CARTRIDGE FILTER MARKET UPDATE

JUNE 2012

McIlvaine Company

www.mcilvainecompany.com

 

TABLE OF CONTENTS

The Residential/Commercial chapter of the Cartridge Filters World Market report has recently been updated.

COMPANY NEWS

Pentair and Tyco International’s Flow Control Business to Combine in $10 Billion All-Stock Merger

Pentair Water Purification Debuts in USA

Donaldson Building New Plants to Serve China’s Filtration Needs

Pall’s Faucet and Shower Filters Now Available to U.S. and Canadian Consumers

Clarcor Announces Acquisition Of Modular Engineering

Velcon Filters Acquires EMEA Partner Warner Lewis

Teda Filters Production Boosted with Two New Lines

COMPANY FINANCIALS

Clarcor Q1 Profit Rises

Pentair Reports Strong First Quarter Results

PGI Strong Fourth Quarter, 2011 Year-End Results

RO/ DESALINATION

$4.2 Billion Desalination Market for Pumps, Valves, Filters and Chemicals

Desalination Efforts in Singapore Backed by Japanese Bank

New South Wales Accepts Refinancing Offer for Sydney Desal Plant

Hyflux, Hitachi and Itochu to Develop Asia’s Largest Seawater Desalination Project in India

New Desalination Technique Yields More Drinkable Water

 

 

Many projects are detailed in monthly updates under Industry Analysis in this Report’s Chapters. Click on the links below to view information on these projects.

 

 

CHEMICAL

OIL & GAS

FOOD

PHARMACEUTICAL

LNG

SEMICONDUCTOR

METALWORKING

TRANSPORTATION

 

GDP ANALYSIS

 

 

COMPANY NEWS

 

Pentair and Tyco International’s Flow Control Business to Combine in $10 Billion All-Stock Merger

Combination of Highly Complementary Businesses to Create a Global Leader in Flow, Filtration and Equipment Protection

• Creates an industry leader with expected $7.7 billion in pro forma 2012 revenue

• Provides substantial value-creation opportunities for both companies’ shareholders

• Expected accretion of approximately $0.40 to Pentair’s 2013 EPS, excluding transaction related one-time costs

• EPS for combined company anticipated to be greater than $5.00 by 2015

• Identified annual synergies of $250 million, expected to be fully realized by 2015

• Enhanced capital structure and strong free cash flow expected to support growth with increased return of capital to shareholders

Pentair, Inc. (NYSE: PNR) ("Pentair") and Tyco International Ltd. (NYSE: TYC) ("Tyco") announced a definitive agreement to combine Tyco’s Flow Control business ("Tyco Flow") with Pentair in a tax-free, all-stock merger. The transaction values Tyco Flow at approximately $4.9 billion, including assumed net debt and minority interest. Upon completion of the transaction, which has been unanimously approved by the boards of both companies, Tyco shareholders will own approximately 52.5% of the combined company and Pentair shareholders will own approximately 47.5%. The combination will bring together complementary leaders in water and fluid solutions, valves and controls, and equipment protection products to create a premier industrial growth company. The merged company, with estimated pro forma 2012 revenues of $7.7 billion, is expected to create enhanced shareholder value through:

The new company will be named Pentair and will be led by Randall J. Hogan, Pentair’s current Chairman and Chief Executive Officer.

 

Pentair Water Purification Debuts in USA

Pentair Residential Filtration, LLC, a subsidiary of Pentair, Inc has launched its new electronic water purification system for the North American water industry.

The technology is built around a hybrid deionisation (hybrid DI) process, using Pentair and Voltea technologies to combine reverse osmosis (RO) filtration and a water softener without requiring salt as a regenerant.

Pentair developed the new technology through a partnership with Dutch firm Voltea, which licensed the technology to Pentair in residential and light commercial applications for point-of-entry products.

The system uses capacitive electrodes to remove hardness and TDS from water without employing salt. The core of the system is Voltea’s ‘stack’ configuration of electrodes combined with ion-selective membranes. The treatment sequence begins with the purification step. This occurs as untreated water flows through the cell, where ions are drawn through the membranes and absorbed in the charged electrodes, producing high quality treated water. The electrodes automatically regenerate when the system reverses its polarity. This drives the ions out of the electrodes and flushes them from the stack. The polarity is then reset to normal to start purification again. The technology within the hybrid deionisation system is driven by a micro-controller developed by Pentair that uses sensors to monitor and manage all system and water quality parameters in real time. The technology assesses the inlet and treated water quality, controls the power supplied to the stack, and adjusts operating cycles and system flows to continuously optimise performance.

Pentair will use the new system in products for light commercial applications such as retail operations, car washes and laboratories. The technology will also be used in products for residential customers through an agreement with Aquion, Inc’s RainSoft brand.

"Like a reverse osmosis system, this new product will produce safe, softer, bottled-quality water throughout an entire facility – but with 90% less waste water. Plus, since it doesn’t use salt, there is no net increase in discharged total dissolved solids," claimed Sam Karge, global vice-president of marketing for Pentair Residential Filtration.

The technology is suitable for light commercial sectors such as hotels/restaurants, healthcare, pharmaceutical and electronics manufacturing."

Products using the Pentair and Voltea technologies hybrid DI system will become available in mid-2012.

 

 

Donaldson Building New Plants to Serve China’s Filtration Needs

Donaldson Company, Inc. Bloomington, MN, will begin construction on two new manufacturing plants in Xuzhou, China, to serve the fast-growing filtration needs of China's diesel-powered equipment and industrial markets. Each of the new plants will be 140,000 square feet. One facility will be dedicated to manufacturing air filters while the other plant will specialize in liquid filters. These two new plants, expected to open in CY14, represent Donaldson's second manufacturing campus in China. Donaldson's successful first China campus in Wuxi opened in 1997 and currently has four manufacturing plants.

"We are very pleased to add these two new plants to our existing manufacturing and distribution base in China and have appreciated the wonderful support of the local Xuzhou Economic & Technological Development Zone officials through the planning process," says Eugene Wu, Donaldson's president of Asia Pacific. "During the last 15 years we have developed strong relationships with many local Original Equipment Manufacturers and Aftermarket Customers. As the industrial and diesel-powered equipment markets continue to develop and expand in China, these new plants will allow us to both further increase our air filter manufacturing capacity and establish our first Chinese-based liquid filtration manufacturing capacity to meet our projected Chinese customer demand."

"We warmly welcome Donaldson, a leading worldwide filtration solutions company, to build manufacturing plants in Xuzhou," says Zhang Fu Ning, standing committee member, Xuzhou Municipal Government and party secretary of Xuzhou Economic & Technological Development Zone. "With Xuzhou's reputation as the capital of construction machinery in China, Donaldson's new plants will streamline the supply chain for our local construction equipment manufacturers. We will fully support Donaldson's development in the Xuzhou Economic Development Zone."

 

Pall’s Faucet and Shower Filters Now Available to U.S. and Canadian Consumers

Pall Corporation’s (NYSE: PLL) Kleenpak™ disposable water filters are now available to U.S. and Canadian consumers. Based on Pall technology widely used in clinical institutions as a barrier for water-associated pathogens, Pall’s advanced point-of-use filters can now be easily fitted to household faucets (faucet filters) or shower fixtures (shower filters). The Pall Kleenpak point-of-use filters utilize a 0.2 micron pleated filter membrane validated to retain bacteria, fungi and protozoa. The new filters were introduced at the APIC 2012 Annual Educational Conference & International Meeting, June 4 – 6, San Antonio, Texas.

"Continually rising healthcare costs translate to shortened hospital stays. Immunocompromised individuals who leave the hospital environment may need protection against opportunistic waterborne pathogens at home," says Dan Mueller, Vice President, Pall Medical. "Pall Kleenpak point-of-use water filters are an ideal solution for these at-risk individuals. For consumers looking for a safer water alternative, the filters may help reduce cost and waste associated with bottled water."

Water filtration, directly at the point-of-use, can establish an efficient barrier against transmission of waterborne pathogens from water sources to consumers. Unlike typical household filter devices that only address taste and odor, Pall Kleenpak point-of-use faucet and shower filters retain pathogens such as bacteria, fungi and protozoa.

The easy-to-install, disposable Pall Kleenpak point-of-use filters help remove pathogens for up to 31 days and may be safely disposed of in household refuse.

 

Clarcor Announces Acquisition Of Modular Engineering

Clarcor Inc. (NYSE: CLC) announced that it has acquired 100% of the shares of Modular Engineering Pty Ltd., a manufacturer of natural gas filtration products and distributor of aftermarket elements based in Henderson, Australia, outside of Perth. A long-time supplier to Clarcor’s PECOFacet division whose former owners will remain with the business following the closing, Modular will become a part of Clarcor’s PECOFacet division, which is included within Clarcor’s Industrial/Environmental Filtration segment. Terms of the acquisition were not disclosed, and although the acquisition is expected to be accretive to Clarcor’s earnings in 2012, it is not expected to be material to the Company’s 2012 results.

Chris Conway, Clarcor’s CEO, said: "Modular is an outstanding company and a leader in the production of skid-mounted equipment in Western Australia, at the epicenter of the natural gas boom for the Asia Pacific region. They have been fabricating equipment and distributing aftermarket elements for PECOFacet for many years and we know them well. With a deeply experienced employee base and excellent relationships with key players in the Australian natural gas market, the acquisition of Modular strengthens our participation in the high growth in natural gas extraction and transportation that is underway throughout the Asia Pacific region. As countries such as Japan move away from nuclear energy, natural gas is playing an ever more important role in satisfying the region’s energy needs. Modular gives us first-fit filtration manufacturing capabilities in Western Australia, as well as a platform to increase our sales of aftermarket elements throughout the region. The acquisition of Modular is another step in our strategy of making Clarcor the world’s leading natural gas and fuel filtration provider."

 

Velcon Filters Acquires EMEA Partner Warner Lewis

Velcon Filters, LLC, a manufacturer of industrial filtration systems, recently announced that it has acquired Warner Lewis GmbH.

Velcon is a portfolio company of The Sterling Group, a middle market private equity firm based in Houston, Texas, and was acquired in 2009 as a platform to execute a buy-and-build strategy.

Headquartered in Kelsterbach, Germany with locations in Phillipsburg, Germany; Farnborough, UK; Paris, France; and Dubai, UAE; Warner Lewis offers aircraft refueling solutions to customers in Europe, the Middle East and Africa ("EMEA"). Warner Lewis has been a strategic business partner of Velcon for over 40 years distributing Velcon's line of products, in addition to manufacturing its own standard or custom vessels, pit-boxes and ground fueling products. The acquisition of Warner Lewis represents an opportunity for Velcon to directly serve customers in EMEA.

Velcon manufactures filtration systems, primarily for the jet fuel market, including vessels and replacement cartridges which meet specific requirements for fluid filtration processes in a variety of domestic and international end-markets. Keith McAslan, President of Velcon, said, "Since 1969, Warner Lewis has been the recognized leader for aircraft fueling components and solutions in EMEA and has been Velcon's exclusive distributor in that region. As Velcon looks toward its 60th anniversary in 2013, we are pleased to join with Warner Lewis and directly provide a broader range of products and solutions to our aviation customers in the Americas and EMEA."

This is the third acquisition for Velcon in the past three years. Velcon acquired Chemflo in late 2009 to expand its product offering into the energy markets, and in 2010 acquired Twin Filter B.V. in the Netherlands to diversify and grow its business in the oil, liquid and air filtration markets. "We are excited to expand in the aviation fuel market where Velcon is a market leader in filtration and Warner Lewis is a trusted provider of filtration and refueling solutions," Greg Elliott, Partner of The Sterling Group and Chairman of the Board of Velcon, said. "Velcon's acquisitions over the past three years have strengthened the global footprint, scale and organic growth opportunities of the business, and we expect that Warner Lewis will have a significant impact as well." The acquisition was financed with debt from BNP Paribas, Amegy Bank of Texas and BBVA Compass.

Velcon Filters, LLC, headquartered in Colorado Springs, Colorado, is a niche manufacturer of filtration systems, including vessels and replacement cartridges, that meet specific requirements for fluid filtration processes in a variety of domestic and international end-markets. The company's aviation division, through Velcon branded product lines, is a global leader in the filtration process for aviation fuel delivery, engineering and manufacturing products that filter, purify and remove water and containments from aviation fuel along the transport chain from the refinery to the aircraft. Velcon's process division, through its Twin Filter brand, engineers, manufactures and markets equipment and replacement cartridges for the oil, liquid and air filtration markets in Europe, Asia, North America and other international markets.

 

Teda Filters Production Boosted with Two New Lines

Teda Filters Co. Ltd has a wide array of filter media products on display at ANEX 2012. This year the company installed two new meltblown lines to service the automotive and liquid filtration industries, complementing its four other production lines.

The company specializes in meltblown technology for the production of air and liquid filtration media, thermal insulation for clothes, automobile sound and heat insulation material.

After developing micro-fiber polypropylene meltblown thermal insulation material (Teda Mian), the company began supplying thermal-wear uniforms for China’s army and police.

A variety of filtration products with international certifications also includes surgical and dust-proof suit media; air filtration for HVAC units; and acoustic insulation media.

 

 

COMPANY FINANCIALS

Clarcor Q1 Profit Rises

Unaudited First Quarter 2012 Highlights

($ millions, except percentages)

Quarter Ended

3/03/12

2/26/11

Change

Net sales

$ 257.3

$ 245.7

5%

Operating profit

34.3

31.3

10%

Net earnings

23.5

21.9

7%

Operating margin

13.3%

12.7%

0.6 pts

 

Clarcor Inc. (CLC) reported a 7 percent increase in first-quarter profit, as revenues grew at the engine/mobile filtration and industrial/environmental filtration segments. Net sales at Engine/Mobile Filtration segment increased 8 percent, driven mainly by higher heavy-duty engine filter sales. Sales grew 12 percent domestically and 3 percent outside the US despite a 15 percent decline in China.

Industrial/Environmental Filtration unit sales advanced 8 percent, driven mainly by higher natural gas vessel sales. Sales outside US dropped 4 percent due mainly to lower sales from Europe impacted by continuing issues with the eurozone economies.

Packaging segment sales dropped 29 percent, due mainly to lower confection packaging sales, smokeless tobacco packaging sales and lower sales in other markets.

Clarcor said net sales for the quarter grew 5 percent to $257.26 million from a year ago.

Looking forward to the full year 2012, the company lowered its total sales growth estimate to a range of 5.5 to 7.5 percent, from the prior range of 6.0 to 8.0 percent.

Pentair Reports Strong First Quarter Results

• First quarter sales increased to $858 million, up 9 percent from last year

• Planning underway for pending merger with Tyco International’s Flow Control

business and on-track for end of September closing

"The first quarter was a solid start to the year. Despite continued softness in Western Europe and lower flood-related residential pump sales, we delivered another quarter of strong operating performance," said Randall J. Hogan, Pentair chairman and chief executive officer. "Excellent execution of pricing and productivity initiatives, coupled with the benefits from our repositioning efforts, drove adjusted operating margins higher as we continue to invest in the innovation, brands and global capabilities that we believe position us well to deliver long-term sustainable growth."

The company delivered operating income of $85 million in the quarter, down 1 percent from $86 million in the same quarter last year. After excluding $12 million of acquisition related costs in the first quarter 2012, operating income was $97 million, up 10 percent, and operating margins expanded 20 basis points to 11.3 percent.

Water & Fluid Solutions sales grew 14 percent year-over-year to $587 million, with the Clean Process Technologies ("CPT") acquisition adding 13 percentage points and a negative one percentage point impact from foreign exchange. In fast growth regions, Water sales grew 41 percent, largely driven by the CPT acquisition. Within Water & Fluid Solutions, the first quarter sales performances were as follows:

• Flow sales, which accounted for approximately 40 percent of Water & Fluid Solutions sales, were down 3 percent versus the prior year quarter, as lower flood-related and municipal pump sales offset the benefit from the CPT acquisition.

• Treatment/Process sales, which accounted for approximately 40 percent of Water & Fluid Solutions sales, were up 34 percent from last year, benefiting from the CPT acquisition. Sales in industrial, energy, and foodservice grew double digits in the quarter, more than offsetting lower sales in Western Europe.

• Aquatic (previously named Pool) sales, which accounted for approximately 20 percent of Water & Fluid Solutions sales, were up 18 percent year-over-year, driven by pool dealer expansion and continued strong demand for Pentair’s energy efficient pool products and solutions.

Technical Products delivered first quarter 2012 sales of $271 million, down 1 percent versus the prior year quarter, including a one-percentage point unfavorable impact from foreign exchange.

PGI Strong Fourth Quarter, 2011 Year-End Results

Charlotte, NC-based Polymer Group, Inc. (PGI) announced solid fourth quarter and year-end earnings results for 2011 despite a volatile raw materials cost environment, severe flooding at the company’s Colombia operation and new market dynamics that have led to softer volumes in the US.

Sequential improvements in 2011 led to $1.18 billion in net sales, compared to $1.106 billion in 2010, says Ronee Hagen, CEO of PGI, during an April 2 webcast. She also notes annual adjusted EBITDA of $141 million in 2011 as well as cash increases to $72.7 million.

According to a company press release, "The year-over-year [sales] increase was due primarily to additional volume in the company’s Nonwovens segments, with increases in Latin America, Asia and Europe offset somewhat from lower volumes in the U.S., and lower volumes in the Oriented Polymers segment. Net sales also benefitted from a higher price/mix in all Nonwovens segments and Oriented Polymers, primarily due to price increases resulting from the higher raw material costs. Foreign currency translation rates negatively impacted sales by approximately $2.9 million compared with the fourth quarter of 2010."

Raw material costs were $19 million higher in Q4 2011 compared to the prior year and $101 million higher in 2011, noted Hagen. Polypropylene costs moderated in Q4 2011 but have accelerated to date in Q1 2012, she adds.

Gross profit, including the impact of purchase accounting, was $186.5 million for 2011—representing a gross profit margin of 15.7%—compared with a gross profit of $209.9 million the prior year.

"Although moderating in the fourth quarter of 2011, raw material costs impacted profitability throughout 2011 and have risen to date in 2012," according to a company statement. "The positive impact of the company’s U.S. plant consolidation activities and operational improvements throughout its global base during the year were offset somewhat by the disruption to operations from the flood in Cali, Colombia."

Hagen calls the return of that Colombia facility to normal operating levels "a significant achievement," given the impact of flooding, although it is still running a bit under its peak.

As for other PGI facilities, Hagen points to benefits during the year from "plant consolidation and realignment initiatives, particularly in the US, as our manufacturing costs were $10 million less compared to 2010."

The company refined its focus on its core functions in 2011 with the sale of its Difco business, which was fully closed down by early fourth quarter. "We are taking additional steps to reposition resources and to refine our strategic focus on growth markets," says Hagen.

Growth investments the company had underway since late 2010 came online in the second half of 211, with ramp up achieved by the fourth quarter in both the Suzhou, China, and Waynesboro, VA, lines.

"With this new capacity nearly 80% of our nonwovens business is comprised of spunmelt capacity," Hagen says. While the company saw some contribution from the operations in the fourth quarter, the impact will be felt more fully in 2012.

Capabilities at the Waynesboro, VA, line include the company’s new Arium platform technology, which is expected to open new opportunities in healthcare, industrial, filtration and new emerging market applications.

Challenges for the future, however, include new competition in the nonwovens market. "We are managing through an environment that has seen new competitive capacity come online at the same time," Hagen says suggesting "the pace of ramp up may be slowed a bit."

With softer demand in the US hygiene market, the company’s new Arium technology supports a shift into non-hygiene and higher growth markets. As it moves forward, PGI will leverage market leadership in high-growth regions with additional focus on wipes, filtration and new healthcare markets.

RO/ DESALINATION

$4.2 Billion Desalination Market for Pumps, Valves, Filters and Chemicals

The market for pumps, valves, filters and chemicals for use in desalination will increase at near double digit rates from a 2012 level of $4.2 billion. This is the conclusion reached by the McIlvaine Company in aggregating forecasts in a number of its reports.

Treatment chemical cost averages 0.03 $/m³ of capacity in seawater, reverse osmosis (RO) systems and 0.02/ $/m³ in thermal systems. There is substantial use of scale inhibitors in thermal systems. Acids and antifoams are used in MSF systems. Cleaning chemicals are a substantial investment where RO is employed. The present desalination market is 70 million m³/day with a projection of 100 million m³/day by 2015. The present water chemicals market is $638 million per year rising to $912 million in 2015.

The amount of water being pumped in desalination systems is presently only about one percent of the amount being pumped for all the world’s drinking supplies. On the other hand, the high pressure pumps needed for reverse osmosis are an order of magnitude more expensive than those used for drinking water transport. So, of the $6 billion 2012 market for pumps for drinking water, $450 million is attributable to desalination. Of the $3.4 billion market for valves for drinking water, $250 million is attributable to desalination. This does not include the valves used for thermal treatment which add another $70 million.

Prefiltration for the reverse osmosis systems and initial purification of water which will be evaporated in thermal systems is accomplished with liquid macrofiltration and cartridges. Automatic back wash filters and sand filters are frequently used. Liquid wastes are dewatered in filter presses.

Cartridges are used to remove particles which are too small to be captured in liquid macrofiltration equipment but too large and plentiful to be handled by cross-flow membranes. There has been a high replacement frequency on cartridges.

An alternative to liquid macrofiltration is sedimentation. Clarifiers and dissolved air flotation systems are selected for a number of systems. The desalting takes place in either thermal systems where the water is evaporated or by separation with cross-flow membranes. Reverse osmosis does the final separation. Macro or ultrafilters are often used to pre-filter and protect the RO membranes. Source: McIlvaine Company

Desalination Efforts in Singapore Backed by Japanese Bank

Components for Singapore’s second desalination plant that will eventually produce over 300,000 cubic meters of water per day will be funded through a USD$14.4 million loan from the Japan Bank for International Cooperation, WaterWorld reports.

Hyflux subsidiary, Hydrochem, was awarded the design, build, own and operation (DBOO) contract back in March 2011.

The loan will be used to purchase reverse osmosis membrane elements manufactured by Toray Industries and high pressure pumps manufactured by Torishima Pump Mfg.

Tuaspring Desalination Plant (see WWi video interview), which is designed to produce 318,500 m3/day of desalinated water, will employ Hyflux’s proprietary ultrafiltration membrane technology for the pre-treatment process and a double pass reverse osmosis process to produce potable water.

Singapore’s first desalination plant, SingSpring, was also developed by Hyflux and produces 136,000 cubic metres of potable water per day. This helps to provide 10% of the nation’s total water demand.

The loan amount is co-financed by Mizuho Corporate Bank, while Nippon Export and Investment Insurance (NEXI) will provide the buyer’s credit insurance for the co-financed portion.

The loan is the first of its kind extended by JBIC to Hyflux Group following their memorandum of understanding on global collaboration on water projects signed in August 2009. It is also the first time that a buyer’s credit loan has been secured for components for a Hyflux project.

Olivia Lum, executive chairman and Group CEO of Hyflux, said: "With this first buyer’s credit loan secured by Hyflux Group, we believe there will be more opportunities for Hyflux and JBIC to collaborate on global water projects."

Singapore is trialing new desalination technologies and techniques in a bid to reduce current energy requirements for membrane desalination from 3.5kWh to 0.8kWh per cubic metre.

New South Wales Accepts Refinancing Offer for Sydney Desal Plant

The New South Wales state government in Australia accepted on 10 May 2012 a binding offer for refinancing the Sydney Desalination Plant (SDP) from a consortium of Ontario Teachers' Pension Plan (OTPP) and Hastings Funds Management.

The successful bid values the 250,000 m³/d seawater reverse-osmosis plant at US$2.3 billion over 50 years. As Sydney Water owes US$2 billion for the plant's construction by a Veolia-led consortium, it will only receive US$300,000.

OTTP Infrastructure Group currently manages an international portfolio of approximately US$ 11 billion, including water and wastewater, electricity distribution, airports, power generation, high-speed rail, port facilities and timberland.

The Hastings input comes from two managed infrastructure equity funds: Utilities Trust of Australia (UTA) and The Infrastructure Fund (TIF). UTA has investments in South East Water in the UK and TIF in Ballarat Water in Victoria, Australia.

"SDP is a high-quality infrastructure asset ideally suited to our investment criteria and will help to pay benefits to our members for decades," said Stephen Dowd, OTTP's senior vice-president, infrastructure and timberland. SDP would provide stable inflation-protected returns through its fair and transparent regulatory regime and contractual framework, he said.

Hastings pronounced itself pleased to have secured the asset given its attractive yield and low-risk investment characteristics.

"SDP is a core infrastructure investment and represents exactly the type of quality asset we are seeking to add to our investment portfolios. The investment is expected to provide strong, inflation-linked earnings and operates in a secure, regulated environment with strong contractual protections," said Hastings CEO Andrew Day.

"This was a high priority transaction for our funds, UTA and TIF, and we expect the acquisition will enhance the balance sheets of both funds' portfolios while generating solid returns with low volatility. SDP is a quality investment that will have long-term benefits for our investors," Day said. UTA and TIF have committed a combined US$374.2 million to the transaction.

Hyflux, Hitachi and Itochu to Develop Asia’s Largest Seawater Desalination Project in India

A consortium of Hyflux Utility (India) Pte Ltd, Hitachi Ltd and Itochu Corp are to develop a seawater desalination plant in the Dahej Special Economic Zone in the state of Gujarat, India.

The US $600 million desalination project will be developed on a Design, Build, Own and Operate (DBOO) basis.

Hitachi will be the lead engineering, procurement and construction (EPC) contractor and will collaborate with Hyflux on the EPC and O&M works for the desalination project.

The 336,000 m3 per day desalination facility will employ ultrafiltration pre-treatment and reverse osmosis membrane technologies to treat the seawater into water suitable for industrial use.

This will be Asia’s largest seawater reverse osmosis (SWRO) desalination plant to date.

New Desalination Technique Yields More Drinkable Water

Kamalesh Sirkar, a New Jersey Institute of Technology (N.J.I.T.) distinguished professor of chemical engineering, says he has devised a direct-contact membrane distillation (DCMD) system that can efficiently wring drinking water out of up to 20 percent-salt-concentrated brine. (After about 25 percent, salt precipitates out of the solution in the membrane distillation system and could damage the membranes, pumps, lines and other components, Sirkar says.)

Normal seawater has a salt concentration of about 3.5 percent, which means the new system can reprocess the same seawater several times. "More water can be recovered with less residue", Sirkar says.

In Sirkar's system, heated seawater flows across a membrane strung with a series of hollow tubes made of a porous, yet hydrophobic, fiber—meaning only water vapor can be osmotically transferred. Cold distillate water runs through each of the tubes in a direction perpendicular to that of the seawater. The temperature difference between the heated seawater and cold distillate water causes vapor to form on the tubes. This vapor diffuses through the pores and condenses again inside the tubes, joining the flow of cold distillate water. The salt cannot penetrate the tubes and is carried away; with each cycle, more fresh water is drawn off, leaving more highly concentrated brine behind.

Sirkar's recently patented system can deliver about 80 liters of drinking water per 100 liters of seawater, he says. A comparable reverse-osmosis system—which relies on pressure to force seawater through a salt-filtering membrane—would reclaim 41 liters from that same amount of saltwater, according to Sirkar.

Membrane distillation's advantages include its ability to produce drinking water with very low salinity. In addition, seawater can be distilled at a range of temperatures—from 30 to 100 degrees Celsius—reducing the amount of heat typically needed for desalination, an energy savings, Sirkar says. Prolonged use may decrease a typical membrane's efficiency, but Sirkar says his system adds an ultrathin layer of a highly porous silicone–fluoropolymer coating to extend membrane lifetime. Fluoropolymer—a polymer that contains fluorine atoms—has a high resistance to the solvents, acids and bases found in ocean water. As for the environmental impact of desalination, Sirkar says dumping concentrated brine back into the sea creates a "minimal" disturbance to sea life. He adds, "Seawater is a very large volume with enough turbulence to dilute [the brine] very quickly."

That's not to say membrane distillation is without problems. It requires a steady, inexpensive source of heat to prevent the temperatures of the water on either side of the membrane from equalizing, which would impede the vaporization/condensation process. For DCMD to be practical it needs to be easier to use, more cost-effective and able to take advantage of available heat sources, including waste heat produced by places such as shore-based factories and offshore drilling operations, Sirkar says.

McIlvaine Company

Northfield, IL 60093-2743

Tel: 847-784-0012 Fax: 847-784-0061

E-mail: editor@mcilvainecompany.com

Website: www.mcilvainecompany.com