Rio Tinto and Glencore named as among world's biggest water users

Published by MAC on 2014-04-20
Source: Reuters

Veolia sees growth as miners seek better waste water treatment

• CEO expects revenue to double by 2020 in metals, mining
• Sees tighter regulation driving growth
• Veolia's 2013 mining water recycling revenue 700 mln euros
• Wants to boost miners' revenue, not just be a cost factor

By Geert De Clercq

Reuters

9 April 2014

Paris - France's Veolia Environnement expects its revenue from treating waste water from the mining and metals industries to double to 1.5 billion euros ($2.1 billion) by 2020, as it seeks a growing share of an expanding market, its CEO said on Tuesday.

Antoine Frerot said mining was one of several industries being targeted by the water and waste group in order to secure half its revenue from industrial clients in coming years - from about a third today - as margins and revenue shrink in its traditional municipal water business.

Frerot said pretax margins in mining waste-water recycling are around 10 percent, which he said is higher than the narrowing margins in its French water business.

He said the mining and metals industry is the world's second-biggest user of water, after agriculture, with companies globally using as much as U.S. domestic consumers as they pump water into ore deposits to help extract minerals.

Frerot said 70 percent of new projects by the big six mining companies were in regions suffering water shortages and he saw tightening environmental regulation as the main driver of growth. But Veolia also wanted to win business by recovering minerals from the waste water, he said at a strategy briefing.

"We treat their waste water, we are the last wheel of the wagon for them, a cost that is increasingly mandatory because of tightening regulation," Frerot said.

He said Veolia's challenge is to become not just a cost for miners, an industry whose leading players include Rio Tinto and BHP Billiton, but to help them generate more revenue by recycling raw materials from waste water and help them win operating permits by integrating water recycling procedures from the start.

Veolia estimates the global market for water, waste and environment services to the mining and metals sector will grow to more than 20 billion euros in 2020, from between 13 and 14 billion currently. It also hopes to increase its share of that market from 5 percent to between 7 and 8 percent.

Global Competitor

Frerot said Veolia's only global competitor is French peer Suez Environnement, though both vie with big regional water treatment players such as General Electric in the United States, Osmoflo in Australia and Japanese groups Kurita Water and Ebara Corp.

Total annual revenue of the mining and metals sector is about 700 billion euros per year, Frerot estimated.

Miners not only use a lot of water, but also produce huge quantities of waste water.

"Until recently, in most countries in the world, this was discharged in the environment without treatment," he said.

A chart of mining firms' water use put together by Veolia showed that Brazil's Vale uses 1.58 billion cubic meters of water per year, nearly as much as the 1.82 billion cubic meters of drinking water consumed by eurozone citizens per month. Most of that water, 1.23 billion cubic meters, is recycled, the rest is sourced directly from the environment.

The second and third-biggest water users, Rio Tinto and Glencore Xstrata, each use more than 1 billion cubic meters, which is nearly as much water as flows over the Niagara falls per week.

Unlike Vale, they use much more water directly from the environment.

Veolia Global Mining and Metals director Christopher Howell said the percentage of recycled water the companies use is not just a function of how virtuous they are, but depends more on whether the ore is mined in a wet or dry environment.

He said one example of Veolia making money for mining clients rather than being a cost is Spain's Iberpotash, which created 45 million euros in additional revenue as it recovers white potash and salt from the facility's effluents.

Other customers include Rio Tinto, Vale, Anglo American, Newmont and Freeport-McMoRan. ($1 = 0.7277 Euros)

(Editing by Tom Pfeiffer and Mark Heinrich)

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China blames France's Veolia for supervision flaws in tap water pollution case

Sui-Lee Wee

Reuters

16 April 2014

BEIJING - China has blamed French utility Veolia Environnement for "supervision problems" in its water quality standards after authorities said a cancer-inducing chemical had been found in tap water supplied by the firm at 20 times above national safety levels, state media said on Wednesday.

The above-standards reading of benzene in the tap water in the northwestern city of Lanzhou was taken on Friday, forcing the city to turn off supplies in one district and warn other residents not to drink tap water for the next 24 hours.

Lanzhou, a heavily industrialised city of 3.6 million people in the northwestern province of Gansu, ranks among China's most polluted population centres.

Investigators looking into the incident found "there were supervision problems within Veolia Water Company related to water quality and safety", China National Radio said on its website, quoting a Lanzhou government spokesman speaking at a news conference. The spokesman did not elaborate.

The Lanzhou government and executives from Lanzhou Veolia Water Co, a local unit of Veolia, could not be reached for comment.

The Lanzhou government's complaints come on the back of rising scrutiny of foreign companies by Chinese state media. The government and state media have taken a series of firms to task on issues ranging from pricing to alleged poor quality products and shoddy customer service.

Lanzhou Veolia Water Company's deputy general manager, Yan Xiaotao, said there was no late reporting of the benzene spike or cover-up, Xinhua reported. Lanzhou Veolia Water Co, is majority-owned by the city government, with Veolia China, a unit of Veolia Environnement, holding a 45 percent stake.

The government has already blamed a crude oil leak from a pipeline owned by a unit of China National Petroleum Corp. for the presence of benzene.

Separately, a Chinese court has rejected for the second time a lawsuit filed by five residents from Lanzhou, the state-run China Youth Daily newspaper said on Wednesday.

The lawsuit, first filed on Monday afternoon, sought civil damages, a public apology and data from water quality testing in the past year from Lanzhou Veolia Water.

(Additional reporting by Li Hui; Editing by Kenneth Maxwell)

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How energy demand could drink up global water resources

Robin Webster

Carbon Brief [original article with tables at http://www.carbonbrief.org/blog/2014/04/carbon-briefing-how-energy-demand-is-set-to-drink-up-global-water-resources/]

25 April 2014

Increasing energy demand is set to put pressure on the world's water resources over the coming decades, according to a number of new expert studies. Even if the world shifts away from fossil fuels and toward cleaner power supplies, growing demand could help put water supplies under severe strain by the middle of the century.

From cooling down power plants and extracting, transporting and processing fuels to growing crops used as biofuels, energy production relies on water. Altogether, the sector accounts for 15 per cent of water withdrawals around the world, according to the International Energy Agency. Only agriculture is more water-hungry.

Yet demand is going up - just as growing populations and climate change put the world water supplies under even more pressure. Working out where water supplies for energy will come from in future is one of the "great challenges of our generation," the World Resources Institute says.

Changing threats to water supplies

Water resources are already stretched. Groundwater extraction has tripled in the last 50 years in response to rising demand. Some underwater stores are now reaching "critically low levels", according to the latest edition of the UN World Water Development Report, released in March.

The pressure's likely to intensify. Agriculture already accounts for 70 per cent of freshwater use around the world, and it's going to need at least another fifth again by the middle of the century, the UN says.

That's not all. According to the Intergovernmental Panel on Climate Change's review of the future impacts of climate change, rising temperatures are going to increase the struggle for freshwater resources over the next few decades - exacerbating competition for water "among agriculture, ecosystems, settlements, industry and energy production" in already vulnerable regions.

Water demand from the energy sector

Into this mix, we have to add the energy sector's need for water. Some 580 billion cubic metres of freshwater are withdrawn for generating energy every year - a scale of use the IEA calls "tremendous".

The vast majority of this water use is for cooling down fossil fuel power plants. Coal, natural gas and oil - which together account for 80 per cent of global energy generation - create vast quantities of waste heat when burnt. The water is needed to carry the heat away and keep the power stations functioning.

Water also generates energy directly in hydroelectric power stations, which provide about 15 per cent of the world's electricity.

Energy and water are "highly interconnected", the UN says - people use energy for water and water for energy. In wealthier countries, significant amounts of energy is used to clean water supplies up and transport water to populations.

Water use and water stress

World primary energy demand will increase by 36 per cent between 2008 and 2035, the UN projects.

The vast majority of this increase is likely to take place in regions that are already under water stress. Poorer countries outside the OECD are expected to account for 93 per cent of the increase over the next 30 years, with China accounting for 36 per cent of it, according to its report. These regions are more likely to be already suffering from water limitations.

In a recent article, the World Resources Institute mapped the world's top coal producing and consuming countries against countries suffering from water limitations. As the table below shows, more than half of them already face high or extremely high levels of water stress: [see table in original]

Regional disparities matter too. China alone accounts for more than half
of the planet's coal consumption - and it has plans to expand. As of July 2012, the Chinese government had another 363 coal-fired power plants planned - an almost 75 per cent increase on its current levels, the WRI says. Half of these are in areas already suffering from high or extremely high levels of water stress.

New energy technologies

Plans to generate energy in new ways aren't necessarily going to help matters. Extracting so-called unconventional sources of energy like shale gas and tight oil tends to use more water than conventional sources, the UN says, because water is injected at high pressure into rock.

Attempts to reduce emissions could also increase the energy sector's need for water. Carbon capture and storage plants - which capture emissions from fossil fuels and store them underground - use about 25 per cent more water than conventional power plants, according to University of Sydney research. That's because water is needed both to cool the solvents used to capture emissions and in the conventional power generation process.

Expanding the amount of power the world gets from bioenergy - crops, plants or trees - will also increase water demand. Crops need water in order to grow and to be converted into fuel - making the whole process highly water intensive.

More water consumption

In assessing water use, it's important to distinguish between water withdrawal and water consumption. Withdrawal refers taking water from a source and then returning it later. Meanwhile, consumption happens when water evaporates or is incorporated into other products - so it doesn't return to its source.

At the moment, the energy sector tends to withdraw water - to cool power stations, for example - and then return it later. Only about 10 per cent of water used for energy generation is actually consumed, the IEA says.

But in future, this could change, as we use more energy crops and shift toward more efficient power plants with advanced cooling systems that consume water. Water withdrawals by the energy sector could increase by about 20 per cent over the next 20 years, the IEA suggests - while water consumption could go up by a more dramatic 85 per cent: [see table in original]

The future

There is a bright side, however. Water requirements from other renewable technologies like wind and solar power are "negligible", the IEA says. This makes them well-suited to a water- and carbon-constrained world.

In future, limitations on water supply could well affect where developers chose to locate new power stations - and even affect the extent to which new technologies like bioenergy and shale gas can develop.

Governments need to invest "heavily" in research and development into more water-efficient technologies, support the use of reclaimed water for irrigation and develop regional water plans that consider electricity needs, the UN report says. In China, the government is already planning to limit coal expansion in response to water availability.

The IEA expects the energy sector to become increasingly water-vulnerable. But it suggests the impacts are "manageable" with better technologies, more reliance on renewables, and intelligent power station siting. In its vision of the future world energy system, it assumes that water constraints can be overcome.

Politicians and energy company bosses involved in shaping the world's future energy systems will probably have to hope that this assumption is correct.