ENVIRONMENTAL CLEAN TECHNOLOGIES LIMITED. — AGM Information 2002

Nov 26, 2002

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NO.982 DØ1

		ENVIRONMENTAL SOLUTIONS INTERNATIONAL LTD.	WEBSITE www.environ.com.au.
	FACSIMILE		PERTH OFFICE 21 TEDDINGTON ROAD PO Box 116 BURSWOOD WA 6100 AUSTRALIA TELEPHONE 61 8 9470 4004 FACSIMILE: 61 B 9355 0450
Date	27 November 2002		MELBOURNE OFFICE SUITE 6, 28 YOUNG STREET
То	Company Announcement Office		MOONES PONDS VIC 3039 TELEPHONE: 61 3 9326 2980
Company	Australian Stock Exchange Ltd		FACSIMILE: 61 3 9326 2142
Fax	1300 300 021	Our Ref LMF	BRISBANE OFFICE
From	Peter Hopps	Pages	7 BAROONA ROAD, MILTON QLD 4064 PO Box 1974, MicTON QLD 4064
Subject	Environmental Solutions International Ltd (ESI) Annual General Meeting		TELEPHONE: 51 7 3876 4011 FACSIMILE: 61 7 3876 4022

Dear Sirs

Please see attached Chairman's Address which will be delivered at the Annual General Meeting scheduled to be held at 11.00 a.m. (Perth time) today.

Should you have any queries please do not hesitate to contact the undersigned.

Yours faithfully ENVIRONMENTAL SOLUTIONS INTERNATIONAL LTD

Peter Hopps Company Secretary

Encl:

AUSTRALIAN STOCK EXCHANGE
ESI 001

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ENVIRONMENTAL SOLUTIONS INTERNATIONAL LTD

ANNUAL GENERAL MEETING Wednesday, 27 November 2002

CHAIRMAN'S NOTES

FINANCIAL OVERVIEW 1.

As shareholders will be aware from the Annual Report, the company reported a profit of \$1.3M on a slightly increased revenue of almost \$22M. The balance sheet remained strong, with net assets at nearly \$12.5M, adequate cash reserves of over \$8.6M and no debt. A total dividend for the year of 0.6 cents was paid.

Revenue for the first half of the year was around \$6.5M with over \$15M coming through in the second half. We are seeing a similar pattern emerging in the 2002/2003 year, on which I will make further comment later.

WATER/WASTEWATER BUSINESS $2.$

Your company's traditional source of revenue has been from the design, construction and operation of wastewater treatment plants. More recently we expanded firstly into the process control/automation of such plants, and secondly, into the drinking water sector. Both new directions have proved to be successful strategic moves.

For the past two years the order book for this business was skewed towards the second half of the financial year, and this looks to be repeated in Financial Year 2002/2003.

As evidence of this I am pleased to inform you that the company has just been awarded two new contracts to the value of approximately \$4.7 million for wastewater treatment plants in Victoria and South Australia. These are strategically important contracts for ESI in that they have been won in states other than ESI's traditionally strong bases of Western Australia and Queensland. These orders are additional to contracts to the value of approximately \$6 million already awarded to ESI this financial year, including the Longford Water Treatment contract in Tasmania which was won in the face of strong competition.

Tendering activity by the company is at record levels. As of today the company has submitted, or is finalising, tenders for work in excess of \$80 million both in Australia and overseas. Because of ESI's track record over the last two years we are confident in converting our fair share of the tenders.

We are currently either designing, constructing, commissioning or operating wastewater or water treatment plants in diverse locations such as:

• · Atherton, Daintree, Whyanbeel, Mossman, Beaudessert, Yungaburra, Mirani in Queensland.
• Bunbury, Collie, Kemerton, Woodman Point, Beenyup and a S.W. winery in Western Australia.

CHAIRMAN'S ADDRESS AGM 2002

• Hat Head, Sunset Strip in New South Wales
• · Longford, Tasmania
• Mt Beauty, Colac, Tidal River in Victoria
• Port Pirie in South Australia,
• Fili and Malaysia.

The company's newer process control business is growing quietly and we anticipate that it can generate revenues of around \$5 million per annum within a few years.

ENERSLUDGE™ AND ITS COMMERCIALISATION 3.

New technologies take a long time to commercialise, resulting in long lead times to contracts, revenue and profits.

There is no doubt that ENERSLUDGE^TM is a technology that works. The most immediate markets were considered to be in Europe and Japan, and the company has concentrated heavily on these markets. The strategy was to enter into licence agreements with respected and significant local players.

The licence agreement with Mitsubishi Electric Corp did not produce the expected early results and ESI has changed the original exclusive licence to nonexclusive one. We are in the process of identifying other licensees for Japan.

In July 2002 the company signed an exclusive agreement with ONDEO-Degrémont, the world's leading water management company. ONDEO were granted exclusive rights for France and non-exclusive rights elsewhere on a project-by-project basis. So far we have bid on 3 prospects with ONDEO and will bid on one more before December 2002.

Finding business partners/licensees in North America and other parts of Europe for the marketing of ENERSLUDGE™ is still a major strategic objective for the company. The window of opportunity we believe is still very much open, as none of ESI's competitors has secured a contract for the commercial processing of sewage sludge using gasification or pyrolysis technology, anywhere in the world.

Relative to the more traditional, but environmentally unsustainable, options for sludge disposal, technologies such as ENERSLUDGE™ are understandably more expensive. Based on the very valuable experience accumulated from operation of the first ENERSLUDGE™ plant at the Subiaco facility, the company has identified and is working on, a number of ways to reduce both capital and operating costs and take advantage of renewable energy and carbon credits in the European markets. These should make the technology more commercially competitive.

The move into Europe was predicated on the assumption that disposal of sludge to land and landfill would be prohibited by legislation. Although there are some moves in this direction, most European countries still permit these methods of

27/11/02

disposal, which are significantly cheaper than any thermal process for sludge disposal.

Nevertheless, we are exploring a number of options for the construction of a first ENERSLUDGE™ plant in Europe with the assistance of funds from the Renewable Energy/Transport Division in the EU which has allocated in excess of Euro 900 million for innovative renewable energy technologies.

In the second half of Financial Year 2002/2003 the company will have a much clearer picture on the prospects for the appointment of licensees in North America.

AUSTRALIA'S WATER CRISIS AND ESI 4.

Early last year State and Federal governments promised over \$1.3 billion would be spent addressing quality problems in Australia. Nearly two years later, the country is in the grip of one of the worst droughts on record which focused attention on the problem and prompted a pro-active response from the private, public and government sectors. Here in Western Australia we have seen very significant and unprecedented initiatives by government, namely proposals to build one of the largest desalination plants in the world (to supply drinking water). the construction of a large effluent reuse plant (to supply industrial grade water to a number of high water users in the Kwinana industrial strip) and of more concern, suggestions that some new industrial projects will not get off the ground because of the unavailability of sufficient water resources.

Obviously, the issue is complex and whilst it is not easy to predict capital expenditure decisions by governments it is difficult to imagine the issue will go unaddressed. It is very likely that Australian companies will be called upon to contribute their expertise for new water related projects. ESI, with its sound reputation for building good wastewater recycling and drinking water plants, is a potential player, as is evidenced by the recent award of such contracts to ESI.

5. CONCLUSION

The Company's wastewater business remains profitable, and as I said earlier we expect to win our share of the large number of tenders outstanding.

The cost of the program for the ENERSLUDGE™ rollout is in excess of \$1,500,000. The Board has reviewed the outlook for the next half and has concluded that the half will show profit but, regrettably, we believe it will be difficult to do better than breakeven for the year due to the cost of the ENERSLUDGE™ rollout strategy.

STAFF 6.

Finally, I would like to thank our Managing Director, Denis Glennon and staff of the company, for a very good year and for their efforts and contribution this year.