First published in Cleantech magazine, November/December 2009. Copyright Cleantech Investor 2009
By John O'Brien, Australian CleanTech
Phoslock Water Solutions (PHK) manufactures and distributes a product, ‘Phoslock’, that was invented and developed by Australia’s leading research organisation, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) during ten years of research and development. Phoslock removes filterable reactive phosphorus (FRP) from the water body and forms a diffuse layer on top of the sediment that continues to react with the phosphate released from the sediment. FRP is one of the essential nutrients for phytoplankton (including algae and blue-green algae) growth. Through removal of this substance, the growth and proliferation of algae and blue-green algae is decreased owing to the nutrient limitation.
PHK is headquartered in Sydney and operates both through its joint venture manufacturing facility in Kunming, China and through its European office in Bremen, Germany which covers sixteen European countries. The company also has licensing and distribution agreements in ten other countries.
Phoslock is made from two naturally occurring products. The manufacturing process involves mixing naturally occurring clay (bentonite) with a rare earth element (lanthanum). The lanthanum is absorbed into sites within the bentonite and becomes the active element to remove phosphate.
When Phoslock is applied to a water body, the FRP present in the water column is attracted to the lanthanum and produces lanthanum phosphate. Lanthanum phosphate is ‘insoluble’, thus locking up the phosphate within the bentonite. Once bound within Phoslock's clay matrix, the FRP remains bound over a wide range of pH, salinities and water temperatures. Alternative ways to treat this problem are algicides and other chemicals, which could be toxic, dredging or other unproven treatments.
The effectiveness of Phoslock has been demonstrated at Lake Silbersee near Bremen, and a contract to treat a second lake near Hamburg was won in October 2009. It is anticipated that Europe could be a major sales generator because of EU directives.
The global demand for a unique product like Phoslock appears to be strong, although there can be long lead times between problem identification and undertaking a Phoslock treatment. The company claims to have a pipeline of over 50 projects totalling more than 20,000 tons.
Now in its fourth year of commercial sales, PHK made revenues of A$1.1 million for FY09, up 29% on the prior year, and a corresponding operating loss of A$2.6 million, a 23% improvement. As at June 2009, the company’s net assets were $4.2 million, including $550,000 of cash, and it was debt free.
PHK raised a total of A$770,000 through institutional placements in August and October of this year. The latter placement of A$220,000, with a South East Asian institutional investor, was targeted to “help promote the stock in this region”. This follows placements in 2008 totalling $1.6 million, $550,000 of which came from the Ludgate Environmental Fund, which remains on the share registry.
At the end of October 2009, the company’s share price was A$0.12 - down from its peak share price of over A$0.40 in early 2007 but up from its low of below A$0.08 in January of this year - giving a market capitalisation of A$22 million.
