Wastewater Situation

and Opportunities in
Mexico 2011
Vincent Lencioni
WWEMA Washington Forum
April 21, 2011
 LGA Water Focus
 15+ Years working with Wisconsin companies with products for
Mexico public and private water sector
 Market Analysis, Intermediary and Client Searches
 3 years of formal & extensive regional water focus
 Quarterly Mexico Water Report
 Development of Mexican Water Intermediary contacts
 Distributors, Reps, Integrators, EPCs, Consultants
 Winners of Awards, Participants in Bids
 Interaction with Mexican federal and local water officials and
intermediaries for early project information
 Monthly compilation & review of water bids & awards
 WWEMA Presentation, Global Committee, Latin America assistance
 Development of AWWA Manufacturers Committee, Mexico City
 Various presentations on Mexico water sector in the US & Mexico
 Outline
I. Mexico Economic Overview
II. Mexico Water Challenges
III. Wastewater Standards
IV. Municipal Wastewater Plants
V. Industrial Wastewater Plants
VI. Wastewater Opportunities
VII. Annex
VIII. Presentation Sources
I. Mexico/Latam Economic Growth
I. Mexico Misconceptions
 Latin America is insignificant vs.Asia & US markets
 US Market: Latam: 36%; Mexico/Brazil > 25%
 Mexico = 8-10% of US GDP and in general US Market
 World Economies: Brazil #8; Mexico #15
 Mexico fell badly (2009), still on its knees
 Mfg GDP since 2007: Up 2%; up 10% in 2010
 GDP since 2007: Up 3.5%; 2011-12: Up 9%
 Brazil is much more dynamic/important than Mexico
 Brazil GDP: 2x Mexico BUT Brazil Imports < Mexico
 US Export Volumes and % of Total Exports (2010)
 Brazil = $558 Million; Mexico = over $2 Billion & 10% of total
I. US Exports to Mexico
(Billion US) TOTAL EXPORTS % INCREASE

2008 2009 2010 2009 2010

All Products 151.2 128.9 163.3 -14.7% 26.7%
Elec Prods 24.9 23.8 31.5 -4.4% 32.2%
Inds Prods 22.1 20.6 24.8 -6.8% 20.3%
Vehicles 14.0 10.1 14.5 -27.9% 43.8%
Fuel/Oil 11.1 7.7 14.2 -30.6% 84.8%
Plastics 10.7 9.4 11.4 -12.1% 22.1%
Chemicals 5.1 4.4 5.0 -13.7% 13.6%
Instruments 4.5 4.6 4.4 2.2% -3.9%
Paper 3.0 2.9 3.3 -3.3% 13.3%
Iron/Steel 3.1 2.5 3.1 -19.4% 21.8%

*2009 Crisis; 2010 Full Recovery

*Mexican imports & exports up 35%
I. Key Mexican Import Indicators
 Imports from US: Mexico vs BRIC
 Total US Imports: BRIC 11.4%; Mexico 12.4%
 US Import Increase: BRIC 33%; Mexico 32%
 Intermediary Products in Full Recovery
 Capital Goods: 2006 figures; 2007 figures at year end
 Mexico Purchasing Power Up
 Favorable, Appreciating Peso Exchange Rate
 Government Spending Positives
 Pemex Income Up = 1/3 federal spending
 Mexican budget & indicators = healthier than US
And the 800 pound Gorilla in the Room…..
I. Mexican Insecurity and Business
 Insecurity Situation
 Govt vs Cartel struggle
 Right but tough fight
 Historic US cooperation
 Military & Police roles
 Cartel vs Cartel struggle
 Drugs vs Crime (Zetas)
 Victim Realities
 35,000 murders since 2008
 Over 90% = Police or Cartels
 Culture + Taxes = Impunity
 Crime, Kidnapping, Murders
 North vs. South Blurr
 Expanding to other areas
 Business Perspective
 Regional Dynamic
 North vs Rest; 3 Major Cities
 Foreigners not targeted
 Kidnappings nor Murders
 New companies staying away;
already in Mexico are growing
(Control Risks Latin America)
 Maquiladora mfging up
 Volkswagon, BMW, WalMart
 US Travel Advisory Context
 US government motherly role
 Murders per capita reality
 See Following Table
I. Murders per Capita Context (2010)
50 WORST LATIN AMERICA COUNTRIES (ABOVE MEXICO), MEXICAN AND US STATES

HONDURAS 77 Oaxaca 21 New Mexico 8.7 Oklahoma 6.2

Chihuahua* 74 Sonora* 20 Mexico City 8 Nuevo Leon# 6
SALVADOR 70 Morelos 19 Guanajuato 8 Tabasco 6
Durango* 60 MEXICO 18 Jalisco 8 Illinois 6
VENEZUELA 48 Michoacan 18 Maryland 7.7 Georgia 5.8
Sinaloa* 47 Nayarit 15 Tennessee 7.3 Florida 5.5
Guerrero 46 Quintana Roo 13 Puebla 7 Arziona 5.4
T&TOBAGO 37 Louisiana 11.8 Alabama 6.9 Texas 5.4
COLOMBIA 32 Chiapas 10 Mississippi 6.4 California 5.3
BRAZIL 25 Coahuila# 9 Missouri 6.4 Pennsylv. 5.2
Wash D.C. 24 Mexico(State) 9 Michigan 6.3 Queretaro 5
Baja Calif* 24 Tamaulipas# 9 So Carolina 6.3
Puerto Rico 22.6 Colima 9 Arkansas 6.2

1. Mexico better than Brazil, Colombia, Venezuela, & Central America

2. Mexico business travel locations (underlined) similar to US locations
3. Problems in Northwest Mexico states(*) spike Mexico average badly;
Northeast Texas border area states (#) much better than portrayed.
II. Mexico Water Overview
II. Mexico Water Issues & Challenges
1. Geographical Challenges: North/Central vs South dynamic;
Altitude, precipitation, population, urban growth issues

2. Overexploited aquifers: 15% - all in the North/Central

3. Per Capita Water: 18,000 m3 (1950) to 4,400 m3 (2010)

4. Potable/Sewerage Coverage: Goals ok, rural low (79%/63%)

5. Metering: Domestic (“obligatory”, < 2/3) vs Industrial (0%)

6. Use of Water: 80% Agriculture (40% in US) = only 2% revenue

7. Delivery Systems: 50% loss in Potable and Agriculture Use

8. Wastewater Treatment: < 40% Municipal; < 20% Industrial

 II. 2030 Water Priorities
All municipal water treated Increased Irrigation technology

All rivers % lakes without trash River Basin auto administration

Contamination
All treated water reused
sources under 100% River Basin
control Clean Equilibrium
Rivers
Efficient regional
All industrial water order
treated
Universal Habitable
Water areas free
Urban suburbs Coverage from floods
Flood zones without
connected to the habitations
network

Disaster alert systems and

All rural areas with potable water
prevention

Operating organisms functioning efficiently

 II. Mexico Water Goals: 2012 & 2012
 5 Year Plan (2007-2012)
 Potable water coverage: 92%
 Current: 91%
 Sanitary/sewer coverage: 88%
 Current: 87%
 Wastewater treatment: 60%
 Current: 40% (may be)
 Rehabilitate 500 Dams
 Current: 420; 750 by 2030
 8% increase: utility efficiency
 Improve Water Productivity in
the Agricultural Sector
 Better flood prevention
actions
 2030 Water Agenda
 By 2016: all major urban
areas free from risk of flood
 By 2015, All Irrigation
technified, 100% water reuse
 2024: Complete rural potable
water and sewage access
 2025: All Industrial and
Municipal wastewater treated
 2030: All aquifers and
contamination in balance
 From 64th in water
infrastructure to between
Panama (46) & Chile (35).
I. Municipal Treatment Evolution
(2012 Goal and Historical Figures)
Year 2000 2005 2007 2008 2009 2010 2012

Collected* 200 205 207 208 209 2010 220

Treated* 46 71.8 79.3 83.6 88.1 91.2 132
Increase* 4.9 7.3 4.9 4.3 4.5 3.1 40.8
% Treated 23.0% 35.0% 38.3% 40.2% 42.1% 43.4%# 60%

# = 2010 Latin America Green City Index Average 52% vs

Mexico 43.4%
* = Collected, Treated, Increase = m3 per second;
Increase = year to year treated
III. Wastewater Standards
III. Mexican Wastewater Regulations
 Types of Regulations
 By where water goes:
 NOM 001: Federal bodies
 Rivers, Lakes, Coasts
 All towns > 2500 inhabs
(2600+) & all companies
 NOM 002: Municipal
 Sewer/Drainage System
 Discharge “Rights” Fees
 If NOM 001: Federal Fees
 If NOM 002: Local Fees
 By Reuse
 NOM 003 = Water Reuse
 NOM 004 = Sludge/Mud
 System/Function
 Measures metals, oils,
tempurature, nitrogen
 BOD (DBO) = Urban
 COD (DQO) = Industrial
 TSS (SST) = Both
 Based on post-treatment
use: Agriculture, Public
Use, Fauna
 Requirements vary by use
 Sampling: Frequency,
Self Enforcing
 No Metering: 2011 Pilot
Projects
 III. NOM 001:
Discharges into Federal Bodies

M.A. = Monthly Average; D.A. = Daily Average

(1) Instantaneous
(2) Simple sample weighted average
(3) Absent as per the Test Method defined in the NMX-AA-006.

As of 2010, all companies & municipalites with 2500+ (3200 total)

supposed to be compliant; Reality is much, much less, numbers unclear
 III. NOM 001 (continued)

(*) Measured in full.

D.A. = Daily Average M.A.= Monthly Average NA = Not applicable
(A) (B) and (C): Receiving Body type according to Government Service Charges
Law.
 III. NOM 002:
Discharges into Municipal Systems

As of 2010, all companies are supposed to be compliant

 III. Wastewater Standards:
US vs Mexico
 Significant differences between systems:
 Standards Levels & Materials Tested
 Samplying Frequencies
 Metering Requirements
 PreTreatment vs PostTreatment
 Viable Regulations & Enforcement
 Local vs State vs Federal
 Fines, Civil & Penal Liabilities, Closures
IV. Municipal Wastewater Plants
IV. Municipal Plants - Annual
 2010: How Much/Where
 43.4% Waste Treated
 200% increase since 1992
 100% Increase since 2000
 Treatment capacity need:
196m3 = 71m3 deficit
 25% capacity increase since
2006
 Flow Increase: 5% annual
 Treatment Areas
 North > 50% treatment
 Center: 33% treatment
 48% Treatment in Río
Bravo/Lerma Basins
IV. Municipal Plants by State (2009)
IV. State Treatment Good & Bad:
Refining Coverage & More Basic Needs
 Good: 10 States > 2/3
 100%: Nuevo Leon, Baja
California, Aguascalientes
 75-65%: Guerrero, Nayarit,
Chihuahua, Sinaloa, QR,
Tamaulipas, Durango
 Evolutions (2003-2010)
 Aguascalientes: 77 to 100%
 Baja California: 72 to 100%
 Chihuahua: 32 to 72%
 San Luis Potosi: 22 to 63%
 Tamaulipas: 37 to 65%
 Sinaloa: 40 to 69.4%
 Positive but Reversals
 Quintana Roo: 73 to 69%
 Nayarit: 82.6% to 70.3%
 Bad: < 25% wastewater
treatment coverage
 < 10%: Yucatan,
Campeche, Hidalgo
 14.4% Mexico City
 20-15%: Zacatecas,
Tabasco, Morelos, Chiapas
 22.2% State of Mexico
 24.1% Jalisco
IV. State Wastewater: Good/Bad
 Which States are doing better than others
 BOD (Oxygen Demand: Urban wastewater)
 Bad (> 30*): DF, Mexico, Guanajuato, Tlaxcala
 Good: Jalisco, NL, Tamps, VC, AGS, CHI, BC
 COD (Chemicals: Industrial wastewater)
 Bad (> 40*): DF, Mexico, Jalisco, Guanajuato, Baja California,
Aguascalientes, Chihuahua, Puebla, Tlaxcala
 Good: Nuevo Leon, Queretaro, Tamaulipas, Veracruz
 TSS (Suspended Solids: Both, more urban)
 Bad (> 150*) only Hidalgo = result of DF/Mexico Wastewater
 Overall Good: Campeche, Coahuila, Colima, Chiapas, Durango, Guerrero,
Nayarit, Oaxaca, Quintana Roo, San Luis Potosí , Sinaloa Sonora ,Tabasco and
Yucatan.
* Miligrams per liter
IV. Major Urban Wastewater:
Projects, Coverage, Future Trends
 Mexico City
 Atotonilco: 2013; Cost: $785 Million US
 El Caracol: 2014; Cost: $130 Million US
 Area Coverage: < 15% in 2011; 40-60% in 2013/2014
 Capacity: 26m3 dry season; 38m3 wet season.
 Guadalajara
 Agua Prieta: 2012; Cost: $280 Million US
 El Ahogado: 2012: Cost: $150 Million US
 Area Coverage: < 25% in 2011; 100% in 2012
 Capacity: 11m3; ability to treat 10,000 liters/second each.
 Monterrey
 No Major Projects but has 100% Coverage
 Medium Size/2nd Tier Cities: Next/Current Targets
 8 Cities: 2.5 to 1 million; 20 Cities > 750,000; 30 Cities > 500,000;
45 Cities > 250,000; Over 60 Cities > 100,000 population.
IV. Type of Municipal Plants (2009 = 2029 plants)

Sludge Activated
46.43%
Stabilizing Ponds
15.59%
Advance Primary
11.14%
Others 8.63%

Aeration Ponds
8.11%
Biological Filters
5.37%
Dual 4.74%
IV. Public Treatment Challenges
 Cons – Concerns but
 Limited Federal Role
 Few Sticks & Carrots
 Bid Processes Bad
 Corruption, 3 Year
Municipal Elections
 Rains, Altitude, Urban
 Societal Acceptance and
Low Water Reuse (<10%)
 Statistics: probably worse
 Inadequate monitoring
 Pros – Improving
 Legal Changes on Way
 Prosanear = 173 cities
 Some positive societal and
municipal gov`t signs
 Northern State Positives
 Coverage is up & growing
 APAZU Funding for
municipal plants: 64%
 Funding and Financing
supposedly sufficient – see
next slide
IV. Impact of Funding Issues
 2011 Total Mexico Water Budget
 $6 Billon US = 2x Conagua budget
 Sources: Federal (Conagua) 49%;
State 18.5%; Local 12%;
Other (EPA) 20.5%
 2011 Conagua Water Budget
 Total: 36.8 Billion pesos ($3 Billon US)
 States: 62%; Federal Spending 38%
 Urban: 80%; Rura:l 20%
 Distribution: 48% Projects; 33% Admn;
19% HidroAgriculture
 Projects: 39% Potable; 49% Drainage;
12% Treatment
 Treatment = $360 million US
 Growth Up, slowed by economic crisis:
 Since 2002 250%; Since 2007: 69%
 2011: 5.5%; 2010: 14%; 2008: 22%
 Hidroagriculture: 2008: 46%; 2011: 4%;
 Local vs Federal Projects
 Municipal: 95%
 64% APAZU Matching Funding
 Federal: Large Projects Only
 Funding vs Finance Argument
 “Funding Sufficient”: Conagua
 “Financing Available” Fonadin
 Still BOT vs Traditional Bid Debate
 Payment, Local Government concerns
 Supposedly $2 Billion US: 2008-2012
 Water Prices
 Domestic: Low (graph) Not close to costs
 Industrial: higher but still low
 Agriculture: almost free
 80% total use < 2% revenues
 Billing vs Collected (See Graph)
IV. World Domestic Water Prices
Price (pesos/m3)
(11 pesos:$1 USD), 2008 prices

2.76 Mexico City/Federal District = 25 cents

20.4 Washington D.C.

20.98 Lisbon

24.2 Madrid

28.67 Los Angeles

31.7 Istanbul

46.44 London

0 20 40 60
IV. Water Revenue Problems

Ejercido = Spent; Recaudado = Revenue

V. Industrial Wastewater Plants
V. Industrial Plants by State (2009)

Operating Capacity & Treatment %: Very low, even in industrial states

Total Treatment: 190m3 flow p/s with 36.7m3 p/s treated = 19.3%
Total BOD: 6.95 million tons with 1.33 million tons treated = 19.1%
2009 Operating Capacity: 50% (Installed: 72.5m3; Treated: 36.7m3)
V. Industrial Wastewater Treated:
Not good but better than seems
40
35 Up 66%
30 since 1999
25
20 (m3/s)
15
10
5
0

Industrial Wastewater since 1997: Flow up 195% (64.5 to 190m3 p/s)

Treated amount up 592% (5.3 to 36.7m3 p/s)
Wastewater/BOD Treatment up 137.5% compared to flow (8% to 19%)
 V. Industrial Plants by Type
2010 Total Industrial Plants: 2186 (100%)
 Primary: 731 (33.4%)
 Adjusting PH levels & removing materials > .1mm
 > 50% in Veracruz & Chiapas: Basic Treatment

 Secondary: 1193 (54.6%)

 Removing colloidal & dissolved organice materials
 57% in 4 states: Mexico, Veracruz, N.L., Hidalgo

 Tertiary: 88 (4%)
 Removing dissolved materials, driven by incentives
 32 Mexico City/State of Mexico; up 25 a year

 Other: 174 (8%)

V. Industrial Treatment Challenges
 Cons – Serious but...
 Funding for Enforcement
 Federal: Carrot/Incentives
 Growing but still limited
 Federal: Stick/Enforcement
 Staff, Metering concerns
 Few Fines, Closures
 Local: Rules & Enforcement
 “Generic Vodka”
 Local: Politics/Corruption
 Limited Federal Role
 Companies: Price-based, not
reach for best or right solutions
 Plants: 53% up since 2000 = half
of Municipal Increase (99%)
 Pros – Some good signs
 Conagua Commitment Up
 Municipal need for revenue
 Water Reuse up (Over 5 Bm3)
 Industrial Water Prices Up
 Fines & Permits
 Costs and enforcement up
 Targeting Problem Industries
 Prosanear Program Growing
 Society & Tracking Responses
 Funding & Legal Reform Up
 New Metering Pilot Programs
 Writing on the Wall: When not if
companies must comply.
VI. Wastewater Opportunities
 VI. Municipal Opportunities
 Plants – New & Rehabilitation
 2011 New: 50 Plants, another 50 expected: Rehab: 43% Plants ($225 million)
 2012 - Should be equal or better than 2011 – Year before Presidential Elections
 2013 – New Presidential Administration: considerable slow down / adjustments

 “In Vogue” Treatment Processes / Tendencies

 90% of Municipal Treatment in six categories:
 Sludge = 46% treatment (546 Plants); Stabilization Ponds = 16% treatment (707
Plants); Advanced Primary = 10% treatment (16 Plants); Aerated Ponds = 8%
treatment (32 Plants); Dual Plants (10) & Biological Filters (97) = 10% treatment
 Plants with significant numbers but low treatment: RAFA/WASB (162), Wetlands (160)
 New Plants and Plant Growth (2008 to 2009)
1. Biological Filters (55, up 100%+); 2. Aerated Ponds (up 33%);
3. Sludge (92, up 20%); 4. Wetlands (26, Up 20%)
 Info on state preferences for treatment technology (see LGA Consulting website)
 Problem – Physical/Chemical used over Biological – driven by upfront costs

 Medium Size/2nd Tier Cities: Next/Current Targets

 8 Cities: 2.5 to 1 million; 20 Cities > 750,000; 30 Cities > 500,000; 45 Cities
> 250,000; Over 60 Cities > 100,000 population.
 VII. Mexico Wastewater Projects
2011-2012
 New ($850 Million)  Feasibility Studies for
 Lake Xochimilco (3) Wastewater Plants (13)
 Lake Valsequillo (4)  Chiapas, Tabasco, Veracruz,
 Rehab ($400 Million+) Mexico City, Puebla, State of
Mexico, Colima, Tamaulipas,
 Lake Chapala (7) Tlaxcala, Sonora, Yucatan,
 Chihuahua (40) Michoacan, Hidalgo
 Colima (18)  Global Water Intelligence (9)
 Jalisco (28)  Valle del Bravo, Valley of
 Sinaloa (20) Mexico, Caborca, El Conejo,
 Tlaxcala (20) El Zapotillo, Bahia de
Banderas, Popotla, Tijuana,
 Veracruz (18)
Monterrey VI
 Tabasco (20)
VI. Municipal Wastewater Sector
Market Size
 Estimated size as ranges of below models: $220-546 Million (Median: $357 Million)
 From 2011 Conagua Budget Elements
 From Total 2011 Mexico Water Budget
 Conagua Budget: 49% Conagua, 51% others; Therefore x 1.5-2 = Total Market Size
 Conagua Projects = 48% ($1.53 Billion); 12% of Projects = “Saneamiento”: $183 Million
 Conagua Wastewater = 80% Saneamiento or $146 Million
 Total Municipal Wastewater (WW) Market (1.5-2x) $220-293 Million
 From 2011 Saneamiento Budget Concept
 Saneamiento $189.8 Million x 80% = $152 million US
 Total Municipal WW Market (1.5-2x) = $228-300 Million
 From 2011 Specific Conagua Wastewater-related Concepts
 100% (S218) + 12% (K007+S074+S075) = $255 million
 Total Municipal WW Market (1.5-2x) = $382-500 Million
 From 2010 US Embassy Study on Mexico Water & Wastewater Imports
 $3.922 Billion; 66-80% Municipal = $2.9 Billion; 12% Saneamiento: $350 Million; 80% = $280 Million
 Total Municipal WW Market = $280 Million
 From 2008 Latin America Municipal Wastewater Equipment Study (Frost & Sullivan)
 Latin America Municipal Water: 2008: $43.1 Billon; Mexico = 27.5% or $11.85 Billion
 Total Municipal WW Market (See Formula Above: 48% x 12% x 80%) = $546 Million
VI. Problems for NAFTA Companies
Selling to Mexican Government
 National Content  Licitation Problems
Regulations
 New (2010), Higher
(65%), enforcement up
 National Bid Issues
 NAFTA Problems
 US/Canada vs Mexico
 Result: Govt Bid
Opportunities down
 Mexico hypocritical?
 Compranet System
 Decisions already made
 Opening/Closing dates
 Can´t find winners?
 Low amounts reported
vs. high amounts
budgeted
 Where are projects?
 Lack of Transparency
 Local vs Conagua issue
 VI. Channel Realities
 Private Sector – Full Range of Options (B2B)
 Pros & Cons: Distributor vs Rep vs Direct
 Private Sector Intermediaries work in Public Sector?
 Public Sector – Requirement despite NAFTA
 National Bid Rules = Sales: Distributor or Subsidiary
 99% of Bids National = Must sell through Mexican entity
 National Content Rules = 55% now; 65% in 2012
 Increased need to work through Mexican integrators/EPCs
 Local Bid (95%) Selling Environment
 Early bid knowledge, answering bid, servicing
 Sale will often be based on who you know
 Ability to steer clear of corruption problems
 VI. Industrial Opportunities
- Commercial & Industrial – Traditional Wastewater
- Types of Plants & Technologies
- Secondary Strong - Activated Sludge, Aeration Lagoons, Extended Aeration
- Tertiary low but growing (2009: 66 Plants; 2010: 88 Plants = 25 a year?)
- New vs. Refurbished (2011: over $225 million US)
- Industry Water Reuse & Savings
- Water reclamation, water capturing systems more important with industrial water price
increases
- Infrastructure Projects
- Resorts: Hotels and Restaurants, Residential and Golf Courses
- 100 New plants (2011-2014)
- Commercial: Malls, Industrial Parks, Hospitals, Restaurants, Hotels
- States & Cities with best enforcement reputations
- D.F., Monterrey, Chihuahua, Guanajuato, AGS, Queretaro
- 173 Cities participating in PROSANEAR Program
- Products: Domestic vs Imported (See Annex Sheet)
VI. Industrial Sectors – Problems
Top Priorities, heaviest
polluters (2030)
1. Sugar – Requires regular,
on-going investments even
though meeting standards.
2. Paper - $70 million US* -
Highly regulated, improved
Mfging processes, maintenance
3. Metalworking / Automotive –
Large & Growing, Tier 1 & 2
issues, OEM compliant
4. Food & Beverage / Dairy -
$90 million US*
* = Expected Investment 2011-2012 (US Embassy, Mexico City)
High Frequency & Flow
Priorities
1. Pork / Agriculture / Aquaculture – Target
area for enforcement, Conagua investment
increases. Problems worse than expected
2. Textile / Clothing / Leather – $70 million
US*; many medium & small producers
who are not compliant
3. Petroleum / Petrochemical (Pemex) –
Increasing investments in wastewater
4. Chemicals / Pharmaceuticals / Plastics -
$120 million US*
VI. Industrial Wastewater Market
Estimated Size as ranges of below models: $110-$350 Million (Median: $285 Million)

A. From 2005 Mexico Industrial Wastewater Equipment Study (US Embassy)

$370M - Industrial Wastewater Equipment Only: 2005: $325 Million; 2006: $346 Million
 Pre-Economic Crisis Numbers could come close to approximating current market; 40% Large vs 60% Small/Medium
Total Industrial Wastewater (WW) Market: $350 Million

B. From Total Mexico Water & Wastewater Imports (2010) (US Embassy)
Imports: $3.314B x Equipment (88%) x Industrial (20%) = $593 Million
 Estimated Wastewater %: LOW (33%): $221 Million; MEDIUM (50%): $336 Million; HIGH (66%): $445 Million
Total Industrial WW Market: $336 Million (5% Annual Growth figure for future estimates).

C. From 2011 Conagua Budget (with Industrial = 50% of Municipal)

* Total Market Municipal Wastewater Treatment = $220-293 Million; Industrial = 50% or
Total Industrial WW Market: $110-150 Million

D. From 2010 Latin America Industrial Wastewater Equipment (Frost & Sullivan)
Latam: 2011: $1.12 Billion; 2012: $1.17 Billion; 2014: $1.27 Billion
 Mexico: (millions US$) 2011 2012 2014
 Low (16.5%) 185 195 210
 Low-Medium (25%) 280 295 320
 Medium (33.3%) 375 390 425
Total Industrial WW Market: $280-375 Million
________________________________________________________________________________

Estimated Size of both Industrial & Municipal Wastewater Markets > $500 Million
VI. Tips for Mexico Opportunities
 Get in/stay in, despite insecurity concerns
 Demand Up: Economic Growth & Funding Up
 Water Sector: 70% Imported, 2/3 from the US
 Municipal: 2011 and 2012 up; 2013 down
 Industrial: Locate proactive states/cities: target companies
 Find in-country sales support…..
 Ideally:Sales Staff or Rep + Integrators
 Distributors – Viable in Private, not in Public

 …but don`t rely solely on intemediaries for

market analysis or business development
 Bring financing/credit plan: Private > Public
LGA Contact Information
Vince Lencioni, General Manager

Email: vlencioni@lgaconsulting.com
Website: www.lgaconsulting.com

Mexico Water Report Electronic Access:

http://www.lgaconsulting.com/water/report.html

Mexico City Toll Free Number in the US:

1-888-750-0988; or 011-52-555-378-3840 or 90
VII. Annex
VII. Domestic vs International Products
Imported Product Preference Both Domestic Product Preference

GIS & SCADA Analyzers & Contractors & Construction

Manometers
Automation & Controls Equipment Filtration Equipmt & Pipe/Water Distribution Equipment
Products
Wastewater –Reuse Equipment Treatment Plant Sludge Handling Systems
Systems
Treatment Plant Systems Tanks Gates & Flumes
Data Management Systems* Leak Detection Metal Fabrication
CIS & Meters Laboratory & Sampling Chemical Feed Equipment
Products
Well Drilling/Systems Process Equipment Corrosion & Cathodic
Aerators, Diffusers Protection/Control Equipmt
Chemicals Compressors & Chlorine
Blowers
Desalination Equipment Disinfection Systems Coating & Lining

Leak Detection Consulting* Sewer/Collection Systems &

Equipment
Laboratory & Sampling Equipment Pumps & Valves Traditional Treatment Options

Rain Water Reclamation Storm/rain drainage

Solutions
 VII. Water Demand by Sector
(2020)
Km3/year (m3/s)

National Agriculture Industry Public Other Difference

Supply 2020-1997

3180 2640 95 381 64 856

100% 83% 3% 12% 2% 27%

CONAGUA 2010: 77% Agriculture, 12% Public, 9% Industrial.

VII. Mexican Domestic & Industrial
Water Prices
VII. Treatment by Basin Analysis
No Water Basin Number of Installed Water Treated
. Plants in Capacity (m3/s) (m3/s)
Operation

Lerma = 25% of plants; Rio Bravo = 25% of

Installed Capacity and Water Treated; using
75% of Installed Capacity, Need a lot more.
VII. Treatment by Basin Analysis
Municipal wastewater treated by 13
River Basins (Total = 100%):
 Conclusions
 Majorityof Treatment in
1.- Rio Bravo/Northern Border 26.5% North (#1,3,5,7,8)
2.- Lerma-Santiago-Pacífic 21.5%  Over 50% of all treatment
3.- Pacific North 8.0%
4.- Valley of Mexico 7.4%
5.- Penisula of Baja California 7.3%  SignificantTreatment in
6.- Balsas
7.- Central Northern Basins
6.5%
4.8%
Center (#2,4,6)
8.- Northeast 4.0%
 About 1/3 of rest
9.- Center Gulf 3.7%
10.- Southern Border 3.1%  Insignificant
11.- Gulf North 2.7%
treatment
12.- Pacific South 2.3% in south/gulf areas
13.- Península of Yucatan 2.0%  Less need for water, less
industry and population
VII. Municipal Treatment Plants by Capacity (2010)
VII. Municipal Wastewater Treatment
by State Analysis
 Majority of Plants in dry,  Installed Capacity
northern states 1. Nuevo Leon (12%)
1. Durango (167, 10%) 2. Chihuahua (8%)
2. Sinaloa (136) 3. State of Mexico
3. Chihuahua (119) 4. Baja California
 Most important states: 5. Federal District
fewer plants  Treated Water
 State of Mexico (105) 1. Nuevo Leon (14%)
 Jalisco (96) 2. Chihuahua (7%)
 Nuevo Leon (61) 3. Baja California
4. State of Mexico
VIII. Presentation Sources
 American Chamber of Commerce, Mexico – Charting the
Economy; 2nd Quarter/2011
 Banco de México, Índice de volumen de la producción industrial,
Series de tendencias.
 Business Monitor International, Latin America Monitor, May 2011
Editions
 Comisión Nacional de Agua (CONAGUA): Presupuesto Federal
de Egresos (2009, 2010, 2011)
 Comisión Nacional de Agua (CONAGUA): Situación del Subsector del
Agua y Saneamiento 2009
 Comisión Nacional de Agua (CONAGUA): Situación del Subsector del
Agua y Saneamiento 2010
 Comisión Nacional de Agua (CONAGUA): Estadísticas del Agua 2011
 Economy Watch: Economic Statics & Economic Indicators Data Base
for 2012.
 Global Trade Information Services, US Export Statistics – United
States Exports To Mexico; United States Exports to Brazil, March
2011.
VIII. Presentation Sources
 Gobierno Federal Mexicana, Ley Federal De Derechos, 2010
 Interviews with different Conagua and EPA officials.
 Media Analytics, Global Water Intelligence, January and February 2011
editions
 Semarnat, Normas Oficiales Mexicanas: NOM 001-1996, 002-1996,
003-1997, 2009
 Semarnat, Norma Oficial Mexicana NOM 004-2002, 2002.
 U.S. Commercial Service Report: Mexico Equipment and Services for
Upgrading Municipal Wastewater Treatment Plants. September 2010.
 U.S. Commercial Service Report: Mexico Water and Wastewater
Equipment and Services Industry. September 2010.
 Wikipedia, List of countries by international homicide rate 2010;
US State source: http://
www.ucrdatatool.gov/Search/Crime/State/StatebyState.cfm
Mexico State source:
http://www.prominix.com/sblock/admin/images/Mexico%20Crime%20Stats%202
010.pdf