How the Tides Turn: Water Scarcity And Services In Australia

This story features DE.MEM LIMITED. For more info SHARE ANALYSIS: DEM

If climate change is primarily a water scarcity crisis, as the UN thinks it is, then ASX-listed De.mem might find its ambitions are supported by the next global megatrend.

-World’s focus will shift to the importance of water (scarcity)
-Technologies to filter and purify water to become more crucial
-ASX-listed De.mem could find itself in operational sweet spot

By Ed Kennedy

It’s often said that “water will be the oil of the 21st century.” If one accepts that numerous wars of the past century took place over the acquisition and securing of oil supplies, one can’t deny the sad reality that similar conflicts are likely to occur this century surrounding water. When a resource is scarce as water will increasingly become due to the impacts of climate change motivated parties will move to seize control of it.

But it doesn’t need to be this way. With the use of the right technologies, there is the potential for a better path ahead, one where water security is enhanced and the safety of those who need it is ensured. The application of technologies like water filtration systems is a prime example of this. It’s why the work of De.mem Ltd ((DEM)) is not just relevant in a local context but a global one not only for water security but for security as a whole.

Seeking Solutions That Won’t Run Dry

To understand the reality of water scarcity and how to address it, it’s essential to distinguish between sustainable and unsustainable water management practices. As the United Nations notes, “climate change is primarily a water crisis”. 

Yet, it also adds that “water can fight climate change. Sustainable water management is central to building the resilience of societies and ecosystems and reducing carbon emissions”.

The Promise and Perils for Australia Regarding Water

The Australian government states that 81% of the nation is defined as rangelands commonly seen as part of the Outback and contends that 70% of the continent’s land is semi-arid or arid. Despite these challenges, Australia has several advantages regarding the future of its water security. For instance, its achievements in developing water conservation management plans and improving irrigation efficiency in the agricultural sector are noteworthy.

Additionally, the rapid growth of solar power in Australia and the immense potential the nation possesses to become a “solar superpower” if the right steps are taken offers significant promise. This is due to solar power’s capacity to be used in powering water treatment operations.

While initiatives like the Murray-Darling Basin Plan are not without critics, and solar power’s potential does not guarantee outcomes, there is no doubt that Australia has the resources to develop a robust and resilient water management strategy.

Nonetheless, water scarcity and water management will become increasingly important considerations in the future both in Australia and globally. The value of companies that can offer solutions to these issues will grow, and firms like De.mem should indeed be monitored with interest, both for their activities in Australia and worldwide.

Pouring Over DEM’s Progress

Founded in 2013, De.mem has established a domestic presence in Melbourne, Brisbane, Perth, and Launceston, while an international footprint via operations in Singapore and Germany. Over the years, its Australian operations have grown significantly, marked by acquisitions such as Akwa-Worx in 2017, and Pumptech Tasmania in 2019.

In 2021, De.mem acquired Capic, an Australian company DEM held to be “highly complementary by product, geography, and customer base, providing substantial cross/up-sell opportunities.”

Despite these successes, De.mem has also experienced a turbulent performance on the ASX since its listing in April 2017 at just under 40 cents. While the stock saw a high of around 35 cents in October 2019 and around 34 cents in January 2021, it has also faced lows, hitting approximately 13 cents in August 2018, and approximately 10 cents in February 2024.

De.mem’s Services On Tap

De.mem offers customised water treatment systems for use in commercial – specifically, facilities management – manufacturing, and industrial settings. The precise form these offerings take can be seen in the company’s range of boilers, reverse osmosis systems, cooling water towers, and other products. In addition to the aforementioned sectors, De.mem also caters to the mineral processing and energy sectors, among others. 

A key driver of the company’s offerings is its ‘membrane technology’. In September 2021, the company launched its proprietary ‘graphene oxide-enhanced membrane technology’, which incorporates GO nanoparticles into its existing polymer membranes.

This innovation is designed to lower operating costs and improve filtration performance by increasing water throughput and reducing fouling. De.mem also offers a range of other advanced technologies, including hollow fibre nanofiltration and ultrafiltration membranes.

The Ways and Means of Other Water Operators

Several major global players operating alongside De.mem affirm the intensity of competition in the space. Veolia Water Technologies, headquartered in France, is one of the largest companies in the water sector, as is Suez Water Technologies and Solutions, also based in France. In turn, companies like Fluence – headquartered in the USA with offices in Sydney and Melbourne – focus on decentralised water solutions, similar to De.mem.

Then, there’s Aquatec Maxcon, headquartered in Ipswich, Queensland. Since its establishment in 1970 it has expanded to host another five offices across Australia, in addition to two abroad in Thailand and Indonesia. Alongside its Australian operations, it has also exported its offerings to nations throughout Asia including New Zealand, Papua New Guinea, Vietnam, and India. 

Increasing the Flow 

While it’s indisputable that increasing water scarcity can lead to conflict, as highlighted earlier, the outbreak of hostilities or the maintenance of stability among stakeholders disputing water resources will depend on a multitude of factors.

That said, while much attention is focused on climate change action with significant media coverage always surrounding events like the UN’s annual COP conference and its discussions about achieving net-zero emissions it’s important to remember that even if all harmful emissions ceased today, the world would continue warming for many years to come.

Therefore, even the most ardent advocates of climate action must acknowledge the importance of climate change mitigation activities alongside efforts to reduce emissions.

In this context, organisations that enhance access to water through filtration and treatment provide valuable opportunities, particularly for Australia. Progress in this field, especially on this dry continent prone to droughts, could offer promising models for other nations seeking sustainable and effective solutions.

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