Companies fighting acid rain may find they're sitting on a goldmine


Companies developing technologies to control acid rain may be sitting on a sleeping giant of a market. Clean Air Act amendments finised at the end of 1990 and expectations that ZTC the stock market will bottom out in the next quarter have rekindled investor interest in these companies.

But since most new technologies are being developed by large, diversified companies, investment analysts and brokers have paid little attention because few opportunities exist for a "pure play" in companies devoted totally or mostly to controlling acid rain.

The revised Clean Air Act will have positive effects on a few large, publicly traded firms for which acid-rain control technologies represent only a small interest, and for some small, privately held development ventures, says Robert Miner, a pollution control analyst for Paine Webber in New York. However, due to the lack of pure play, "There are really no good ways to play this market," concludes an unenthusiastic Miner.

Not everyone agrees, however.

A few lone wolves are looking at the $30-$60 billion projected market for controlling acid rain, and they are undaunted by the larger, better financed and more diversified competition.

To survive, these companies will need not only a cost-effective, viable technology but the financing and marketing to bring their products to interested utilities at the right time. Partnerships with major corporations may be vital to give smaller research and development companies the credibility needed to boost their stock prices.

Take, for example, Noxso Corp., a 10-year-old Pittsburgh firm that went public in 1980. Its system uses an absorbent and reusable material that reportedly collects 90 percent of both sulfur dioxides and nitrogen oxides. During its initial public offering, Noxso raised $1 million, at $1.12 a share, says company president L.G. Neal.

For the next four to five years Noxso operated in anonymity, at least in Wall Street terms. Stock dropped to 50 cents a share at one point. Then, in September 1987, Noxso announced several agreements with the conglomerate W.R. Grace & Co., potentially worth at least $3.2 million in research and development fees and options. In May 1989, a consortium comprising W.R. Grace, M.K. Ferguson, Ohio Edison and Noxso signed a $6.5 million contract with the Department of Energy to conduct a technology demonstration at an Ohio plant.

Although there is still considerable argument about how soon the acid-rain control market will burgeon into a major money-maker, it is definitely a when, and not an if, question. Companies and investors alike stand to do quite well if their timing is accurate.

Grant Ferrier is editor of the Environmental Business Journal, San Diego, Calif.

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