Energy: THE Key to Economic Development

We take electricity for granted in this country. That isn't the case in less developed nations where power is a luxury in some areas. Although power is boring here, it's an expanding industry in key growth markets around the world and you can invest in that growth.

The Internet is a joke
In a recent interview with The Financial Times, computer visionary Bill Gates describes getting the world's poor connected to the Internet as "a joke." He believes that health care is much more important than the Internet. And he's right. However, without electricity, even helping people live healthier lives becomes problematic.

That's why building power plants has become such an important priority for developing nations like China and India. Not only does reliable power bring with it such niceties as Internet access, but it also makes living healthier lives that much easier. Think about the refrigerator in your house, connected to a wall socket, and how your life would change if you didn't have it.

The buildout
According to uranium miner Cameco (NYSE: CCJ  ) , there are 91 new nuclear reactors set to be built over the next decade or so. Over three quarters will be located in China and India. That underpins Cameco's long-term growth prospects, and its plans to increase production by about 60% over the next five years. 

And, while the nuclear disaster in Japan took that country's reactors off line and led many other nations to rethink their nuclear future, the 91 new reactors Cameco is expecting takes into account 43 reactor shut downs. Moreover, Japan is currently in the process of trying to reopen 14 reactors. So, even the country at the center of the current nuclear backlash is rethinking its rethink.

China and India are also aggressively building coal power plants, with global coal giant Peabody Energy (NYSE: BTU  ) projecting that these nations will account for 80% of the increase in global coal demand over the next five years. The expected construction of around 300 gigawatts of coal-fired power power in China and India is key to Peabody's estimates.

And, interestingly enough, Peabody will benefit from this increase in two ways—as well as from the growth in nuclear facilities that Cameco is projecting. That's because this coal miner sells both thermal and metallurgical coal. While the former is used as a fuel in coal power plants, met coal is used in the steel making process. You can't build power plants without steel.

Diversified benefactors
Peabody gets about half of its revenues from Australia, a country that puts it in close proximity to both China and India. However, it isn't the only company positioned so close to these countries looking to "power" themselves into the developed world. Mining giants BHP Billiton (NYSE: BHP  ) and Rio Tinto (NYSE: RIO  ) are also big players in the land down under.

Like Peabody, BHP Billiton sells thermal and met coal. However, the miner also mines iron ore, a key ingredient in steel. In fact, taken as a whole, about half of the company's business is tied to steel. That puts it in prime position to benefit from the energy infrastructure build-out in India and China. It also mines copper, which is another key ingredient in the power equation.

Interestingly, however, BHP recently sold a uranium mine to Cameco, effectively getting out of the nuclear power business. Rio Tinto, on the other hand, continues to invest in uranium and has operations in thermal and met coal, and copper. That puts this global miner in prime position to benefit from the growth in both nuclear and coal power—during construction and afterward.

Investing in the power future
Electricity is a key aspect of economic prosperity. It allows people to do everything from connecting to the Internet to living healthier lives. That's why China and India are making such a dramatic push to increase their electric capacity. You can tag along for the ride with Cameco, Peabody, BHP, and Rio Tinto.  

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