As decentralised water treatment company De.mem (ASX: DEM) heads for another record quarter, it anticipates up to $18 million in cash receipts for the 2020 calendar year.
Shoring up the De.mem’s success is its proprietary membrane filtration technology and the rising need for advanced water treatment options worldwide.
Speaking with Small Caps, De.mem chief executive officer Andreas Kroell said the global water treatment market was growing – particularly here in Australia where the Environment Protection Authority imposes strict regulations on industrial companies regarding their wastewater discharge.
Analyst Market and Markets estimated the global membrane filtration market was worth US$13.5 billion in 2019 and forecasts it will reach US$19.6 billion by 2025.
In addition to a tighter regulatory environment, other factors driving membrane filtration demand are a rapidly expanding dairy sector and increased adoption of premium membrane filtration in a variety of applications.
Market and Markets anticipates developing regions such as India, China and South East Asia will offer growth opportunities over the next five years.
Mr Kroell said De.mem’s strategy was to build its market leading position Australia-wide, and boost its international expansion.
During 2020, De.mem increased its presence throughout Queensland, and secured a foothold in Tasmania, Victoria and South Australia.
Internationally, the company has international branch offices already in place in Singapore, Germany and Vietnam.
It was also a key year in 2020 for De.mem in forging its path into Australia’s “robust” food, beverage and agriculture sector which Mr Kroell believes will help drive overall growth.
Mr Kroell said underpinning De.mem’s success was its “world class” intellectual property. The patented membrane technology was developed after intensive research and investment, as well as ongoing collaboration with Singapore’s Nanyang Technological University (NTU).
De.mem manufactures its various polymeric membranes at its Singapore facility. Turn-key water and wastewater treatment systems deploying the membranes are then assembled in Queensland.
Mr Kroell describes the company’s polymeric membranes as among the most advanced globally.
Membranes are microporous structures, which Mr Kroell likened to a sieve.
Similar to a sieve, water molecules pass through the membrane, while larger particles are rejected.
The technology is used to remove bacteria, microorganisms, particulates and natural organic material.
Different membranes to suit various end-uses
The membrane serves as the key filter in De.mem’s integrated turn-key water treatment systems.
A standard water treatment plant will have an ultrafiltration membrane that removes small particles. The next step is a reverse osmosis membrane which eradicates other small contaminants.
Reverse osmosis involves filtering water through a membrane with tiny pore sizes at high pressure. By this process, water molecules are separated from contaminants such as iron, fluoride, lead, salt, manganese and calcium.
De.mem has developed a range of differing membranes with various pore sizes to suit particular applications.
Its ultrafiltration membrane has a large market. It provides pre-filtration for reverse osmosis and potable water treatment.
Meanwhile, De.mem’s nanofiltration membrane can combine the reverse osmosis and ultrafiltration processes into a single treatment step.
According to Mr Kroell, the nanofiltration membrane provides a “superior filtration performance” because it requires much less water pressure while retaining a very high filtration quality due to its small pore size.
This technology enables extremely clean water to be produced at a lower cost. Additionally, the nanofiltration membrane system is cheaper to manufacture.
Mr Kroell said this efficient and effective technology is suitable to treating industrial wastewater.
Singapore’s NTU created the forward osmosis membrane which is used to treat industrial wastewater and liquid in food and beverage markets. De.mem licenced the technology from NTU in early 2018.
This membrane uses osmosis to separate water from contaminants. For example, it can be deployed to de-water concentrated waste from reverse osmosis plants by up to two-thirds.
As a result, waste disposal costs are substantially reduced which are large part of a reverse osmosis plant’s operating expenses.
Mr Kroell said the rejected liquid is often trucked to an evaporation facility which can be “incredibly costly”.
The forward osmosis membrane is highly valuable to the industrial wastewater treatment market including mining.
However, Mr Kroell said it also has a place in the food and beverage industry where it can be used as a cold concentration process.
Unlike traditional methods that require heat, the cold process reduces impact on taste, nutrients and protein, while also shaving costs.
Another membrane with a large market, is De.mem’s microfiltration membrane, while the company’s “point of use” filter system has been designed for domestic use.
Not stopping at these membranes, De.mem has a number of new developments in the pipeline.
It is currently exploring integrating new materials into its membranes, to develop more novel technologies.
The company also plans to introduce a so-called membrane bioreactor to the market. This product combines biological treatment with the membrane and is suited for high organic load wastewater, similar to that found in food and beverage industries.
Mr Kroell said the company’s membranes were a high-value add product that generate quality treated water.
‘One stop shop’
Mr Kroell describes De.mem as a “one stop shop” with its range of water treatment products, solutions and services.
In addition to its patented water membrane technology, De.mem sells consumables including pumps, hydraulics, small water treatment systems and filters.
De.mem also sells water treatment chemicals.
Under two recent contracts, De.mem is supplying equipment to one client in the resources sector and another to an Australian power station.
Meanwhile, De.mem also provides entire customised turnkey plant solutions.
De.mem can design, manufacture, build and operate a water treatment plant for a client – meeting each one’s specific needs.
Positive operating cash flow in its sights
Over the last few months, De.mem has collared several contracts, which, combined, are worth millions.
In October, De.mem revealed it had secured a $2.6 million deal to design, manufacture and commission a membrane-based water treatment plant for a client in the agriculture sector.
The plant will convert seawater into high quality treated water, which De.mem claims will “substantially” exceed Australian drinking water standards.
De.mem will manufacture the solution at its Queensland plant with revenue from the contract to be realised next year.
While a leader in decentralised seawater desalination, Mr Kroell said the company’s product offering around wastewater and recycling has a strong focus on the needs of industrial customers such as multi-national companies working in mining and resources, energy, food and beverage, and agriculture sectors.
Mr Kroell added stricter EPA regulations were continuing to push demand for its solutions.
And as other countries tighten wastewater regulations, Mr Kroell anticipates De.mem will secure more international contracts – particularly for companies with operations across several regions.
Throughout 2021, De.mem will continue diversifying its revenue through customer segments, geography and products.
Mr Kroell said De.mem has never been in a better position as it targets positive operating cash flow in the near future.