A Vancouver company is banking on industry’s need for clean water to generate a stronger revenue stream in 2011.
BioteQ Environmental Technologies Inc. (TSX:BQE) expects four new projects will increase its revenue 25% in 2011.
“These projects are quite a bit larger than projects we’ve done in the past,” said Tanja McQueen, vice-president of corporate development. “And so for that reason the impact they’ll have on our revenue will be bigger.”
BioteQ makes custom ion-exchange water treatment technology for the mining industry that produces clean water and recovers dissolved metals from industrial wastewater.
The company estimates that its new plant in Dexing, China, will be operating by 2011’s third quarter.
Its other projects include:
- a zinc recovery plant that’s being engineered on behalf of an undisclosed mining customer;
- a pilot project with Newalta Corp. (TSX:NAL), one of Canada’s largest environmental waste management services companies, that will use BioteQ’s new Sulf-IX technology; and
- an initiative with EcoMetales Ltd. to break into the Chilean market by developing technology to recover molybdenum from waste smelter dust; EcoMetales is an industrial waste management company owned by Codelco, the world’s largest copper producer.
According to McQueen, strong global mining activity continues to drive demand for water treatment technology. She said industry accounts for 60% of the world’s fresh water use, and many of the world’s mining sites have to deal with acid mine drainage, a toxic soup of dissolved sulphide minerals that can cause significant environmental damage.
“It’s a massive problem,” she said. “Companies choose our technology because it allows them to meet really strict water quality limits. It eliminates residual waste so they don’t have a disposal issue and it recovers byproducts that have value.”
Last year, the company treated seven billion litres of water and removed more than a million kilograms of metal contaminants from industrial wastewater.
Along with the four projects, BioteQ has a marketing alliance with Lanxess Sybron Chemicals Inc. to introduce its sulphate removal technology into the energy industry.
According to McQueen, Lanxess is the world’s second largest chemical manufacturer. She said the alliance will help diversify BioteQ’s markets beyond the mining industry.
But even with that alliance, building the company’s business is difficult. McQueen said resistance to new technologies is the toughest part of breaking into new industries and markets.
“No one wants to be the first one to try a new technology; they all want to be the second one in the door,” she said. “People want to see that the technology works in their industry.”
McQueen remains confident BioteQ’s track record speaks for itself. With a client list that includes companies such as Xstrata (LSE:XTA), Barrick Gold Corp. (TSX:ABX) and Freeport-McMoRan Copper and Gold Inc. (NYSE:FCX), she believes the company’s technology can successfully be translated into other sectors.
But for Sara Elford, industry analyst at Canaccord Genuity Corp., BioteQ’s 25% growth announcement is underwhelming.
According to her analysis, revenue for 2010 is estimated at $8.8 million and, with 25% projected growth revenue for 2011, will be about $11 million.
But BioteQ’s projected 2011 revenue growth is less than the 27% increase the company generated from 2009 to 2010.
Elford said 25% growth is “certainly nothing to sneeze about in this environment. But given where we’ve been over the course of the last few years in terms of some of the challenges that have been faced in commodity prices through the economic crisis, I think there was an expectation their growth coming out of that would be more robust, more quickly.”
But with no direct competition to BioteQ’s technology, Elford said the company is in the right place at the right time and has to wait for industry to recognize it.
“I think their technology has been commercially proven quite successfully and certainly would be in need out there,” Elford said. “These things often don’t move as quickly as you think they ought to, even though they look to be very, very commercially appealing.”