Toray Industries, Inc. (hereinafter referred to as “the Company”) announced that it had won an order to supply reverse osmosis membrane for a large seawater desalination plant in Saudi Arabia.

The seawater desalination plant employs reverse osmosis method and is under construction in Shuaiba, south of Jeddah on the Red Sea coast, the second biggest city of Saudi Arabia. The plant will have a capacity to desalinate 150,000 cubic meters of water per day and is expected to start operation in the beginning of 2009 (the Company is scheduled to supply membranes in 2008).

The Independent Water and Power Project, or IWPP, being implemented in Shuaiba currently produces electric power at an oil-fired power plant and carries out seawater desalination at an evaporation method plant. The project chose the reverse osmosis method for another desalination plant and Doosan Heavy Industries & Construction Co., Ltd. of South Korea won the contract to construct the plant, while Toray received the aforementioned order to supply reverse osmosis membranes.

Saudi Arabia is the biggest market in the world for seawater desalination and the country produced 1.24 billion cubic meters of desalinated water in 2005. About 85% of that water is desalinated using evaporation and other methods with only a small number of reverse osmosis plants, although the number of plants employing reverse osmosis is on the rise and the plants being built tend to be bigger in size. The reverse osmosis membrane order announced this time is the first order that Toray has received for a large seawater desalination plant after the Al-Jubail seawater desalination plant (desalination capacity: 91,000 cubic meters of water per day; the Company supplied membranes for desalinating 24,000 cubic meters per day with DuPont Co. supplying the rest. The membranes were delivered in 2000) and it is the second biggest seawater desalination plant, after the Hamma seawater desalination plant in Algeria (desalination capacity: 200,000 cubic meters per day. Delivered in 2007), for which the Company is supplying the membranes.

The Company is the only reverse osmosis membrane manufacturer which has received orders for large-sized seawater desalination projects with capacity of 100,000 cubic meters per day or larger in each of the major markets of the Caribbean, Mediterranean, the Middle East and East Asia. The Company enjoys a high reputation for delivering membranes used at large-sized plants, which tend to have higher technological requirements.

The reverse osmosis membrane market is expanding at an annual rate in excess of 8% fueled by the intensifying worldwide water shortage and the need to preserve water resources from an environmental perspective. The market is expected to grow further, primarily in the U.S., Europe, Middle East and North Africa and China. Along with the growth in demand for seawater/brine water desalination plants and for industrial applications such as producing boiler feed water, the market for new applications such as urban sewage and waste water reuse are expanding, fueling expectations for further growth in demand for such membranes.<br>
As part of its efforts to respond to these strong demands, the Company has embarked on the expansion of capacity at its reverse osmosis element plants both in Japan and the U.S., and recently the new line of membrane production facility at its Ehime Plant began production, doubling its capacity.

The aggregated orders the Company has received to-date for membranes in the seawater desalination field exceeds 2 million cubic meters per day in terms of the amount of water being desalinated and is one of the largest player in the field. The 2 million cubic meters of water translates into drinking water for approximately 8 million people.

Toray is committed to continue with active efforts to increase the number of orders it receives in the Middle East and elsewhere including the Mediterranean region, China and Pacific Rim.