Reducing water waste in Brazil

AVK, a world leading Danish producer of e.g. vales, hydrants and accessories to water distribution networks, has established a new production plant in Brazil.

For several years the company has been competing on the Brazilian market and gained a good market share. But local competition is strong, and AVK has been challenged due to technical regulations, import duties, local content rules etc. Starting up production in Brazil has eliminated these disadvantages and made AVK more at par with its locally based competitors.

The key to success in Brazil

The new 2,000 m² production plant located in Indaiatuba, an industrial town close to São Paulo, has enabled AVK to produce a five digit number of units annually. Total investment is anticipated to be close to DKK 30m to finance production lines and as working capital.

- We are confident that the large capacity that AVK Group holds in relation to manufacturing valves of high quality combined with the extensive expertise of our local team will be the key to success for the company in Brazil, said Estevan Fernandes Lopes, Sales and Marketing Manager at AVK Brazil.

A growing market for water in the cities

The consistent expansion of Brazil’s urban population creates a strong and growing demand for portable water and treatment of wastewater. At the same time, the current distribution systems are old and inefficient, which results in major water loss. As a large part of the water distribution cost is related to the cost of energy used for producing and pumping water, it is expected that Brazil has to add around 6,000MW in new capacity annually to meet the demand. Consequently, reducing water waste will also lead to a lower emission of greenhouse gases.

In 2014, the São Paulo region experienced severe drought and water shortage both for households and the production of electricity, which to a large extent is based on hydro power. This has made water loss reduction even more important. Consequently, AVK is participating in a Danish initiative to assist the authorities in finding and implementing immediate and long-term solutions to tackle this issue.

KIF has contributed with risk capital

The Danish Climate Investment Fund has contributed with risk capital in the form of equity for the establishment and operation of the AVK production plant in Brazil.

- The project is economically sustainable and will contribute to reducing both water waste and greenhouse gas emissions. Consequently, it fits perfectly with the aim of the Danish Climate Investment Fund, said Niels Evendt, Investment Director at IFU.

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