April 8 (Bloomberg) -- Veolia Environnement SA, Europe’s largest water utility, seeks to more than double sales to the mining industry to $2.1 billion by 2020 amid water scarcity and tougher environmental rules.
The added revenue would come from orders to treat water and waste from extraction industries as well as helping to boost energy savings at sites, the Paris-based utility said.
“The more the mining industry booms, the more mines are being located in areas where there are water shortages,” Chief Executive Officer Antoine Frerot said today at a press conference. Tougher environmental rules are also creating business for Veolia.
The CEO has sought to cut Veolia’s debt and narrow its global focus while at the same time targeting contracts with industry which can carry higher profit margins than municipal water agreements. The utility seeks to increase revenue and some measures of profit this year following a turnaround plan marked by asset sales and management changes.
“Water issues can be key, they can put projects on hold,” Christopher Howell, global director of mining and metals at Veolia, said today at the press conference. Mining companies are coming under increasing pressure from indigenous populations over water rights.
Barrick Gold Corp. suspended construction at the $8.5 billion Pascua-Lama gold-mining project on the border of Argentina and Chile in the Andes due to a dispute over potential water-supply contamination. Newmont Mining Corp.’s $5 billion Conga gold project in Peru was also halted due to water issues.
Veolia won a contract last year from Codelco, the world’s largest copper producer, to build and operate an effluent- processing facility in Chile.
Veolia expects revenue of 1.5 billion euros ($2.1 billion) from the mining industry by 2020 compared with 700 million euros last year, the company said today in a presentation. This compares with the 700 billion euros earned by the mining industry as whole and a market for water, waste and energy services to mines valued at 14 billion euros and expected to grow to 20 billion euros in six years, according to Veolia.
Veolia’s customers include Rio Tinto Plc, Vale SA and Anglo American Plc, the company said.
Frerot’s quest for mining contracts comes after he unveiled plans in the past year to expand nuclear dismantling, hazardous- waste cleanup, shale-drilling water-treatment and services for the food-processing industry.