There’s something nasty in our water and soil that hangs around forever and can make us very ill. The better news is that two ASX-listed companies are up to the vast remediation task.
Dubbed the ‘new asbestos’, PFAS is the collective name for a group of man-made chemicals – Per- and poly-fluoroalkyl substances – used in industrial and applications, notably fire-fighting foam.
They are also used in consumer products such as Teflon pans and carpets.
“Once PFAS enters the environment it can spread very rapidly,” says Sean Halpin, CEO of the water treatment junior Scidev (ASX:SDV).
“It bioaccumulates and doesn’t break down naturally in the environment.”
PFAS has been linked with maladies including cancer, organ damage and infertility.
“The product is being phased out with global bans, but as with asbestos, that doesn’t address the legacy issues,” Halpin says.
Highlighting the growing clean-up costs, US firefighting foam provider 3M Company has agreed to a settlement of between $US10.5bn and $US12.5bn to remove PFAS from thousands of water sites.
The viability of the $US50 billion market cap company now is said to be in doubt.
Last year, Delaware-based chemical giant DuPont de Nemours Inc reached a $US1.8 billion deal to compensate 300 drinking water providers.
The Australian government reportedly is considering having a swing at 3M, in relation to the defence force’s use of the toxic foam which allegedly has affected more than 30,000 residents across 11 towns.
Current PFAS treatments are complex and expensive, but Halpin says Australia is a leader in developing better methods.
Known as Intec, Scidev listed in early 2000 as a mining tech business, aimed at minimising on-site water waste and pollution.
In 2021 the company acquired the private Haldon – co-founded by Halpin – and a PFAS treatment called Fluorifix.
The ion-exchange filtration method rids water (and soil) of PFAS and other contaminants, condensing the PFAS into a small volume for incineration at high temperature.
Currently, 60-70 per cent of Scidev’s revenue derives from the US, where the omnibus Inflation Reduction Act funds water remediation measures.
“The US has a widespread environmental issue that has direct human health impacts,” Halpin says. “There will be funding available in one way shape or form no matter who is in office in the US [after November’s presidential election].”
Listed since 1977, Environmental Group (ASX:EGL) has focused on mitigating air pollution, reducing carbon emissions and waste-to-energy production.
With Victoria University, the company’s fledgling EGL Water arm has been developing an “enhanced patented technology” for treating PFAS.
Unlike rival processes the nasties don’t require incineration but are converted into a non-toxic chemical. This has resulted in a “ground breaking” 87 per cent reduction in PFAS-contaminated water.
In June the company won its first order for one of its PFAS plants, pitched at airports, water authorities, petrochemical companies and local government.
EGL generated December half-year revenue of $46.9 million, up 14 per cent, with core earnings (EBITDA) of $4.5m (up 48 per cent) and a $2.1m net profit (up 47 per cent).
Scidev turned over a record $50.3 million in the first half, up one per cent, with EBITDA of $3.2m and a slender $100,000 net profit.
The revenue derived mainly from Scidev’s mainstay business of providing purification chemicals to mining and construction clients.
But Scidev estimates the global PFAS treatment market at $US1.8 billion ($2.76bn) and expects it to grow at a compound annual rate of 5.2 per cent to reach $US2.9bn by 2031.
“It’s a great story of Aussie tech being able to take on a global environmental problem,” Halpin says.
While both EGL and Scidev are similar revenue-wise, EGL’s $100 million market cap is more than double that of Scidev’s.
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