June 2001
Volume 43 Number 6
 

World Spotlight: Chile -- Insight into the Country’s Water Quality
by Roger Biset   Pages: 

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Chile is a long, thin country that hugs the southwest coast of South America and is nearly twice the size of California. The entire country at its widest point is only about 300 miles, yet to travel its 2,500-mile length would be about equal to going from the southern tip of the Baja Peninsula in California, to Ketchikan, Alaska. The terrain is desert in the north with a fertile central valley, volcanoes and lakes toward the south, giving way to a rugged and complex coastline. The Andes Mountains form the eastern border.

The water needs of Chile are defined by its unique geography. The mining industry is located in the northern desert. The coast of Chile is sparsely developed, so the focus on development of fresh or purified water supplies is driven by the needs of the mining industry. The south of Chile is in the Antarctic zone and is very thinly populated. It also has abundant water from rainfall and snowmelt. About 85 percent of Chile's population of 15.2 million live in urban centers in the central regions of the country with about 40 percent living in greater Santiago. The water for this area comes from surface water generated by snowmelt from the Andes Mountains.

Water breakdown
Currently, 70 percent of water in Chile is used to generate electricity, while 30 percent is consumed. Of the consumption figure, irrigation makes up 84.5 percent, while industry demands 6.5 percent, and mining and drinking water each 4.5 percent.

Water supply systems in Chile provide drinking water to 92 percent of the urban population and sewage collection to 81 percent. In rural areas, those percentages drop to 42 percent and 13 percent, respectively. Overall, water is supplied to approximately 13.2 million people, with average consumption of approximately 700 liters per capita per day for domestic, industrial and mining uses. Because of population growth, urban migration and industrial growth, the demand for potable water is expected to double by 2020, putting increased pressure on water resources in the capital and the northern region.

Industrial water treatment
Largely associated abroad with extractive industries, Chile nonetheless has an active and important industrial base. Industries as a group contribute around 15 percent of gross domestic product (GDP), far ahead of the better known mining sector. Industrial production has grown 5 percent annually for the past 18 years, while industrial sales have kept a similar pace at 7 percent annual growth. Projections have Chile's industrial output doubling by 2020, growing at a rate of 8 percent as the economy continues to expand.

The available water supplies in Chile are largely conducive to use by its industry. The primary exception is in the northern region of the country where the mining users are often faced with water supplies high in minerals, suspended solids and organics. Brackish water, reverse osmosis equipment is occasionally used to provide purified water to mining camp employees. Water supplies to primary industrial users in the central region of Chile are typically municipal or other fresh water sources relatively low in total dissolved solids.

Driving the economy
Chile's GDP was projected at $85 billion for 2000 with an annual real growth rate of 5.8 percent. Chile's economy is highly dependent on international trade. In 1999, exports accounted for about 20 percent of GDP. Its major export markets are the European Community (25 percent), United States (17 percent), Japan (15 percent), United Kingdom (6 percent), Argentina (3 percent), and Brazil (5 percent). Chile levies a flat 11 percent customs duty (C.I.F. basis) on all imports from countries with which it has no free trade agreement. This declined 1 percent per year to 6 percent beginning Jan. 1, 1999. There are no restrictions, non-tariff barriers or reservations against U.S. products.

Imports supply nearly all of the water and wastewater treatment equipment in Chile. The total import market in 1997 was US$158 million; the U.S. supplied $94.8 million -- almost 60 percent of the market. European companies have about 35 percent market share and Asian countries about 5 percent. Domestic production is minimal and limited primarily to fabrication of large tanks and other distribution equipment.

Held in high regard
The United States has been active in Chile for some time and U.S. technology is highly respected. Many Chilean regulations and engineering techniques are modeled after those of the United States, offering U.S. companies a competitive advantage. European products are also accepted, but are often at a price disadvantage and must be justified by significantly better performance, ease of purchase and financing; however, European manufacturers are frequently aggressive in their sales practices and possess a long-standing reputation for personalized after-sales service -- an important factor in a country so far away from the supplier.

Asian products are sold when they're offered at a much lower price. For industrial water treatment equipment, efficiency and durability will probably play a more important role than price, since projects require long useful lives to control replacement costs.

All companies, however, face stiff competition from international firms, particularly from the United States, Spain, Germany, France, UK and Canada, many of which have been in the market for several years, establishing business networks with local companies and regulatory agencies. There's strong interest from European companies in entering the water sector as privatization unfolds.

Areas of interest

The best prospects for foreign companies interested in supplying solutions for the industrial water treatment users in Chile include the following areas:
Sanitary services: Consulting, design, and engineering services in association with other international and local companies to offer a full range of services including financing.
Municipal wastewater treatment: The largest investments in wastewater treatment will be in metropolitan regions, specifically the Santiago area.
Drinking water supply systems: Smaller scale systems for municipalities, industrial developments and tourist areas will be required.
Innovative water reuse and recirculation systems: Municipal and industrial applications (especially mining) will be an important element in water projects in the north.
Pollution prevention and control equipment: Key industrial sectors such as mining, fish processing, pulp and paper, and food processing. This includes solvent extraction/electro-winnowing processes for copper mining, air floatation technologies for fishmeal to recover proteins, chlorine-free pulp bleaching technology, high-pressure spray systems and evaporators.
Sludge-processing equipment: Mining operations in particular.
Pre-treatment technology: Wastewater discharged into municipal systems.

Residential water treatment
One would expect the best market for residential and light commercial water treatment equipment to be in the more heavily-populated central region of Chile; however, the central region is also the region with the most abundant supply of fresh water and more developed distribution system, so the overall market for this type of equipment is small. The opportunities that do exist are in the residential point-of-use (POU) market and for bottled water, ice, and small beverage producers. As in most small and developing markets, the demand for water purification equipment for car washing, pharmaceutical, and other ultrapure applications is minimal.

Seawater desalination
Use of seawater desalination in Chile is small, but does offer some potential for the future. For a country with such a long coastline, development of the coastal areas that would drive a demand for seawater desalination has lagged behind development of the mining and central industrial areas. The market for seawater desalination is starting to emerge in the dry northern coastal regions adjacent to Iquique, as desalination technology becomes more affordable relative to other alternatives.

Conclusion
Chile is a country blessed by a combination of relatively small population, ample fresh water supplies and one of the most stable economies in Latin America today. To date, its active international trade and business environment has provided Chile access to the water treatment technology needed. Still, Chile will be faced with the same challenges as most other developing countries as its population grows and migrates to less-developed suburban regions of the country.

References
1. U.S. Dept. of State, Bureau of Western Hemisphere Affairs, "Background Notes: Chile," October 2000.
2. Website: www.tradeport.org/ts/countries/chileisaisar0013.html
3. Website: www.businesschile.com/indicators/fr_ch_indicators.html
4. Website: www.localaccess/com/chappell/chile/basics.html
5. Website: www.chileinfo.com/whyChile.html

About the author
Roger Biset is the international sales manager for Haliant Technologies, a manufacturer of water purification equipment located in Sarasota, Fla. He has advanced engineering degrees from Cordoba University in Argentina and has previously served the South American market for many years as an employee of Environmental Products USA Inc. and Force Filtration Systems Inc. He can be reached at (941) 359-3862, (941) 360-9632 (fax) or email: rbiset@haliant.com

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Chile at a Glance:

Official Name: Republic of Chile
Area: 756,945 sq. km (slightly smaller than twice the size of Montana)
Capital: Santiago
Population: 15.2 million (July 2000 est.)
Language: Spanish
Climate: Temperate; desert in north; Mediterranean in central region; cool and damp in south
Education:
* Years compulsory -- 8
* Attendance -- 3 million
* Adult literacy rate -- 95 percent
Natural Resources: Copper, timber, iron ore, nitrates, precious metals, molybdenum, hydropower
Environment Issues: Air pollution from industrial and vehicle emissions; water pollution from raw sewage
Life expectancy: 75.74 years

SOURCE: The World Factbook 2000