Suez aiming to navigate China

Suez Environnement, one of the world’s largest water and waste service company by revenue, plans to enter China’s desalination market by tendering projects in two coastal cities in the next two to three years, said the company’s chief executive officer.

“We are preparing to tender desalination projects in Tianjin municipality and Qingdao in East China’s Shandong province,” Jean-Louis Chaussade, CEO of the Paris-based Suez Environnement, said in Australia in a recent interview.

Visiting several of the company’s projects in Australia, including the world’s largest desalination plant at Wonthaggi, Melbourne, Chaussade said the company has a plan to become a major player in China by helping the country turn seawater into drinking water.

He refused to reveal the details of the two pending projects in Tianjin and Qingdao but confirming that they are both small- to medium-sized projects with capacities to produce 100,000 to 200,000 cubic meter of drinking water per day. The company’s large Wonthaggi project is able to produce 450, 000 cu m per day.

Apart from the Wonthaggi project, which cost 3.5 billion Australian dollars ($3.65 billion) for construction, Suez Environnement has desalination plants in the cities of Sydney, Perth and Adelaide too, as well as other water and waste management projects in Australia.

Chaussade said that when he made his first trip to Australia in 2000, all the authorities he met said Australia would never need seawater desalination projects.

“Now, there are big desalination projects in almost all the major cities in Australia. I’m pretty sure China will need that very soon,” he said, adding the development of desalination market just began in China.

He said the company would probably see the first desalination project in China in the next two to three years, though no timetable for the tendering of the two projects in Tianjin and Qingdao is confirmed.

The company reported global revenue of roughly 11.12 billion euro ($14.58 billion) for the first three quarters of this year, showing a 1.3 overall growth year-on-year amid Europe’s economic turmoil. It, meanwhile, saw a 10 percent organic growth in Asia Pacific, in which the Chinese market is a major driving force.

The company’s total income in China reached more than 1 billion euro in China in 2011. Around 80 percent of Suez Environnement’s China business is water-related.

Chaussade said it’s a natural process to move from conventional water supply to higher end water treatment for his company’s business in China, especially when there is more competition in lower-end urban water supply.

The acute water shortage driven by the scarce water resources and the growing population makes China an ideal market for desalination.

A report released by research firm Global Water Intelligence in 2011 shows that China is expected to become the second largest desalination market in the world after Saudi Arabia by 2016.

“If you want to know the potential of China’s desalination market. I have two figures for you. China, which presents 21 percent of the world’s population, has only 7 percent of water resource. The situation speaks for itself,” Chaussade said.

Seawater desalination, according to him, is one part of complex water management system. “A lot of cities combine water transfer projects, recycling water and more rational consumption with desalination technology together to secure the access to drinking water in case of severe water shortage,” he said.
Thierry Mallet, Suez Environnement’s senior executive vice president in charge of international business, said the company is not one of the first comers in China’s desalination market but it “definitely wants to be there”.

“One important thing about Suez Environnement is that we are not always trying to be the biggest. We want to provide the right solution in the right place rather than going first,” Mallet said.

“Finding the right project and be sure we are competitive is our challenge once entering Chinese market,” he said.

Suez Environnement, according to Mallet, has already started to source desalination equipments from China, which is able to nurture local providers and local partners to help the company to be more competitive once it enters Chinese market.