ltd. (YGE) declined 9.8% to $28.11; and Suntech Power Holdings Co. Ltd. (STP) fell 5.17% to finish trading at $38.85.

LDK has said its own internal investigation found no material discrepancies in its financial statements, but many analysts rejected that statement as insufficient because the investigation was conducted internally.

Making matters even worse for LDK was the fact that the widely read Barron’s reported this weekend that it interviewed (through an interpreter) someone familiar with the company’s production operations. And its findings weren’t encouraging.

"That person said that the company’s silicon ingots were indeed so impure that a recent production run had produced tons of them that were too contaminated for technicians to even analyze with instruments," Barron’s reported. "The company says it knows of no such problems."

Early last Thursday, LDK said it conducted the internal investigation after its former financial controller, Charley Situ, said the company has been inconsistent in reporting its inventory. Situ, who was fired in September, made the allegations a few days earlier, LDK said. The company has asked an independent firm to conduct its own audit.

CIBC World Markets analyst Adam Hinckley has downgraded the stock to "Sector Underperformer," or "Sell," from "Sector Performer." According to Hinckley, investors should sell LDK’s shares and wait for more details about the accusations that Situ made – and for more proof from LDK about the audit it said it conducted to prove it did no wrong.

"We view the [LDK] press release as unsatisfactory, as it does not disclose the specifics of the allegations and leaves questions unanswered," Hinckley wrote in an investment note to clients.

Clay Sumner, an analyst for Friedman Billings Ramsey, said the controversy could hurt LDK’s efforts to boost its capacity. And for investors who like the solar-power sector – it does have great promise – deep problems at LDK could open the door for rival MEMC Electronic Materials Inc. (WFR). That could turn MEMC into a real investment opportunity, if the LDK situation is as bad as it now seems.

LDK, which makes multicrystalline solar wafers used in solar panels, said last Wednesday it had signed a five-year contract to supply those types of wafers to Taiwan-based Solartech Energy Corp. Contract pricing is fixed for the first three years of the deal, during which LDK agreed to deliver about $224 million worth of the wafer products to Solartech.

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• Money Morning News Analysis:
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• Reuters:
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• Reuters:
  German Solar Firms Boost Capacity to Meet Demand.

Shares of high-flying LDK Solar Co. Ltd. (LDK) fell yesterday (Thursday), even after the Chinese solar wafer maker said an internal audit revealed no evidence of wrongdoing related to the way it reports inventory.

Early Thursday, LDK said it conducted an investigation after its former financial controller, Charley Situ, said the company has been inconsistent in reporting its inventory. Situ, who was fired in September, made the allegations a few days ago, LDK said. The company has asked an independent firm to conduct its own audit.

CIBC World Markets analyst Adam Hinckley has downgraded the stock to "Sector Underperformer," or "Sell," from "Sector Performer." According to Hinckley, investors should sell LDK’s shares and wait for more details about the accusations that Situ made — and more proof from LDK about the audit it conducted to prove it did no wrong.

"We view the [LDK] press release as unsatisfactory, as it does not disclose the specifics of the allegations and leaves questions unanswered," Hinckley wrote in an investment note to clients.

Clay Sumner, an analyst for Friedman Billings Ramsey, said the controversy could hurt LDK’s efforts to boost its capacity, opening the door for rival MEMC Electronic Materials Inc. (WFR).

LDK, which makes multicrystalline solar wafers used in solar panels, said Wednesday it had signed a five-year contract to supply multicrystalline solar wafers to Taiwan-based Solartech Energy Corp. Contract pricing is fixed for the first three years of the deal, LDK Solar said. During these three years, LDK is to deliver solar wafers worth about $224 million to Solartech.

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  Fluor to Build Polysilicon Plant in China.

• ExpansionManagement.com:
  
  Fluor to Build Polysilicon Plant in China.

• Reuters:
  
  Fluor Wins $1 Billion Contract for LDK Solar Plant.

• Money Morning Investment Analysis:
  
  How to Profit as Surge of Solar IPOs Mark Dawn of New Industry in China.

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From Staff Reports

Site preparation has begun for a Xinyu City, China, polysilicon production plant that will be located adjacent to LDK Solar Co. Ltd.’s (LDK) existing solar wafer manufacturing facilities.

Fluor Corp (FLR), the U.S.-based engineering-and-construction company, said it landed a contract worth more than $1 billion to provide engineering, design and other services for the LDK facility. Fluor said it booked front-end engineering and design work in the third quarter, while the engineering, procurement and construction-management services would be booked in 2008.

LDK, which makes multicrystalline solar wafers used in solar panels, has said it plans to reach polysilicon production capacity of 6,000 metric tons by the end of 2008 and 15,000 tons by the end of 2009.

Tight supplies of polysilicon have crimped expansion in the fast-growing solar market, and many companies have moved to develop their own supplies of the key solar cell component.

Of the six China-based solar-energy companies that went public this year, three are among the best-performing IPOs through the first nine months of this year. [For more information on these IPOs through the first three quarters of the year, please click here and check out our related story on IPO deals through the first nine months of this year].

The includes the No. 1 performer, JA Solar Holdings Co Ltd (JASO), the solar-cell maker whose shares have more than quadrupled in value since it went public on Feb. 6 at $15 a share. LDK Solar Co. Ltd. (LDK) and Yingli Green Energy Holding Co. Ltd. (YGE) – which went public a week apart in early June – ranked third and fourth, respectively.

News and Related Story Links:

• ExpansionManagement.com:
  Fluor to Build Polysilicon Plant in China.

• Reuters:
  Fluor Wins $1 Billion Contract for LDK Solar Plant.

• Money Morning Investment Analysis:
  How to Profit as Surge of Solar IPOs Mark Dawn of New Industry in China.

• Money Morning News:
  IPOs Soar in Third Quarter, Fueled by Solar, Software and Finance Deals.

• Money Morning News:
  China Solar Cell Maker JA Solar to Sell $280 Million Worth of Additional Shares.

China-based solar-cell maker JA Solar Holdings Co. Ltd. (JASO) is selling 6.33 million American Depositary Receipts, worth about $280 million based on its closing price of $44.01 yesterday (Monday), Reuters reported that sources said.

The pricing of the deal, jointly handled by Credit Suisse (CSGN.VX: Quote, Profile, Research) and Lehman Bros. Holdings Inc. (LEH), is set for Oct. 10, the source said. Of the shares to be sold, 63.2% are primary, with the rest secondary.

The deal also has an over allotment option equal to about 15% of the shares being sold.

JA Solar’s ADRS have nearly tripled from their February IPO price of $15 each.

News and Related Story Links:

• Reuters:
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• Money Morning Investment Analysis:
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• Money Morning News:
  IPOs Soar in Third Quarter, Fueled by Solar, Software and Finance Deals.