Acid mine drainage treated to industrial
standard will present a less expensive alternative and reduce
potable water off-take.
It sounds very encouraging that a treatment solution is being
developed to address all the contaminated water of past and
present gold mines in the Witwatersrand. But what will the
business model look like? And, what will it mean to industry and
other parties?
A Sustainable Model
The National Water Act of 1998 makes it very clear: the polluter
pays. Apart from the moral imperative to address the problem,
the issue of AMD would, therefore, cost the mines millions if
they just let it be due to tighter legislation.
When the initial talks of such a treatment project began, it
became very clear to the parties involved that the financial leg
of the triple-bottom-line principle was vital in order to make
this project truly sustainable. "The plant needed to make money
in order to work in the long term," says Schoeman. So the water
had to be sold. DWAF agreed on condition the mines - who were
responsible for the problem in the first place - were not
allowed to gain financially from the project. A business model
was developed to underpin this. A Section 21 not-for-profit
organisation, named Western Basin Environmental Corporation (WBEC),
was formed in a Heads of Agreement with the three gold
producers: Mintails, Harmony and DRDGold.
To construct a treatment and distribution infrastructure of this
size, however, requires vast capital Ð funding that cannot be
generated from a Section 21 company. WBEC entered into a
management agreement with WUC - a private company wholly owned
by AIM listed Watermark Global. With its backup from Watermark
Global, WUC could, therefore, gain access to international
markets to generate funding. Each basin will be treated as a
separate legal entity with its own players and role players. WUC
will become the pivot point for these separate non-profit
entities (for example, Eastern Basin Environmental Corporation
and Central Basin Environmental Corporation). To reduce capital
expenditure, the mines will also transfer their existing assets,
like pump stations, pipelines, servitudes and treatment plants,
into the Section 21 company. Schoeman says WUC is already
circulating documents to parties of the other basins to finalise
further Heads of Agreements.
A four-fold win
The project is in the development phase and commercialisation is
expected around December 2010. Once the commercial phase has
been reached, the gold mines' responsibility to pump the water
to the surface will end. This, according to Rex Zoreb,
consulting environmental engineer at Harmony, will alleviate a
major operational cost for the gold mines. It costs the three
mining houses approximately ZAR2,5-million a month to pump water
to the surface.
Once the project has been proven profitable, which is expected
two years later in 2012, the mining companies will be able to
completely step down from their legal obligation and
environmental liabilities; leaving the business risks and
operational costs to clean the water entirely up to WUC. They
can also hand in the project as a closing strategy to DWAF at
this stage.
But, what will happen to the water? "The acidic mine water will
be treated in a chemical precipitation process to SANAS Class 2
standards and sold to industrial users in the Rustenburg and
Vanderbijlpark areas," states Schoeman. The platinum mining
industry uses vast quantities of water in concentrator plants to
process platinum ore and major expansion strategies are on the
cards. Although they will not be the only users, they are viewed
as key industrial water consumers.
"For every ton of ore processed by a mine, a total of
approximately 1,5 t of water is used," states Schoeman. Most
industrial companies use potable water for processing purposes -
a costly and, socially and environmentally, less acceptable
exercise. By treating the water to industrial or "grey"
standards, industrial players would be presented with a less
expensive and more acceptable alternative water source. As a
result of lower demand for drinking water by industry, the
supply of potable water to communities is going to increase.
Schoeman points out: "In essence, the project is about the
national management of water. Contaminated water is transformed
into industrial water and thereby reduces off-take of potable
water sources by industry, in return, increasing supply to
communities". The initiative supports government's objective to
increase water supply to disadvantaged areas. If this project
gets off the ground, the benefits will, therefore, be four-fold:
-
Gold mines benefit as their operational costs
to pump water to the surface will be reduced, as well as their
long-term environmental liabilities.
-
Industrial water consumers are posed with a
less expensive, more socially acceptable and
environment-friendly alternative to potable water.
-
Government finds a closure solution for the
dreaded environmental damage that can be caused by AMD in the
Witwatersrand. The state also indirectly addresses the
scarcity of potable water in poor communities.
-
Communities benefit as the off-take of
potable water supply increases with reduction of use by
industrial parties.
Corporate structure
1. Harmony, DRDGold and Mintails enter into a Heads of Agreement
to treat acidic water effluent in the Western Basin.
2. In December 2010, during the commercialisation phase, minesÕ
responsibility to pump acid mine drainage (AMD) to surface will
stop. When the plant has proven to be entirely profitable after
two years in operation (2012), the mines can hand in the project
as a closure rehabilitation strategy; stepping down from their
environmental liabilities and transferring the onus to the rest
of the structure.
3. A Section 21 not-for-profit organisation is established:
Western Basin Environmental Corporation (WBEC)
4. WBEC enters into a management agreement with Western
Utilities Corporation (WUC) to sell the water.
5. WUC is owned by Watermark Global.
6. WUC, an independent private company, puts infrastructure in
place to treat AMD to industrial standard.
7. AMD is sold to industrial users in the Rustenburg and
Vanderbijlpark areas. 8. Reduced off-take in potable water for
processing by industry leads to an increase in availability to
communities. |
