Maquila Update for Tijuana region Q3 2011- given at WMTA in San Diego. see www.maquilaproperties.com for more info. JP de Kervor 858.551.8000

1. Wastewater Situation and Opportunities in Mexico 2011 Vincent Lencioni WWEMA Washington Forum April 21, 2011

4. I. Mexico/Latam Economic Growth S

6. I. US Exports to Mexico *2009 Crisis; 2010 Full Recovery *Mexican imports & exports up 35% 21.8% -19.4% 3.1 2.5 3.1 Iron/Steel 13.3% -3.3% 3.3 2.9 3.0 Paper -3.9% 2.2% 4.4 4.6 4.5 Instruments 13.6% -13.7% 5.0 4.4 5.1 Chemicals 22.1% -12.1% 11.4 9.4 10.7 Plastics 84.8% -30.6% 14.2 7.7 11.1 Fuel/Oil 43.8% -27.9% 14.5 10.1 14.0 Vehicles 20.3% -6.8% 24.8 20.6 22.1 Inds Prods 32.2% -4.4% 31.5 23.8 24.9 Elec Prods 26.7% -14.7% 163.3 128.9 151.2 All Products 2010 2009 2010 2009 2008 % INCREASE TOTAL EXPORTS (Billion US)

8. And the 800 pound Gorilla in the Room…..

11. II. Mexico Water Overview

13. Increased Irrigation technology River Basin auto administration All rivers % lakes without trash All treated water reused Contamination sources under control Efficient regional order All industrial water treated Flood zones without habitations Urban suburbs connected to the network Disaster alert systems and prevention All rural areas with potable water Operating organisms functioning efficiently All municipal water treated II. 2030 Water Priorities River Basin Equilibrium Universal Water Coverage Habitable areas free from floods 100% Clean Rivers

15. I. Municipal Treatment Evolution (2012 Goal and Historical Figures) # = 2010 Latin America Green City Index Average 52% vs Mexico 43.4% * = Collected, Treated, Increase = m3 per second; Increase = year to year treated 60% 43.4%# 42.1% 40.2% 38.3% 35.0% 23.0% % Treated 40.8 3.1 4.5 4.3 4.9 7.3 4.9 Increase* 132 91.2 88.1 83.6 79.3 71.8 46 Treated* 220 2010 209 208 207 205 200 Collected* 2012 2010 2009 2008 2007 2005 2000 Year

16. III. Wastewater Standards

18. III. NOM 001: Discharges into Federal Bodies M.A. = Monthly Average; D.A. = Daily Average (1) Instantaneous (2) Simple sample weighted average (3) Absent as per the Test Method defined in the NMX-AA-006. As of 2010, all companies & municipalites with 2500+ (3200 total) supposed to be compliant; Reality is much, much less, numbers unclear

19. III. NOM 001 (continued) (*) Measured in full. D.A. = Daily Average M.A.= Monthly Average NA = Not applicable (A) (B) and (C): Receiving Body type according to Government Service Charges Law.

20. III. NOM 002: Discharges into Municipal Systems As of 2010, all companies are supposed to be compliant

22. IV. Municipal Wastewater Plants

24. IV. Municipal Plants by State (2009)

28. IV. Type of Municipal Plants (2009 = 2029 plants)

31. IV. World Domestic Water Prices Mexico City/Federal District = 25 cents Lisbon Madrid Los Angeles Washington D.C. Istanbul London (11 pesos:$1 USD), 2008 prices

32. IV. Water Revenue Problems Ejercido = Spent; Recaudado = Revenue

33. V. Industrial Wastewater Plants

34. V. Industrial Plants by State (2009) Operating Capacity & Treatment % : Very low, even in industrial states Total Treatment : 190m3 flow p/s with 36.7m3 p/s treated = 19.3% Total BOD : 6.95 million tons with 1.33 million tons treated = 19.1% 2009 Operating Capacity : 50% (Installed: 72.5m3; Treated: 36.7m3)

35. V. Industrial Wastewater Treated: Not good but better than seems Up 66% since 1999 Industrial Wastewater since 1997 : Flow up 195% (64.5 to 190m3 p/s) Treated amount up 592% (5.3 to 36.7m3 p/s) Wastewater/BOD Treatment up 137.5% compared to flow (8% to 19%)

38. VI. Wastewater Opportunities

45. VI. Industrial Sectors – Problems * = Expected Investment 2011-2012 ( US Embassy, Mexico City ) 4. Chemicals / Pharmaceuticals / Plastics - $120 million US* 4. Food & Beverage / Dairy - $90 million US* 3. Petroleum / Petrochemical (Pemex) – Increasing investments in wastewater 3. Metalworking / Automotive – Large & Growing, Tier 1 & 2 issues, OEM compliant 2. Textile / Clothing / Leather – $70 million US*; many medium & small producers who are not compliant 2. Paper - $70 million US* - Highly regulated, improved Mfging processes, maintenance 1. Pork / Agriculture / Aquaculture – Target area for enforcement, Conagua investment increases. Problems worse than expected 1. Sugar – Requires regular, on-going investments even though meeting standards. High Frequency & Flow Priorities Top Priorities, heaviest polluters (2030)

49. VII. Annex

50. VII. Domestic vs International Products Imported Product Preference Both Domestic Product Preference GIS & SCADA Analyzers & Manometers Contractors & Construction Automation & Controls Equipment Filtration Equipmt & Products Pipe/Water Distribution Equipment Wastewater –Reuse Equipment Treatment Plant Systems Sludge Handling Systems Treatment Plant Systems Tanks Gates & Flumes Data Management Systems* Leak Detection Metal Fabrication CIS & Meters Laboratory & Sampling Products Chemical Feed Equipment Well Drilling/Systems Process Equipment Aerators, Diffusers Corrosion & Cathodic Protection/Control Equipmt Chemicals Compressors & Blowers Chlorine Desalination Equipment Disinfection Systems Coating & Lining Leak Detection Consulting* Sewer/Collection Systems & Equipment Laboratory & Sampling Equipment Pumps & Valves Traditional Treatment Options Rain Water Reclamation Storm/rain drainage Solutions

51. VII. Water Demand by Sector (2020) CONAGUA 2010: 77% Agriculture, 12% Public, 9% Industrial.

52. VII. Mexican Domestic & Industrial Water Prices

53. VII. Treatment by Basin Analysis Lerma = 25% of plants; Rio Bravo = 25% of Installed Capacity and Water Treated; using 75% of Installed Capacity, Need a lot more. No. Water Basin Number of Plants in Operation Installed Capacity (m3/s) Water Treated (m3/s)

55. VII. Municipal Treatment Plants by Capacity (2010)