BWA Water Additives sees a torrent of growth for water desalination markets in Africa. Annual sales could triple by 2015
New York, New York
Publication: ICIS chemical business
February 20, 2008
Joseph Chang/New York
POTABLE WATER is a scarce commodity in Africa. The continent's population is growing, economies are industrializing and companies are rushing to meet the demand. Construction of desalination plants is booming and there is a growing thirst for the water treatment chemicals needed to keep them operational.
"The epicenter of desalination capacity growth has been in the Middle East Gulf region, but capacity will grow the fastest in Algeria and Libya over the next five years, driven by industrialization and population growth," says BWA Water Additives president and chief operating officer Paul Turgeon.
Algeria's desalination capacity will grow from around 0.7m m3/day currently, to about 2.5m m3/day by 2012, while Libya's capacity will jump from 0.8m m3/day to about 1.6m m3/day by 2012, according to BWA. Globally, desalination capacity is expected to increase by 45% by 2010.
BWA's water additives include antiscalants, corrosion inhibitors and microbiocides. The company has a global market share of 60-65% of the thermal desalination market and 10-15% of the membrane desalination market.
BWA is aiming to boost its annual sales from $105m in 2007 to around $300m by 2015, but growth could come much quicker through acquisitions.
"We see strong growth in desalination and industrial water treatment, and expect sales to rise to $125m in 2008," says Turgeon. "We are also actively looking for acquisitions of new technology platforms or businesses that can boost our geographic presence."
BWA, which is headquartered in Manchester, UK, and has a regional base in Tucker, Georgia, US, is the former Chemtura water additives business that was sold to UK-based private equity firm Close Brothers in May 2006. The company has 100 employees - up from 55 at the time of the buyout.
The acquisition included all the manufacturing intellectual property of the business, but no production assets. However, BWA has significantly expanded its supplier base to a total of 17 suppliers in the US, Europe and Asia, to ensure secure and reliable supply, including continuing to source products from Chemtura facilities in Adrian, Michigan, US, and Trafford Park, UK.
BWA works through its relationships with original equipment manufacturers (OEMs) such as Doosan, Fisia, Italimpianti, and Sidem.
"We work with them through the equipment design phase so that they can design the facilities to best utilize the properties of our products to give their customers the best performance," says Turgeon. "They're interested in talking with us because within our industry we have expertise in the severe service and high performance quadrant."
The end users follow one of two business models, according to Turgeon - the independent water and power producer model (IWPP), where an independently-owned company serves municipalities for local water needs and the build, own, operate and transfer (BOOT) model, where one entity manages the building of the project from the ground up, operates the plant, and then eventually transfers the facility to an IWPP.
"Five years ago, mostly municipalities would own desalination assets," notes Turgeon. "But all these countries are consciously moving away from that as they realize they don't get the best operating performance when it's government-owned. So the environment has moved towards independent ownership of these assets."
The company has a leading global market share in thermal desalination, with its Belgard brand of products, but is building its presence in the faster-growing membrane desalination market with its Flocon line.
The thermal market is growing at about 10%/year, while the membrane market is surging 14%/year.
Thermal desalination is energy-intensive, as it involves boiling water to remove salt and other minerals. Membrane desalination, which typically involves the reverse osmosis (RO) process, uses semi-permeable membranes and pressure to do the same.
"We've brought out a broader range of products and services that address the membrane market, as customers increasingly look for a one-stop shop," says Turgeon. "Through our development efforts, we've added 14 products to the four core products we initially relied upon. We also added services such as membrane cleaning, and operations diagnostics for customers. Sooner or later these membranes need remediation."
Desalination comprises about a third of BWA's sales, with the rest in industrial water treatment and oilfield applications.
Main competitors in water additives for desalination include BASF and Rhodia.
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