HCH (ASX) HCH potential Water business

Originally posted by Bodiezapper: ↑

Construction and commissioning of large desalination plants is not an over night proposition. Whilst it sounds like a great opportunity it is dependent on many things and has plenty of risks.

Not sure of the exact size we are talking here but a 200-400ML/day (2000-4000l/sec) plant you are talking minimum 3-5 year proposition.
Intake/outfall tunnels/pipelines are extremely complex and specialist.
Marine permits and offshore water quality requirements
Mixing zones offshore for brine dictates length and diameters of tunnels/piping. This in turn impacts capex costs which can often be a significant proportion of a total cost of a treatment plant
Quality of the seawater coming into plant affects design and costs. Typically more tropical waters are harder to treat than cold water
Laying or drilling/tunneling of these pipes is highly specialist in nature and will also have requirements dicated by Chile regulatory bodies

2. Location of Plant
Typically close to the coast but with sufficient elevation/protection from dunes etc but also not high enough to make the intake structures too deep from a civil construction perspective. This is a fine balance and will also influence location of plant.
The high voltage power supply is the other key cost factor in the plant and its location. The longer the transmission line the greater the capex and also operational costs with power losses through transmission
They will need to balance the high capex costs of tunnels and power with the high opex costs of where the raw brine (HCH) or treated water (desal) is supplied to. Typically a balance treated water storage/tanks will be on potable side of a desal plant and will have lift pump/s feeding one or multiple treated water pipelines delivering water to other customers. The arrangement of this will depend on delivery location, flow and head requirements of the pipeline. Pumping costs particularly to high elevations can become very expensive so HCH would want to site a plant at the best location considering all downstream customers and subsequent pumping costs.
3 Supply Chain risks
This is significant. The desalination industry is in a bit of a boom with changes in climate and rainfall/runoff driving existing plants and the likelihood of new ones globally. There is significant activity here in Oz but also globally. As a result demand for resources to design and build such facilities is significant and the skills around are not great since its relatively new and growing.
Desal plants use quite a bit of unique gear to operation, Pumps and pipework, valves, pressure vessels and reverse osmosis membranes. Supply chains for such products particularly in bulk can be challenging and since covid in particular have escalated in both lead times and price. This represents considerable risk for new construction or major equipment replacements.
Cost of power and chemicals is a major OPEX cost of desalination plants. Ability to access affordable and reliable long term power supply agreements and supply grids is key. Chemicals used in large scale water treatment are challenging,

4 Downstream Customer Demand
Touched on this thread already but key to the economics of a desal plant is a reasonable baseline potable water price within the area or in Chile itself. Desal plants are not cheap to build or operate so the economics will require a reasonable baseline $/volume price to pay off the capital as well as making a return on investment. If downstream minerals like copper and others go up in price like we all hope then it drives the viability of this water plant also.
Desal plants dont really like being stared and stopped so the water business would like to have a downstream demand profile thats relatively predictable to help with a steady state operation of such a plant. This would require a fair bit of design consideration in both process and design of plant but also how to best manage the downstream pumping and distribution of treated desal water.

Anyway, thats enough of my brain dump for one day on desal. Quite interested to follow developments here and hopefully HCH has more than just copper and gold assets up its sleeve as this thread alludes to.

Expand

Great knowledge, thanks @Bodiezapper ! I believe the 50year water licence is 2000 lt/second.
HCH only need sea water to mine. Costal land, sea water extraction and water pipelines corridors in place.
HCH would probably not run or build Desal Plant. If the numbers stack up, it would more likley be a spin off listing or sale of rights to specialists.

Does anyone know roughly what the current market rate per litre for Desal water is?

(20min delay)
Last 84.0¢		Change -0.010(1.18%)		Mkt cap ! $127.1M

Open	High	Low	Value	Volume
85.0¢	85.0¢	77.5¢	$347.1K	439.1K

No.	Vol.	Price($)
1	776	0.825
1	1000	0.795
1	5000	0.790
1	7500	0.785
3	233000	0.780

Price($)	Vol.	No.
0.840	2654	1
0.845	20000	1
0.850	52834	3
0.860	4357	2
0.870	30023	2

Great knowledge, thanks @Bodiezapper ! I believe the 50year...

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