Glencore, Anglo join South Africa in $1.5 billion water plan to supply mines and communities

Glencore Plc and Anglo American Platinum Ltd. are among the companies attempting to secure half of that amount in financing by the end of the year with the rest of the funds to be sourced by municipalities and the government.

The companies involved in Lebalelo Water Users Association are in talks with about 10 local and international banks for funding, according to Bertus Bierman, its chief executive officer. The project stretches for about 170 kilometers (106 miles) across Limpopo province in northeast South Africa and is expected to be completed by 2030.

The plan is unprecedented in South Africa where almost all water infrastructure, especially initiatives of this scale, have been led by the state. Now, after years of neglect and mismanagement, the government is seeking investment in infrastructure and help in running operations from power plants to rail routes and water facilities.

“This could get a new model into South Africa where government is acting as the regulator and the private entities in partnerships with governmental institutions do more of the work on the ground,” said Bierman in an interview in Pretoria, the capital, this week. “We would like to get construction started early next year.”

Glencore, which operates a chrome smelter in the area, is a global coal and metals mining and trading company, while Anglo Platinum, controlled by Anglo American Plc, is the world’s biggest platinum producer.

Lebalelo plans to build 400 kilometers of pipelines and will supply 250 million liters (66 million gallons) of water a day, about a third of the consumption of Cape Town, which has more than four million inhabitants.

Water will also be supplied to people in the city of Polokwane and Mookgophong, a town north of Johannesburg. Lebalelo’s 16 members also include Impala Platinum Holdings Ltd. and Northam Platinum Ltd. as well as the Department of Water and Sanitation, the Sekhukhune District Municipality and the Mogalakwena Local Municipality.

The project will be rolled out in phases and PricewaterhouseCoopers LLP will arrange the funding, Bierman said, declining to identify the banks that the group is in talks with as the negotiations are confidential.

The project is just one of the initiatives being pushed by South Africa’s government to try and improve the country’s dilapidated water infrastructure.

The state-owned Development Bank of Southern Africa is separately setting up a $1.4 billion facility that will include private investors to fund water reuse projects. State-run companies from the Netherlands and Spain are working with South African counterparts to fund construction in the country.

If the association’s plan is successful the model may be replicated elsewhere in the country, Bierman said. Some of the companies involved in Lebalelo are beginning to discuss a similar energy initiative to generate electricity for mines and communities that could cost about 40 billion rand, he said.