18 minute read
NEWS AND SNIPPETS
NEW MINING GUIDELINES
In March 2022, the DMRE published the Artisanal and Small-Scale Mining (ASM) Policy and the Mine Community Resettlement Guidelines. Both policy documents illustrate the desired integration of ESG standards in the mining sector. The regulator provides guidelines on ASM and resettlement of mine communities to assist them to fulfil their ESG obligations.
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THE ASM POLICY
Currently, mining laws in South Africa do not regulate ASM as a discrete form of mining. Instead, a mining permit which is less onerous than a mining right can be obtained, but ASM miners still struggle to meet its requirements. The ASM Policy aims to create a formal ASM industry that can operate in a sustainable manner and contribute to the economy. It introduces formal definitions for artisanal and small-scale mining, setting out monetary thresholds to differentiate between artisanal (maximum R1-million) and small-scale (maximum R10-million) miners. It also distinguishes between illegal mining, which is a criminal activity, and ASM, for which an ASM permit is required.
The ASM Policy provides structure to the ASM industry and, as it becomes formalised and pays taxes, the ASM industry will be able to contribute to poverty alleviation and economic growth. The ASM may mostly be limited to surface and opencast mining.
THE RESETTLEMENT GUIDELINES
Resettlement for mining is not a new phenomenon. It is a global issue which has attracted the attention of international bodies such as the International Labour Organisation and the International Council on Mining and Metals, both of which have published guidance documents.
The Resettlement Guidelines outline the process for applicants and holders of prospecting and mining rights or mining permits to follow when their operations require the physical resettlement of landowners, lawful occupiers, holders of informal land rights and mine and host communities. It also applies to both new operations and existing mines that are expanding and is intended to apply throughout the lifecycle of the operation, whenever resettlement is necessary.
Business Partners will use IFC’s loan to finance the construction of certified green commercial buildings in South Africa and/or to renovate existing commercial buildings to make them more environmentally friendly, making them at least 20% more energy efficient. Eligible green building certifications will include EDGE, LEED, BREEAM and Green Star.
IFC will also provide financial incentives to Business Partners to partially offset the costs involved in greening and certifying buildings, based on the company meeting certain green building targets in their portfolio.
Conventional buildings account for almost 40% of energyrelated greenhouse emissions worldwide due to a growing urban population and outdated construction practices. An IFC study estimates that South Africa’s green building demand presents a $7-billion investment opportunity between 2016 and 2030. Although the supply of green buildings in the country is growing, the green building market is still at a nascent stage.
IFC TO EXPAND GREEN BUILDING FINANCING IN SA
To support the construction of green buildings in South Africa, IFC is providing a R600-million ($42-million equivalent) loan package to Business Partners, a South African non-banking financing entity specialised in providing finance, mentorship and support programmes to SMEs.
WIND AND SOLAR
The Global Electricity Review 2022 reports that wind and solar generated over a tenth (10.3%) of global electricity for the first time in 2021, rising from 9.3% in 2020, and twice the share compared to 2015 when the Paris Climate Agreement was signed (4.6%). Combined, clean electricity sources generated 38% of the world’s electricity in 2021, more than coal (36%).
Global electricity generation. (Terawatt hours)
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INVESTEC ISSUES GREEN BONDS
Investec has reaffirmed its commitment to funding a sustainable future, with the issue of the group’s first green bond. The bond is backed by several of Investec’s flagship renewable energy projects. The bonds raised R1-billion under Investec’s DMTN bond programme. The issue, which was 3.8 times oversubscribed, highlighted a healthy appetite among institutional investors looking to make a positive impact in terms of their ESG commitments.
The bonds have been issued in line with the Green Bond Principles of the International Capital Markets Association, a global association of debt securities issuers as well as the Investec Sustainable Finance Framework. The principles seek to support the financing of environmentally sound and sustainable projects that foster a net-zero emissions economy.
“Investec’s green bond issue references existing, returngenerating projects, rather than future projects. These are all accredited renewable projects currently delivering clean power into the grid,” notes Louis Dirker, head of debt capital markets at Investec Bank. “In many cases, the projects also have concurrent programmes helping to create jobs and uplifting communities.”
Investec’s green bonds reference five of South Africa’s leading wind and solar projects, namely: • Bokpoort CSP Power Plant (50MW) • Aurora Wind Power Project (94MW) • Karoshoek Solar One Project (100MW) • Kathu Solar Park (100MW) • Windfall 59 Solar Project (74MW)
According to the World Economic Forum, annual issuance of green bonds is expected to exceed US$1-trillion in 2023, double the amount issued last year. Considering that the global bond market is worth some US$130-trillion, there’s significant room for green bonds to grow within the fixed income asset class.
According to Dirker, South African institutional investors are becoming more aware of the risks of climate change to their portfolios and are having to disclose these. “There’s also greater pressure being brought to bear from their stakeholders to make a positive contribution through their ESG policies and related financing. Green bonds thus fulfil an important role within the fixed-income component of an institution’s portfolio, especially where there is a reference to bankable, cash-generative projects.”
CLIMATE CHANGE BILL OPEN FOR COMMENTS
The portfolio committee on environment, forestry and fisheries opened comments for the Climate Change Bill in April 2022. The bill seeks to enable the development of an effective climate change response and a long-term just transition to a low-carbon and climate-resilient economy and society for South Africa.
The bill details the need for appropriate adaptation responses and requires the Minister of Environment, Forest and Fisheries to implement an effective nationally determined climate change response that encompasses mitigation and adaptation actions that represent South Africa’s fair contribution to the global climate change response.
GLOBAL LEADERS TO GUIDE COAL PHASE-OUT
The International Energy Agency (IEA) recently announced that a high-level advisory group of global energy, climate and finance leaders will provide strategic input for a forthcoming IEA special report that will explore how to put the world’s coal emissions on a path toward net zero amid the major energy security and affordability challenges that are affecting countries worldwide with particularly severe economic impacts in the developing world.
IEA executive director Fatih Birol convened the High-Level Advisory Group to offer recommendations for the major new IEA report, Coal in the Global Net Zero Transition: Strategies for Rapid, Secure and People-Centred Change, which is due to be published in the fourth quarter of 2022. The report will provide the first authoritative assessment of how to tackle one of the world’s biggest energy and climate challenges in the changed global landscape resulting from Russia’s invasion of Ukraine.
The emerging global energy crisis driven by Russia’s invasion of Ukraine has laid bare the challenges that countries face in ensuring, sustainable and affordable energy supplies in a complex and uncertain geopolitical environment. As well as hurting consumers and businesses around the world, especially in developing economies, the turmoil in global energy markets threatens to derail efforts to prevent the worst effects of climate change. Last year, global energy-related CO2 emissions rebounded to their highest level in history, largely because of record use of coal to generate electricity.
The move away from coal will not be straightforward. Renewable energy options are the most cost-effective new sources of electricity generation in most markets, but there are still multiple challenges to reducing emissions from the existing global fleet of coal power plants while maintaining secure and affordable electricity supplies. Increased financial flows and new financing mechanisms will be essential to bring down coal emissions and innovation in areas such as carbon capture will be key in many industrial sectors
Tackling the consequences of change for workers, communities and vulnerable consumers will also require dedicated and determined policy efforts. This is especially the case in developing economies where electricity demand is growing rapidly, coal is often the incumbent fuel for power generation, and unabated use of coal in the industrial sector is on the rise.
Many of these challenges have become even more acute in recent months amid the sharp increases in the prices of energy and other crucial commodities, such as cereals and other food staples, which have been driven to all-time highs by Russia’s invasion of Ukraine. This is putting further strains on the already fragile financial situation in many developing economies. It also risks pushing energy sector transformation down the policy agenda in countries worldwide.
IMPROVING LIVES THROUGH WATER
Bolstered by a collective call to action by the president for the public and private sectors to work together to address the infrastructure backlog, the sectors collaborated and conceptualised the Olifants Management Model Programme.
De Hoop Dam outside Steelport in Limpopo.
South Africa is a water-stressed country and is facing several water concerns. The lack of basic services such as water supply and sanitation is a key symptom of poverty and under development. In this context the provision of water supply and sanitation services cannot be separated from the effective management of water resources.
Department of Water and Sanitation (DWS), as sector leader, seeks to manage the critical balance between sustainability of the resource, equitable allocation and economic growth. The National Water Act 36 of 1998 mandates DWS to ensure efficient conservation, management and control of resources to support the country’s water security needs. Future challenges will depend on current responses.
Sustainable solutions require a systematic approach of integrated solutions rather than addressing issues in isolation. Most of these opportunities will need to take advantage of the synergies between government, private sector and civil society.
In response to the negative growth impact of water and sanitation challenges, DWS has over time established a wide variety of partnerships. Lebalelo Water User Association (LWUA) was established in 2002, in line with the National Water Act, as a
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collaboration between DWS and the mining industry (ie ordinary and industrial members) to build bulk raw water infrastructure that will develop the Eastern Limb of the Bushveld Igneous complex in Limpopo.
LWUA’s purpose is “improving lives through water” and its strategy sets out a staged implementation approach that not only aims to transform the Association into a strategic model for future water delivery in the country, but to use water as a catalyst for socio-economic development in the areas it operates in. LWUA itself is also transforming and rebranding and will become the
SYNERGISTIC CO-EXISTENCE
The hive understands the need synergy between nature and bees and between bees themselves. The bee logo (below) was chosen as an interim icon to represent the synergistic nature of the OMM Programme. The programme aims to achieve synergy or collaboration between the public and private sector. proposed Olifants Management Model Water User Association (OMM WUA) with institutional and commercial members based on a 50/50 collaboration model.
LAUNCHING THE OMM PROGRAMME
Institutional and commercial members joined forces to plan an integrated water service model for the Olifants River raw and potable water management called the Olifants Management Model (OMM) Programme. The model has the potential to be replicated across the country as it is underpinned by public-private participation which sets a platform for community inclusivity.
To address the issues relating to the supply of water in the region, members agreed to accelerate bulk raw water delivery, potable water service delivery and socio-economic development (SED). Besides providing much-needed water to surrounding areas, the model will unlock the strategic mineral and industrial potential in the region. It will also establish a sustainable platform for the technical, financial and socio-economic growth of Limpopo.
COLLABORATION IS KEY
The OMM Programme was formalised through the signing of a Heads of Terms for an OMM Framework Agreement in 2022 between institutional and commercial members.
Structured collaboration
In terms of the proposed governance structure, the OMM Programme will be housed within the OMM WUA, which will be the implementation vehicle for the OMM Programme. The proposed OMM WUA authority structure is underpinned by a Charter in accordance with the principles of King IVTM good governance. The OMM Programme Steering Committee shall consist of seven members: three appointed by DWS, three appointed by the Commercial Users Consortium, with the CEO as a co-opted member.
THE NEED FOR THE OMM PROGRAMME
The OMM Programme aims to improve socio-economic growth in the Limpopo Province through the acceleration of the Olifants River Water Resources Development Plan (ORWRDP) and the costeffective provision of potable and raw water infrastructure to defined areas in the Northern and Eastern Limbs of the Bushveld Igneous Complex.
In the early 2000s, DWS conceptualised the ORWRDP to address the bulk water needs of the middle Olifants River catchment area. Projected water demands had increased significantly due to the anticipated development of the mining sector. A key objective of government was to stimulate this mining growth and associated economic activity in a sustainable way for the
OMM PROGRAMME OVERVIEW
The scope of work entails: Augment Supply. Move a portion of the scheme’s current supply from Flag Boshielo Dam, via the abstraction point on the Olifants River at the Havercroft Weir, to the De Hoop Dam to enable water supply to the Mogalakwena area from the Flag Boshielo Dam. Re-sequence ORWRDP. Re-sequence the construction of the ORWRDP bulk raw water infrastructure to meet revised water needs and reduce capital costs. Establish resource partnership. Set up a partnership to construct, operate and maintain defined infrastructure. Implement socio-economic development. Put a SED plan into effect that is focused on potable water (for approximately 380 000 people), sanitation services, connectivity, education and enterprise development to develop skills, create jobs and change behaviour.
benefit of the local and national economy in concert with the Growth and Development Strategy and the Spatial Development Framework of the province.
ORWRDP is a designated strategic integrated project in terms of section 7(1) of the Infrastructure Development Act, 2014 and of significant importance to South Africa.
Phase 1 of the project, raising Flag Boshielo Dam by five metres, was closely aligned to the developing mining sector in the area. Prosperity in the area is closely linked to mining as it creates employment opportunities and economic growth – and water is the catalyst for this development. The ORWRDP Phase 2 forms part of the Presidential Infrastructure Coordinating Commission’s strategic infrastructure projects, which were aimed at fasttracking development and growth across South Africa.
The construction of De Hoop Dam was the second phase of the ORWRDP and was first announced by President Mbeki in 2003 as one of the flagship programmes of government’s Accelerated and Shared Growth Initiative for South Africa (AsgiSA). De Hoop is the 13th largest dam in the country with a 347-million cubic metre reservoir capacity.
The importance of the dam was twofold; it would be a bulk storage facility to augment the water supply around the Steelpoort and Olifants rivers as well as to the mines and unlock vast deposits of platinum group metals (PGM) found in the region – the largest known unexploited mineral wealth in our country.
While the ORWRDP was partially developed over the last two decades, recent studies together with rising community pressure have highlighted the need to adjust and accelerate the ORWRDP.
In the Eastern Limb of the ORWRDP, social unrest has impacted on communities’ access to potable water and mines and other commercial operations’ ability to safely operate. There had also been increasing levels of vandalism on water infrastructure.
With bulk raw water pipelines passing through communities that have no access to water, the communities’ frustrations are understandable. Their difficulties are further compounded by the lack of employment, economic development and opportunities. The concerns of the community are valid, and something needed to be done to improve their quality of life.
The OMM Programme aims to accelerate the delivery of bulk raw and potable water infrastructure to the Northern and Eastern Limbs of the Bushveld Igneous Complex.
OBJECTIVES OF THE OMM PROGRAMME
Given the country and the region’s endowment of critical raw materials, water infrastructure development is a key enabler to create employment through the infrastructure programmes, mining expansion and manufacturing of renewable energy technology. This aligns with the South Africa’s industrialisation objectives.
Besides providing much-needed water to communities, the OMM Programme will unlock the enormous strategic mineral and industrialisation potential of the region to capitalise on the global transition to cleaner energy. Key benefits include: Water security. Accelerate delivery of the ORWRDP as part of the OMM Programme and supply potable and bulk raw water to identified areas. Economic growth. Develop enabling infrastructure essential to the industrialisation of the Bushveld Igneous Complex and to take advantage of mining commodity cycles. Job creation. Create local jobs through construction and system operations, as well as mining developments and develop skills in the water sector. Cost savings. Re-sequence the build programme to utilise existing dams and infrastructure to their optimal efficiency levels. Fiscus support. Private sector contributions to the infrastructure programme will provide support to the fiscus while tax revenues will also benefit from the increased economic activity in the region. Socio-economic development. SED in Limpopo will also be accelerated through localisation of infrastructure and operational spend as well as widening the skills base through local and regional development. Sustainability. Mandate and equip the OMM WUA to implement, manage, operate and maintain the OMM Programme. Replicable model. The public-private collaboration model has the potential to be replicated across the country and other sectors. Social harmony. Improve integration through the provisioning of water, job creation and SED. Water conservation. The Programme will implement behavioural change programmes with a focus on conscious water use. Water reuse. SED activities will prioritise sanitation and water reuse and address wastewater treatment. ESG footprint. The OMM seeks to make optimal use of infrastructure resources (cement, steel, diesel, etc) to minimise its footprint.
SUSTAINABLE DEVELOPMENT
Sustainable development is one of the key underlying concepts of the OMM WUA’s mission, vision and strategy. The United Nations adopted 17 Sustainable Development Goals in 2015 as a universal call to action to end poverty, protect the planet and ensure that by 2030 all people enjoy peace and prosperity. The 17 goals are integrated, and it is recognised that action in one area will affect outcomes in others, and that development must balance social, economic and environmental sustainability. The defined OMM Programme targets will directly or indirectly impact on all these sustainable development goals.
SOCIO-ECONOMIC BENEFITS
Formal economic activity in Limpopo is highly diverse and is characterised by commercial and subsistence agriculture, mining activities, manufacturing, commerce and tourism. Large coal, PGM as well as copper and phosphate deposits are found in the area. The Olifants Catchment is home to several large thermal power stations that are strategically important, and which provide energy to the country as a whole.
A large proportion of the catchment is not economically active (45%), with a further quarter (24%) of the population being unemployed. Only a third of the population (31%) are employed of which 68% are employed in the formal sector.
The OMM Programme represents a significant opportunity for SED in the region given the extent of the infrastructure programme across the province and its associated capital and operational spend.
Themes to steer development
Five priority themes have been identified to steer socioeconomic development activities, and all SED projects within the OMM Programme will align to the themes represented in the diagram on the left. A central hub concept is to underpin all collaboration, to ensure inclusivity and transparency. In terms of quick wins, the OMM Programme aims to expand on existing SED projects (youth leadership and entrepreneur development), work with existing Water Service Authority projects, collaborate with schools and build on existing technology infrastructure.
The five priority themes that have been identified to steer socio-economic development activities.
GREEN OUTCOMES
The OMM Programme will pursue: Renewable energy. Considering water resource availability and regional water needs, additional studies will be conducted in the pre-feasibility phase of the OMM Programme to further optimise and reduce water costs through energy use optimisation and the use of renewable energy.
WATCH VIDEO
Watch Bertus Bierman, CEO of Lebalelo Water User Association in an interview with Gordon Brown, publisher of GreenEconomy. Media.
OUR IMPACT
The difference we make in the world through our business . PURPOSE To safeguard global sustainability through our metals and energy solutions.
VISION To be a leader in superior shared value for all stakeholders.
STRATEGIC FOUNDATION C ore guiding principles the basis for all our decisions and ac t ions. ESG AND SHARED VALUE
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