ITOCHU Corporation (hereinafter “ITOCHU”) has agreed to establish a production and distribution company for reverse osmosis membrane elements for seawater desalination in Saudi Arabia, in a joint venture with Toyobo Co., Ltd. (hereinafter “Toyobo”) and Arabian Company for Water & Power Development (ACWA Power Development, hereinafter “APD”), and has entered into a joint venture agreement. The joint venture will be established in March 2010 and start production around March 2011.

1.Profile of the joint venture (scheduled)

2.Background

Facing a critical need to secure water resources, Saudi Arabia is one of the largest seawater desalination markets in the world (on a seawater desalination volume basis).

ITOCHU has an extensive track record in seawater desalination plants in the Middle East, some of which date back to the 1970s. In collaboration with Toyobo, ITOCHU has been handling the sales and marketing of Toyobo’s reverse osmosis membranes in the Middle East, and also established a joint venture for a seawater desalination plant project with APD.
Toyobo has been involved in desalination facility projects in the Saudi Arabia Shuqaiq Area (240,000 m3 per day) or the Rabigh Area (220,000 m3 per day), among the largest in the Middle East, on the strength of its unique technologies and 20 years of experience in seawater desalination projects. It accounts for more than 50% of reverse osmosis membranes for seawater desalination in the Gulf countries. In Japan, Toyobo was also selected to undertake the Uminonakamichi Nata Sea Water Desalination Center project. Located in Fukuoka City, the Center is the largest facility of its kind in Japan, commencing operations in June 2005 with 50,000 m3 per day.
APD in Saudi Arabia is a major player in the nation’s infrastructure industry, investing in important IWPP (Independent Water & Power Producer) projects. For the reasons listed above, to expand the seawater desalination business, ITOCHU, Toyobo and APD reached an agreement to establish a production and distribution company for reverse osmosis membrane elements for desalination in Saudi Arabia. The new company will be Saudi Arabia’s first producer and distributor of these elements.

3. Schedule

The joint venture will be established in March 2010 and is scheduled to start production around March 2011. The new company, as a base for expansion in the growing seawater desalination markets in the Middle East, intends to market reverse osmosis membrane elements for seawater desalination not only in Saudi Arabia but in other countries of the Middle East and North Africa.
The joint venture aims at net sales of 1.5 billion yen in 2011 and 4.0 billion yen in 2015.

4. Other

This project falls under the scope of support provided according to the "Japan-Saudi Arabia Industrial Cooperation Task Force” of the Japan Cooperation Center for the Middle East.　（http://www.saudiarabia-jccme.jp/）