@Dungiven &
@willchang409, now you know why I was reticent to post about this until management chose to reveal it to us with additional detail (hopefully by next month).
@ptlas,
When I first read about the new module, I too assumed that the spiral was doubling in capacity, however, the benefit in these discussion forums and laying out an opinion, is that some things become clearer.
The source of this information is a Chinese employee who has been involved of all aspects of setting up production at the factory. Doubling the capacity of the production line to meet future budget is more of a concern and focus of his writings than doubling the capacity of a MABR spiral/module. Doubling the width of the materials coming off the production line doubles the capacity of the line, as 1 spiral can then be caged to make a module, rather than 2 spirals.
@elleburra,
The way I am choosing to interpret this is thus.
In the initial 2017 announcement about the factory line, it was PLANNED that the maximum capacity of the one line would be 7500 modules (15,000) spirals per year at full production.
However, there were a few additional steps and some production realities to work through first, in order to achieve the planned maximum.
When they first started producing MABR spirals in the Changzhou factory, they found that the temperature & humidity levels in China were different to those in Israel, and this was having negative production side-effects. Scrap rate was higher and quality lower than in Israel. They are essentially trying to seal a DuPont Tyvek like membrane material together at the edges to create an airtight sleeve, then wrap this around a spacer material, which will allow the mixed liquor (sewage) to make contact with all sides of the air sleeve. I imagine heat & humidity could cause all sorts of issues when dealing with sealing membranes with an end product that requires no leaks.
In 2017 & 2018, it was about the Chinese staff learning the best way to use the production line, as this was a piece of Israeli equipment, so no one in China had any prior experience with using it. Some modifications have been made to the production line from these learnings to help increase production efficiencies. In 2019 scrap rate has been lowered, and per shift, 5 modules (10 spirals) can now be produced from the previous 3 (6 spirals).
Revenue from MABR in 2017 was $200k USD.
Revenue from MABR in 2018 was $3 million USD.
Revenue target for MABR in 2019 is approx $21.5 million USD.
Production in 2017 started in late September, with minimal staff on limited shifts. The aim here was to learn how to produce a few spirals off the line and work out the most efficient way to assemble them into C-MABR (Aspiral) containers. The first C-MABR container was put together in October.
In 2018 it was likely much the same, with only a few Aspirals required for Jinzi & QSY (and a few for overseas) until the late in the year when some larger orders for iTEST came through (and production staff were increased).
Early 2019 saw efficiency increase from 3 modules per shift to 5 modules per shift. Late Q3 2019 there was an increase to 3 shifts to start stockpiling MABR spirals for new assembly facilities and meet increased Chinese and international demand.
With the current 1m MABR spirals, production capacity of the 1 line is limited to around 3750 modules (7500 spirals). This roughly translates to $37.5 million USD of spirals.
We can see that if the 2020 internal revenue targets are over $38 million USD worth of MABR modules, then the 1 line at Changzhou is going to struggle to meet this using the 1m MABR spirals. A 2m width spiral allows them to double production off the line and meet up to $75m USD of MABR spiral production if required.
They may still produce the 1m smaller spirals on some shifts as well (for SUBRE and smaller applications - eg Orenco) so that $75m USD will be variable depending on the mix.
It also shows why management have not bothered to discuss buying in a 2nd production line, as the current line can suffice until current sales demand triples. A 2nd production line will probably be required in 2021 if additional sales opportunities continue on their current trend.
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This also highlights why some of the numbers that Emefcy and CGGC were throwing around in 2016 (10,000 modules in first year of contract, ramping to 60,000 modules) were a bit of a farce, as there would have been a bit of a production reality check in 2017/2018 if 10,000 modules were required just to meet CGGC demand. More a case of CGGC trying to see what best possible price per module was, and determining the value of Emefcy as a company for investment purposes.
