Liquid Asset: Halo Source's new strategy

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Martin Coles calls himself “the accidental CEO.” Drawn to HaloSource Inc. by an abiding interest in water-related issues, the former president of Starbucks Coffee International joined the board of the then-nine-year-old company in July 2011, and was appointed president and CEO three months later. Since then, he has led the Bothell-based company past some significant milestones. Late last year, HaloSource announced it had raised $25 million in a secondary public offering and had established new collaborations with Tupperware Brands Corporation, which will provide customized cartridges that incorporate HaloSource’s HaloPure drinking water disinfection technology, and Pentair, which has wholesale and retail channels in Brazil, the largest global residential water treatment market in Latin America.

HaloSource is a pioneer in drinking water purification. In 2009, its HaloPure technology became the first in 30 years to receive U.S. Environmental Protection Agency registration. The company also designs products for water filtration and remediation in industrial settings. In fact, in its early days, HaloSource focused on treating the water in swimming pools. It quickly expanded when it realized the effectiveness of its biopolymer hybrid at removing particulates from large volumes of water.

Milestones achieved last year signaled a shift in HaloSource’s corporate strategy. To fully exploit its technology, Coles says, the company had to shift from being a consumer products firm to one that focuses strictly on purification technology. “What’s been interesting in our business,” Coles explains, “is how much cross-application technology exists.” For example, HaloSource’s HaloKlear product is now used for cleaning contaminated water at construction sites, and it recently signed an agreement with England’s EnviroCleanse Ltd., which will make use of the polymer for municipal water pre-treatment.

The market is huge and only getting bigger. “The water remediation business on its own is a $26 billion dollar segment,” Coles says. In many countries, such as India, only a small percentage of the population takes purification measures beyond boiling, but “the growth rate of this market is colossal because you’ve got folks joining this group of consumers every year as they move up the social scale,” he notes. The brominated beads used in HaloSource’s patented purification technology also compete favorably with other techniques. Drinking water treated with HaloPure is ready in 30 seconds, as opposed to the three-minute wait time required for chlorine.

HaloSource is now working solely on the chemistry of its products, improving and refining techniques and final results. “We’re a company of scientists, engineers and innovators,” Coles asserts, and rather than divert energy toward manufacturing, HaloSource is forging partnerships with companies already engaged in that side of the market, as well as with water remediation specialists.

One area where HaloSource chemists have been focusing their energy is the use of chitosan (KYE-tuh-san). Derived by treating the shells of crabs, shrimp and other marine invertebrates with sodium hydroxide, the polymer is a major component of HaloKlear, the biopolymer HaloSource markets to pool owners and water remediation specialists. Sigsa, a Costa Rican company that installs hydroelectric power plants, uses the product to filter water at its construction sites. Much of the chitosan HaloSource uses comes from Washington state, where the first domestic manufacturing plant was built in the late 1960s.

“Chitosan is a natural biopolymer biosaccharide,” says Everett Nichols, HaloSource’s scientific director of water treatment technologies. HaloSource uses a dual polymer system (DPS), which enhances the natural ability of chitosan to aggregate suspended particles in water. Because chitosan will biodegrade, the technology is more environmentally friendly than some alternatives. Water treated with a DPS can be filtered through a coarse screen with openings as large as 1 millimeter, rather than a more expensive, very fine filter. The DPS technique also increases the stability of the particle clumps, ensuring they won’t break apart as the water is transported.

The other advantage of DPS technology is its ability to remove oily material from water. This was first marketed to pool owners as a way to remove sunscreen and prevent scum lines, but HaloSource has since developed many other applications. “The system opens up a whole range of opportunities for treating water contaminated with oil, as well as other pollutants,” Nichols says. The biopolymer system has been used near oil refineries to clean groundwater contaminated with hydrocarbons, as well as bilge water from ships. Nichols, who has more than 28 years of experience working with chitosan and other biopolymers, says DPS also has potential for harvesting microgreen algae, which contain large amounts of lipids and may be useful as biofuel.

HaloSource’s biopolymers are in widespread use locally—in construction of the third runway at Seattle-Tacoma International Airport, the Alaskan Way Viaduct and interchange work on State Route 16—as well as numerous other sites nationally and internationally. The HaloKlear DPS recently received a General Use Level Designation (GULD) from the Washington Department of Ecology, which has some of the most stringent testing standards for product approval. The GULD label will allow engineers to specify use of HaloKlear in water treatment processes for construction, dredging and mining projects. Meanwhile, the company is continuing to develop new applications.

“Suspended solids are a lot more prevalent than you’d think,” says Sean Flynn, director of HaloSource’s Environmental Water division. “We see ourselves getting into the sediment control area for applications outside of construction.” He notes that the technology could be used in agriculture to clean water that washed crops and to filter water used in the mining industry. The firm is also working on technology that could be used to extract dissolved pollutants from water.

“Innovation is driven by the issues consumers are facing,” Coles says. HaloSource has conducted focus groups to determine the best way of communicating what its products do in places like India, where there are more 1,200 dialects. It also considers the impact of various contaminants that are troublesome in different regions, such as arsenic, when refining its water purification technology.

“We’re really on a mission here,” Coles says. “All of us are here because we really want to make a difference in the business of water.”

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