Industrial water sector investment to reach $80 bln by 2017-HSBC

Wed Nov 28, 2012 11:44am EST

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LONDON Nov 28 (Reuters) - Investment in the global industrial water sector should reach $80 billion over the next five years, as demand for water grows, supply becomes more volatile and quality standards become stricter, HSBC said in a report on Wednesday.

The rise in investment will take place across areas like waste water purification, seawater desalination and other water and waste treatments - swelling the market's size by 65 percent from 2013 to 2017.

Water shortage has become a global concern due to rising demand from a growing population and climate impacts. Changes to industrial processes are increasing demand for better quality water and there are more stringent regulations around water use and waste water discharge.

Companies such as Veolia Environnement, Suez Environnement and Hyflux already have a presence in emerging markets where demand is growing fastest and are better positioned to capitalise from investment opportunities, HSBC said.

They also have technical ability and could gain from the mining sector in particular, given there are water challenges in Chile where Suez is located, Australia where Suez and Veolia have bases, and China where all three companies have a presence.

HSBC said industry's share of global water use would increase to 22 percent of the total by 2030 from the current 18 percent, with most of that growth coming from China. India's demand for industrial water will quadruple between 2005 and 2030 and South African industrial demand will rise 120 percent.

U.S. firms could benefit from shale gas opportunities, particularly Aqua America (WTR), which has the greatest balance sheet capacity and scope to expand.

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