Water Is The Gift-Of-Life For SembCorp Industries

SembcorpIndustriesLogoSembCorp Industries (SGX: U96) announced that it will build, own, and operate a total water management plant to support a coal-to-diesel project in Wangqiao Industrial Park located in Changzhi city in China’s Shanxi province.

The plant aims to achieve “zero liquid discharge”, where there is no discharge of any waste waters. It will also “offer the most comprehensive range of water products and solutions, amongst the water facilities that SembCorp has developed in China.”

SembCorp’s plant will provide up to 57,600 cubic metres of industrial and potable water; 81,600 cubic metres of demineralised water; and 984,000 cubic metres of cooling water daily.

In addition, the plant is able to treat up to 33,600 cubic metres of industrial wastewater and reclaim up to 38,400 cubic metres of water from treated industrial effluent per day.

The plant will cost around S$190m to develop and is expected to be completed in phases between late 2014 and 2015. The company said it would fund the project with internal resources and external borrowings.

SembCorp Industries has $2.15b in cash on hand and S$2.57b in total borrowings, so it is likely that the total water management plant would not be a strain on its finances.

The plant will be serving the Shanxi Lu’an Group’s coal-to-diesel project under a 15-year service agreement and is “in line with SembCorp’s plans to develop water projects for industries in China”, especially in water-stressed regions.

SembCorp Industries’ Utilities arm, which includes the total water management plant, accounts for more than half the company’s overall revenues.

Elsewhere, the company’s Marine unit, represented by subsidiary SembCorp Marine (SGX: S51), has also seen a slew of contract-wins.

These positive developments will not have any material impact on SembCorp Industries’ top and bottom-line for the year. But there might be long-term benefits.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.