Nanalyze

Investing in Desalination Companies

Fresh water is often talked about as being “the next gold”, and for good reason. 97.5% of all water on Earth is salt water, leaving only 2.5% as fresh water. 70% of that fresh water is frozen in the icecaps of Antarctica and Greenland and < 1% of the world’s fresh water is accessible for direct human use. With agriculture being responsible for 87 % of the total water used globally, about one-third of the world’s population lives in countries that are experiencing water stress. This begs the question, how can we turn salt water into fresh water? The process of turning salt water into fresh water is called “desalination” and over 16,000 desalination plants have now been built worldwide:

Desalination_Builds

Source: www.desalination.com

With such a huge number of desalination plants being built, the question is where are they located? The below chart shows the distribution of desalination plants by country:

Desalination_Plants_By_Country

Source: www.desalination.com

So just which companies are involved in building all these plants? The below chart shows the top engineering, procurement and construction contractors for desalination plants constructed between 2000-2011:

Desalination_Companies

Source: www.desalination.com

Can any of these companies provide pure-play exposure to desalination for investors? Let’s take a cursory look at the top-10 companies in the above list.

Veolia (NYSE:VE) is a $9.7 billion French company operating in 3 business areas: water, environmental services, energy services and transportation. Water management (not just desalination) represented 45% of the Company’s $28 billion revenues in 2013. Veolia has over 1,700 desalination plants located in over 80 countries.

Doosan Group is a South Korean conglomerate which is a member of the Fortune Global 500, and is involved in electrical power, construction, machinery, defense , houses, highways and bridges, chemicals, engines… and desalination.

General Electric (NYSE:GE) is a $256 billion conglomerate involved in what seems to be a little bit of everything as well as desalination.

Fisia Italimpianti is an Italian desalination company predominantly working in the Middle East. The Company is owned by Salini Impregilo (BIT:SAL), a $1.9 billion Italian construction company involved in large-scale infrastructure, such as dams, hydroelectric plants, motorways, railways, bridges, etc.

Degremont is a French company specializing in the production of drinking water with 10,000 facilities around the world. The Company is owned by Suez Environnement Company (EPA:SEV), an $8.8 billion French holding company. 49% of Suez revenues come from water treatment in France and Spain.

IDE is currently working on the Carlsbad Project in San Diego, the largest desalination plant in the western hemisphere when finished. The Company also worked on the Sorek Project, the world’s largest and most advanced desalination plant which comprises 20% of the municipal water demand in Israel. IDE is jointly and equally owned by Israel Chemical Ltd. (TASE:ICL),  a global minerals and specialty chemicals company;  and the Delek Group, one of Israel’s largest holding groups.

Acciona (BME:ANA) is a $4.3 billion Spanish conglomerate group dedicated to civil engineering, construction and infrastructure. Water and services make up just 9% of the Company’s $6.6 billion in revenues.

Hyflux is a $728 million Singapore company which built the SingSpring desalination plant that now provides 10% of Singapore’s drinking water. When the Tuaspring Desalination Plant is completed, 25% of Singapore drinking water will be provided by Hyflux desalination plants. The Company’s focus is on advanced membranes used for desalination with 1,300 membrane products and systems worldwide.

Befesa is a Spanish company predominantly involved in industrial waste management. In looking through their investor presentation, it seems that desalination is a small part of the Company’s overall business focus.

Sadyt/Valoriza is a Spanish water treatment company specializing in desalination with plants in countries such as Spain, Israel, Australia, Algeria, Chile, and Tunis. The Company is owned by Sacyr (BME:SCYR), a $2.7 billion Spanish construction and engineering company.

Conclusion
With the exception of maybe Hyflux, most of these companies are not pure-play opportunities to invest in desalination. Most are involved in various other business activities such that an investor would have far too little exposure in desalination to justify investing solely for that purpose. At most, 50% of revenues come from water treatment, and of that, an even smaller amount comes from desalination. The whole idea of a pure-play investment is to avoid taking unintended bets, on Italian infrastructure projects for example. In a future article, we’ll take a cursory look at the remaining 10 desalination market leaders. In the meantime, please feel free to plug any additional desalination companies into the comments section below.

If you pay more than $4.95 a trade, you're paying too much. Ally Invest is one of the lowest-fee brokers around so you spend less money on transaction fees and more on stocks. With more than 30 trades a quarter it drops even lower to $3.95 a tradeOpen an account and begin trading today.

  • Thanks, very informative. A ton of information available at a glance.

    I say this even though the information mainly served to eliminate my hope of finding a “pure play”.

  • Nanalyze

    Thank you for the feedback George. Please also see the follow-up article below:

    https://www.nanalyze.com/2014/10/10-more-desalination-companies/

    Unfortunately out of this list of 20 there don’t seem to be any pure plays except for maybe Singapore’s Hyflux.

  • Bill

    Google “Artemis Project Top 50” and you’ll get a list of the newest and most innovative small companies and startups involved in water.

    • Nanalyze

      Thank you for the heads up on this list of companies Bill. We’ll certainly look through the list and see if we can’t highlight some of the most exciting companies.

  • Richard Lenz

    Recently I read that India is building many D plants on their coastline. All plants will be using filtering screen that will remove the salt. Does anyone know of the Co. that provides this filtering screen.

    • Nanalyze

      Thank you for the comment Richard. Though maybe not related, we came across the below private company that has nanotechnology based water purification systems which they recently presented to government leaders in Hyderabad India

      http://www.cnanoz.com/

      It would be useful to know which contractor is building out all those plants.

  • Ahmad M Alhawemdi

    Many thanks for quick reply , could you give me List for best companies around the world which can manfucture desal. plant with EMD method .
    thanks with regards

    • Nanalyze

      Thank you for the comment Ahmad. Please see Google.

  • Benaya Hoz

    Thank you Nanalyze for the great summary!

    Mr. Richard Lenz, regarding your question about a company providing filtering screens, I know that Amiad Filtration has great products. There web site is http://www.amiad.com/

  • Are there any ETFs that could be made available to an investor, or mutual funds that may be involved in renewable energy and water related securities. Your website is informative and I thank you for providing the information.
    Carlo

  • Joe Wilson

    GlobalRecoveryPlan – A New Global Economy

    To fund the construction and development cost of two regional Desalinization plants we are proposing a Global Recovery plan, whereby, it is possible to reset or restructure the US based global economy – createspace.com/preview/1164868.

  • Mohamed A Jama

    I would like to introduce a Multinational company interested in the Construction of Water Desalination Plants in Mauritius. This involves Investment + Engineering, Procurement & Construction (EPC).
    Grateful if you can direct me to the relevant Authority/reliable contact.

    Many Thanks
    M A Jama
    Managing Partner AlSiraj General Trading LLC(DUBAI -UAE)

    • Nanalyze

      Unfortunately we have no money to invest in desalination projects in Mauritius nor do we have contacts that would be useful. It’s best to contact the companies directly. Thank you!

  • malihe

    hi

    thanks so much for this article. I really .enjoyed it .

    also I would like to know about useful facts for establishing a desalination factury. like how much it’ll cost and how long it’ll take.

    if a sample BP is available I’ll be grateful to have it.

    • Nanalyze

      Thank you for the feedback Mike. We really have no idea as we’re just a media company. Best to reach out to the companies directly!

Subscribe to the Nanalyze Weekly Digest

Subscribe to our Nanalyze Weekly Digest to receive a summary of all articles every week.

We’ll never use your email for anything other than sending you great articles about investing in disruptive technologies.

  • This field is for validation purposes and should be left unchanged.

45 Shares
Tweet10
Share4
Share28
Reddit
+13
Buffer