SA’s water woes are a growing concern to the mining industry, with some companies forced to spend hundreds of millions of rand to reduce their dependence on municipal supply in recent years.
Gold and platinum group metals (PGM) miner Sibanye-Stillwater said the water supply is insufficient to meet the needs of its SA operations, with incidents where water supply constraints have interrupted its operations being a regular occurrence.
Late last year Sibanye’s PGM operations experienced nearly a week of constrained supply, temporarily affecting production.
“The current situation poses a significant risk to the entire mining industry,” Sibanye spokesperson James Wellsted told Business Day.
The miner said water risks affecting its SA PGM operations were identified some time ago and have been highlighted in numerous annual reports, but continue to pose a threat to the long-term sustainability of the company.
“This is still the case and the risk has increased steadily for years due to poor planning and water management by the authorities,” said Wellsted.
Sibanye’s SA PGM operations are located in the water scarce western limb of the Bushveld Complex, making them particularly vulnerable to municipal supply risks. Unlike its SA gold operations, which are overlain by a water aquifer and equipped with water treatment plants, these mines are fully reliant on Rand Water.
To reduce its dependency on municipal water, the group is assessing strategic initiatives to secure other sources of water for these mines, but Sibanye has already racked up a sizeable bill in pursuit of this goal.
Tariff increases
Since 2019, the miner has spent about R465m on water-related infrastructure and research & development initiatives to “mitigate the potential risks posed by the deterioration in the national potable water network and unreasonable tariff increases”, said Wellsted.
These investments include the construction of water treatment plants, an extensive piping network and network monitoring systems. The group’s combined capital and operational spending on water independence exceeds R100m a year.
Wellsted said the group’s proactive approach was necessitated by “recurring issues with municipal or water board supply, including volume and suboptimal quality, as well as sharp increases in water tariffs” imposed by Rand Water.
In 2019-24, Sibanye managed to reduce its potable water purchases for the PGM operations from 13,888ML to 12,527ML, improving its water independence from 16% to 22% over the period.
Despite the reduction in demand, the SA PGM operations’ water bill increased from R188m in 2019 to R220m in 2024, reflecting the Rand Water’s annual tariff increases.
As a result, Sibanye spent more than R2bn on potable water in 2019-24, in addition to the roughly R465m spent to hedge against municipal supply risks.
Wellsted said that without a robust water strategy, Sibanye could face significant and immediate water-related losses, given the vulnerabilities within the national water network.
“The increasing frequency of and extent of water supply issues across the country suggest that the situation will likely worsen,” he said.
The increasing frequency of and extent of water supply issues across the country suggest that the situation will likely worsen.
— Sibanye spokesperson James Wellsted
Concerns about waning water systems have been echoed across SA’s PGM sector, with Impala Platinum (Implats) scheduling R800m for strategic water initiatives in its latest environmental, social and governance report for the year to end-June 2024.
Implats told Business Day that it was continuing its long-running programme of investing in water reservoirs and water reuse at its mines, having increased its water recycling from 40% in 2020 to 56% in 2024.
To further diversify its water supply, the miner also sources and treats greywater from neighbouring wastewater works.
However, Implats warned that increasingly unpredictable and extreme weather conditions brought about by climate change were an added threat with SA’s ageing water supply infrastructure compounding water supply risks.
Even outside the PGM sector, water supply risks pose a growing threat to SA’s broader mining industry. Harmony Gold said it has been affected by a lack of water stability several times in the past five years, which halted operations and negatively affected production.
Harmony said it expects the water situation to remain a challenge this year due to the increasing demand for water and the effects of climate change, adding that “water is material to our operational success and is a growing concern for Harmony”.
“Into 2025 and beyond, we see more public-private partnerships as a solution to expedite the water supply crisis, similar to the model which worked to improve the security of electricity supply,” said Implats sustainable development executive Tsakani Mthombeni.
The Vaal Gamagara Water Supply Scheme (VGWSS) was constructed in 1968 to encourage mining investment in a water scarce region in the Northern Cape. The scheme, which extracts water from the Vaal river to serve nearby towns, is a “critically important” source of water for iron ore and manganese mines in the arid province, said Minerals Council SA spokesperson Allan Seccombe.
Collaboration between the Minerals Council, mining companies and the government has been key to keeping the aged pipeline operational, with the first phase of refurbishing completed in 2023.
Seccombe told Business Day that about 6,000 households, mines, municipalities and farmers, as well as Transnet, benefited from this first phase, but the pipeline requires urgent upgrading and capacity enhancements.
To fund the second phase of the VGWSS, more than 20 mining companies pay a premium for water in the scheme, with R268m in capital having been raised so far.
Additionally, manganese and iron ore miner Assmang, which is jointly owned by African Rainbow Minerals and Assore, has provided R50m to the Minerals Council’s Northern Cape Mines Leadership Forum to keep VGWSS functional.
On top of its capital contribution to SA’s water infrastructure, the mining industry also consumes about 48% of the water it is authorised to extract instead of its 59% allocation, meaning there is more water available for municipalities and other users.
While water supply remains a key concern for SA mining, Seccombe said collaboration between industry bodies, the government and stakeholders was critical.
“All role players are reliant on a reliable and adequate source of water in this water-scarce region,” he said.
“It is only through collaboration that we can achieve this strategy so vital for lives and livelihoods in the Northern Cape.”
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