Making Seawater Potable in Mexico Has High Costs and Environmental Impacts

This projected desalination plant in Los Cabos, whose construction received final approval in October 2020, will have a capacity to purify 250 litres of water per second and its cost will exceed 55 million dollars, according to figures from the Baja California Sur state government. CREDIT: Government of Baja California Sur

By Emilio Godoy
MEXICO CITY, Jan 31 2021 – Mexico is seeking to mitigate water shortages in part of its extensive territory by resorting to seawater, through the expansion of desalination plants. But this solution has exorbitant costs and significant environmental impacts.

Among the advantages of these water treatment plants, Gabriela Muñoz, a researcher at the public university El Colegio de la Frontera Norte, highlighted the expansion of water sources and the production of water for human consumption.

But in her conversation with IPS, she also underlined the disadvantages of these plants, such as high energy requirements, aggravated if the energy comes from fossil sources; high costs; and the generation of brine and wastewater.”Before considering desalination, measures such as water saving, investment in green infrastructure, rainwater harvesting and the reuse of treated water should be a priority. We must also compare the costs of building desalination plants versus alternatives.” — Gabriela Muñoz

To illustrate the costs: one of the desalination plants authorised in 2014 by the National Water Commission (CONAGUA) in the northern state of Baja California cost some 35 million dollars to process 250 litres per second (l/s). Another plant with the same capacity, given final approval in October 2020 in the neighbouring state of Baja California Sur, will require an investment of more than 55 million dollars.

In Mexico “there are no regulations regarding how to dispose of the brine. The most common thing to do is to dump it on the beach. We have to be careful how we handle the brine because of the toxicity to ecosystems. Nor is there installed capacity to treat all the wastewater. For specific areas, desalination should not be the first option,” said Muñoz from the northern border city of Tijuana.

Between 2012 and 2020, environmental authorities authorised at least 120 desalination facilities, rejected six applications and another five are under evaluation, according to data obtained by IPS through public information requests. Most of the new projects are located in three states with acute water shortages: the northwestern states of Baja California and Baja California Sur, and the southeastern state of Quintana Roo.

However, in Mexico, where more than 400 such plants operate, there has been no research on their ecological effects, as corroborated by IPS, with the exception of the study “Desalination of water”, published in 2000 by the government’s Mexican Water Institute.

One basic desalination technique is thermal distillation, in which seawater is heated until it evaporates, the vapor condenses to form freshwater, and the remaining liquid is discarded as concentrated brine.

Another is reverse osmosis, in which water is filtered and then pumped at high pressure through thin membranes that only allow the liquid to pass through and retain the salt.

Global context

In 2019, the study “The State of Desalination and Brine Production: A Global Outlook”, produced by the United Nations University Institute for Water, Environment and Health, based in Ontario, Canada, warned of the growing generation of brine and its serious effects on the environment. The process of extracting brine, it estimated, accumulated a total of 142 million cubic metres (m3) of waste worldwide that year.

There are 18,214 desalination plants around the world, with an installed capacity of 89 million m3 per day, serving more than 300 million people, according to the latest data from the International Desalination Association. For every litre of water desalinated, a litre of brine is produced.

These plants are part of a trend towards the introduction of this technology in areas facing the threat of water stress or scarcity.

President Andrés Manuel López Obrador (C) visited Los Cabos, on the southern tip of the Baja California peninsula at the northwestern tip of Mexico, in August, where he confirmed the construction of the larger of two new desalination plants in the state of Baja California Sur. Mexico already has 400 seawater treatment plants, but experts warn about the excessive costs and environmental impacts. CREDIT: Government of Baja California Sur

President Andrés Manuel López Obrador (C) visited Los Cabos, on the southern tip of the Baja California peninsula at the northwestern tip of Mexico, in August, where he confirmed the construction of the larger of two new desalination plants in the state of Baja California Sur. Mexico already has 400 seawater treatment plants, but experts warn about the excessive costs and environmental impacts. CREDIT: Government of Baja California Sur

Water availability in Mexico

Mexico, Latin America’s second largest economy, has an area of 1.96 million square kilometres, 67 percent of which is arid and semi-arid land.

According to CONAGUA, water availability varies widely in this country of 129 million people, as it is scarce in the north and abundant in the south.

Of every 100 litres of rainfall, 72 return to the atmosphere through evapotranspiration, 22 run off into rivers and streams, and six feed 653 aquifers, of which 108 were overexploited, 32 had saline soils or brackish water, and 18 had seawater infiltration due to rising sea levels and seepage into the water table.

Although Mexico had a low national water stress level in 2017 – 19.5 percent – its risk of water stress is high, according to the Aqueduct platform, developed by the Aqueduct Alliance, made up of governments, companies and foundations.

In fact, Mexico is the second most water-stressed country in the Americas, after Chile. Water stress could be a problem by 2040 from the centre to the north of the country.

Meanwhile, the extreme northwest presents a medium-high risk of aquifer depletion and practically the entire Gulf of Mexico and the Caribbean Sea present a medium-high risk of drought, precisely where most of the desalination plants are located.

Aqueduct takes into account 13 indicators of water stress, such as groundwater availability and depletion.

In the last five months, drought has worsened in Mexico – the third worst record of the century – a consequence of the climate crisis, according to data from the National Meteorological Service.

In Mexico water use is intense, reflected in its water footprint – the impact of human activities on water – of 1,978 m3/person per year, compared to a global average of 1,385.

As a result, national and regional authorities have set their sights on seawater, given that Mexico is bordered by the Pacific Ocean to the west and the Atlantic Ocean to the east, and there are a total of 150 municipalities with a coastline, out of a total of 2,466, according to the National Policy on Mexico’s Seas and Coasts.

This screenshot from a video by the Baja California Sur government in northwestern Mexico shows the site of the new desalination plant to be built in Los Cabos, next to the sea, including details of the different processes used to make the water from the Pacific Ocean fit for human consumption. CREDIT: IPS

This screenshot from a video by the Baja California Sur government in northwestern Mexico shows the site of the new desalination plant to be built in Los Cabos, next to the sea, including details of the different processes used to make the water from the Pacific Ocean fit for human consumption. CREDIT: IPS

Scalable model

This year, Héctor Aviña, an academic at the Engineering Research Institute of the National Autonomous University of Mexico, plans to scale up his prototype geothermal-powered desalination plant in the city of Los Cabos, located in Baja California Sur, some 1,650 kilometres northwest of Mexico City.

“I don’t know if it is the best option because of brine generation and well exploitation, but it is a good alternative. Many areas are already experiencing water stress. In those places, desalination and beach wells can help aquifers recover,” Aviña told IPS from Mexico City.

The 500,000 dollar plan consists of upgrading a pilot plant from the current capacity of four m3 per day to 40 m3 and, if possible, to 400 m3, in an initiative to be developed with the state-owned Mexican Centre for Innovation in Geothermal Energy.

The project will take advantage of nearby hot water wells to obtain water and geothermal energy.

With this technology, the cost per m3 of water ranges from 0.8 to 1.3 dollars, compared to 0.6 to 1.00 dollars using reverse osmosis.

The National Infrastructure Investment Agreement, signed between the federal government and members of the business community in November 2020, includes the foundations for four desalination plants in Baja California, Baja California Sur and Sonora, with an investment of 643 million dollars and a capacity of 650 l/s.

But Muñoz suggested that before turning to desalination, poor irrigation practices, leaks and aging infrastructure should be addressed.

“Before considering desalination, measures such as water saving, investment in green infrastructure, rainwater harvesting and the reuse of treated water should be a priority. We must also compare the costs of building desalination plants versus alternatives,” she said.

In 2014 Aviña designed a reverse osmosis model equipped with solar panels and batteries, which has competitive costs.

“In other areas, the source of energy must be reviewed. Mexico is going to have water problems, it is a situation that we will have to live with. If we study it well, if we manage it well, desalination is a good alternative,” he argued.

Bombardier Closes Sale of its Transportation business to Alstom

  • Net proceeds to Bombardier of ~$3.6 billion, including ~$600 million in Alstom shares
  • Proceeds strengthen liquidity and will allow the Company to begin debt paydown1; Pro–forma net debt as of December 31, 2020 ~$4.7 billion2
  • Completes Bombardier's repositioning as a pure–play business jet company

All amounts in this press release are in U.S. dollars unless otherwise indicated. Amounts in EUR in this press release are converted to USD at an exchange rate of 1.22, except for certain transaction cash proceeds fixed at an exchange rate of 1.17.

MONTREAL, Jan. 29, 2021 (GLOBE NEWSWIRE) — Bombardier (TSX: BBD.B) confirmed today the closing of the previously announced sale of its Transportation business to Alstom.

Total proceeds to the vendors after the deduction of debt–like items and transferred liabilities are $6.0 billion3. After deducting la Caisse de dpt et placement du Qubec equity position of $2.5 billion, transaction costs, and including the impact from closing adjustments and obligations related to achieving a minimum cash balance at Bombardier Transportation at the end of 2020, Bombardier expects net proceeds of approximately $3.6 billion. This amount includes $488 million of cash from the redemption of equity and a $125 million loan reimbursement by Transportation4, settled in conjunction with the transaction closing. Net proceeds also include approximately $600 million of Alstom shares (500 million representing 11.5 million shares for a fixed subscription price of 43.465 per share), monetizable starting in late April 2021.

"With this transaction now complete, Bombardier begins an exciting new chapter focused exclusively on designing, building and servicing the world's best business jets," said ric Martel, President and Chief Executive Officer, Bombardier Inc. "With an unmatched product portfolio, a world class customer services network and incredibly talented employees, we have a strong foundation to build upon as we use the proceeds from the transaction to begin addressing our balance sheet challenges through debt paydown."

Proceeds from the transaction were lower than previous estimates as a result of Transportation's lower than expected cash generation in the fourth quarter due in part to unfavorable market conditions, as well as disagreements between the parties as to certain adjustments which Bombardier intends to challenge.

Pro–forma net debt2 is approximately $4.7 billion, which includes long–term debt of $10.1 billion, net of $1.8 billion cash on hand at Bombardier Inc. (excluding Transportation) as of December 31, 2020, and the approximately $3.6 billion proceeds from the Transportation sale. The Company intends to deploy available proceeds from the sale of Transportation towards debt paydown and continues to evaluate the most efficient debt reduction strategies.

About Bombardier
Bombardier is a global leader in aviation, creating innovative and game–changing planes. Our products and services provide world–class experiences that set new standards in passenger comfort, energy efficiency, reliability and safety.

Headquartered in Montral, Canada, Bombardier is present in more than 12 countries including its production/engineering sites and its customer support network. The Corporation supports a worldwide fleet of approximately 4,900 aircraft in–service with a wide variety of multinational corporations, charter and fractional ownership providers, governments and private individuals.

News and information is available at bombardier.com or follow us on Twitter @bombardierjets.

Bombardier is a trademark of Bombardier Inc. and its subsidiaries.

For Information
Jessica McDonald Patrick Ghoche
Advisor, Media Relations Vice President, Corporate Strategy and
and Public Affairs Investor Relations
Bombardier Inc. Bombardier Inc.
+1 514 861 9481 +1 514 861 5727
jessica.mcdonald@bombardier.com

1. See the forward–looking statements disclaimer at the end of this press release.
2. Non–GAAP financial measure. Pro–forma net debt is defined as Long–term debt of $10.1 billion less cash and cash equivalents at Bombardier Inc. (excluding Transportation) of $1.8 billion as of December 31, 2020 less net proceeds of approximately $3.6 billion from the sale of Bombardier Transportation, which includes approximately $600 million of Alstom shares. Non–GAAP financial measures are mainly derived from the consolidated financial statements but do not have standardized meanings prescribed by IFRS. The exclusion of certain items from non–GAAP performance measures does not imply that these items are necessarily non–recurring. Other entities in our industry may define the above measures differently than we do. In those cases, it may be difficult to compare the performance of those entities to ours based on these similarly–named non–GAAP measures.
3. Includes the amount paid by Alstom to redeem Bombardier and CDPQ's capital injections of 400 million ($488 million) and 350 million ($427 million), respectively, in BT Holdco made in 2020 to support working capital.
4. Represents the redemption by Alstom of Bombardier's share of the capital injection made in BT Holdco in 2020 amounting to 400 million ($488 million) and the pre–closing reimbursement by BT Holdco of the intercompany subordinated loan of 103 million ($125 million) made by Bombardier in 2019.
5. Because shares were issued by Alstom following the execution of the SPA, Bombardier's share subscription price was adjusted from 47.50 per share to 43.46 per share in accordance with the previously agreed upon anti–dilution adjustment mechanism.

FORWARD–LOOKING STATEMENTS

This press release includes forward–looking statements, which may involve, but are not limited to: statements with respect to our objectives, anticipations and outlook or guidance in respect of various financial and global metrics and sources of contribution thereto, targets, goals, priorities, market and strategies, financial position, market position, capabilities, competitive strengths, credit ratings, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business outlook, prospects and trends of an industry; expected demand for products and services; growth strategy; product development, including projected design, characteristics, capacity or performance; expected or scheduled entry–into–service of products and services, orders, deliveries, testing, lead times, certifications and project execution in general; competitive position; expectations regarding revenue and backlog mix; the expected impact of the legislative and regulatory environment and legal proceedings; strength of capital profile and balance sheet, creditworthiness, available liquidities and capital resources and expected financial requirements; productivity enhancements, operational efficiencies and restructuring initiatives; expectations and objectives regarding debt repayments and refinancing of bank facilities and maturities; expectations regarding availability of government assistance programs, compliance with restrictive debt covenants; expectations regarding the declaration and payment of dividends on our preferred shares; intentions and objectives for our programs, assets and operations; and the impact of the COVID–19 pandemic on the foregoing and the effectiveness of plans and measures we have implemented in response thereto. As it relates to the transaction discussed herein, this press release contains forward–looking statements with respect to the use of the proceeds from the sale of the Transportation business, the evaluation of debt reduction strategies and our intentions with respect to challenging the determination of proceeds.

Forward–looking statements can generally be identified by the use of forward–looking terminology such as "may", "will", "shall", "can", "expect", "estimate", "intend", "anticipate", "plan", "foresee", "believe", "continue", "maintain" or "align", the negative of these terms, variations of them or similar terminology. Forward–looking statements are presented for the purpose of assisting investors and others in understanding certain key elements of our current objectives, strategic priorities, expectations, outlook and plans, and in obtaining a better understanding of our business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

By their nature, forward–looking statements require management to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecast results set forth in forward–looking statements. While management considers these assumptions to be reasonable and appropriate based on information currently available, there is risk that they may not be accurate. The assumptions underlying the forward–looking statements made in this press release in relation to the transaction discussed herein include the following material assumptions: the realization of the intended benefits therefrom (including intended use of proceeds) within the anticipated timeframe; our ability to retain key management and employees following completion of the transaction; our ability to satisfy our liabilities and meet our financial covenants and debt service obligations following completion of the transaction; our ability to access the capital markets as needed following completion of the transaction; and fulfillment by the other parties of their respective obligations, commitments and undertakings pursuant to transaction documentation. For additional information, including with respect to the other assumptions underlying the forward–looking statements made in this press release, refer to the assumptions below the Forward–looking statements in the MD&A of our financial report for the three–and nine–month periods ended September 30, 2020 and the Strategic Priorities and Guidance and forward–looking statements sections in the applicable reportable segment in the MD&A of our financial report for the fiscal year ended December 31, 2019. Given the impact of the changing circumstances surrounding the COVID–19 pandemic and the related response from Bombardier, governments (federal, provincial and municipal), regulatory authorities, businesses and customers, there is inherently more uncertainty associated with our assumptions as compared to prior periods.

With respect to the transaction discussed herein specifically, certain factors that could cause actual results to differ materially from those anticipated in the forward–looking statements include, but are not limited to: uncertainty regarding all or part of the intended benefits therefrom not being realized, or it is determined, necessary or required to direct all or part of the anticipated proceeds therefrom towards other uses than those identified in this press release the failure by the parties to fulfill their obligations, commitments and undertakings pursuant to transaction documentation; Bombardier being unable to satisfy its liabilities and meet its financial covenants and debt service obligations following completion of the transaction; the failure to retain our key management, personnel and clients following completion of the transaction and risks associated with the loss and replacement of key management and personnel; and the impact of the announcement of the transaction on our relationships with third parties, including potentially resulting in the loss of clients, employees, suppliers, business partners or other benefits and goodwill of the business.

Readers are cautioned that the foregoing list of factors that may affect the transaction discussed herein, future growth, results and performance is not exhaustive and undue reliance should not be placed on forward–looking statements. For more details, see the Risks and uncertainties sections in Other in the MD&A for the three– and nine– month period ended September 30, 2020 and in the MD&A of our financial report for the fiscal year ended December 31, 2019. Other risks and uncertainties not presently known to us or that we presently believe are not material could also cause actual results or events to differ materially from those expressed or implied in our forward–looking statements. The forward–looking statements set forth herein reflect management's expectations as at the date of this press release and are subject to change after such date. Unless otherwise required by applicable securities laws, we expressly disclaim any intention, and assume no obligation to update or revise any forward–looking statements, whether as a result of new information, future events or otherwise. The forward–looking statements contained in this press release are expressly qualified by this cautionary statement.