NEWS RELEASE                                   APRIL 2004

Double-Digit Growth in RO Market Due to Membrane Bioreactors and Desalination

The market for cross-flow membrane equipment and membranes will grow from $6.3 billion worldwide in 2004 to over $8.4 billion in 2007.  Desalination alone will account for over one third of this growth and revenues in this sector will grow to $1.8 billion in 2007.  The fastest growing segment of the market is in membrane bioreactors.  Both municipal and industrial revenues will grow by more than 15 percent per year in this segment which combines biological treatment and membrane filtration.  These forecasts are contained in the continuously updated online RO, UF, MF World Markets, published by the McIlvaine Company.

Reverse Osmosis membranes remove salts but require high pressures and, therefore, considerable energy consumption.  Nevertheless, the high removal efficiency is needed for desalination and complete elimination of pathogens.

Ultrafiltration is somewhat less efficient but utilizes far less energy.  Growth in this sector has been associated with the food industry, and more recently in the purification of drinking water.

Microfiltration is the least efficient membrane technology but consumes little energy. Microfiltration has become very popular for use in municipal drinking water plants.  It is used in wastewater treatment in combination with biological treatment.  Compact membrane bioreactors have capital and performance advantages over conventional biological treatment systems.

The high growth rates and promising future of the cross-flow membrane industry have attracted some of the world’s largest companies.  GE is prioritizing water as a growth engine.  It is already a major player in cross-flow membranes due to the acquisition of Osmonics.  ITT has made several recent acquisitions to position itself in the membrane market.  ITT Industries has recently completed the acquisition of Shanghai Hengtong Purified Water Development Co. Ltd. and Shanghai Hengtong Water Treatment Engineering Co. Ltd. (Hengtong), a Shanghai-based producer of Reverse-Osmosis (RO), membrane, and other water treatment systems for the power, pharmaceutical, chemical, and manufacturing markets in China.

The U.S. will remain the largest RO market through 2007:

Reverse Osmosis Equipment and Membrane Revenues

$ Millions

                                                Country                      2007

                                                United States               958

                                                Japan                           301

                                                Saudi Arabia                297

                                                China                           292

                                                Country                      2007

                                                South Korea                192

                                                Spain                            160

                                                Taiwan                         122

                                                India                             114

                                                Germany                       113

                                                United Kingdom            95

However, growth in Saudi Arabia and China will position these countries closer to the U.S. and among the top four purchasers in the world.  Japan will hold on to second place as a membrane purchaser.  It will also maintain its role as a leading supplier and exporter of membranes and membrane technology.

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