Aug 31, 2010

Analysis: Energy, Mining Sectors Drive Demand for Wastewater Treatment Equipment in South Africa

Frost & Sullivan finds that the markets were valued at $17 million in 2009 and estimates them to reach $25.1 million in 2015

Increased demand for energy supplies and the need for regulatory compliance by mining companies are driving the water and wastewater treatment equipment market in South Africa, according to Frost & Sullivan.

New analysis from Frost & Sullivan’s “South African Water and Wastewater Treatment in the Mining and Energy Sectors” finds that the markets were valued at $17 million in 2009 and estimates them to reach $25.1 million in 2015. The following market sectors are covered in this research service: coal mining, gold mining, platinum mining, copper mining and energy.

"The electricity utility Eskom's expansion program and enhanced legislative enforcement to ensure zero liquid effluent disposal (ZLED) by Eskom and mining companies are key factors in the growth of this market," said Frost & Sullivan Research Analyst Derrick Chikanga. "Currently, Eskom is undertaking an expansion initiative that will require additional investment in both water and wastewater treatment equipment."

South Africa's energy sector is a large consumer of freshwater, accounting for approximately 1.5 to 2% of the country's freshwater consumption annually. Both the mining and energy sectors have adopted a ZLED policy in which all reasonable steps are taken to prevent pollution of water resources. This is set to boost investments in the relevant water and wastewater treatment technologies.

However, the lack of financial resources to purchase the required equipment remains a major obstacle to market development.

"The most advanced water and wastewater treatment technologies, like reverse osmosis (RO), are very expensive and cannot be afforded by many of the smaller mining companies in South Africa," Chikanga said. "Most mining companies lack the necessary financial resources to acquire advanced treatment equipment and instead opt for the cheaper options such as lime treatment to reduce acidity."

Despite numerous challenges posed due to the lack of financial resources, the market still presents several opportunities for growth.

Equipment suppliers need to supply products within the budgets of most mining end-users to complement the technology types currently on offer. This will enable companies to capture both the low- and high-budget end users.

A key strategy for competitive success will be the provision of value-added technologies and services.

"The provision of value-added technologies that are reliable is an important element in this market," Chikanga said. "Mining and energy sectors are continuously changing and require high levels of water recovery. This explains why RO technologies are gaining popularity amongst end users."