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DWA - ORWRDP - Technical Workshop Mogalakwena Regional Raw Water Scheme (MRRWS)

DWA - ORWRDP - Technical Workshop Mogalakwena Regional Raw Water Scheme (MRRWS). 21 Feb 2013 Ossie Rossouw Victor Couto Bertus Bierman. ORWRDP PH2 – SCHEME BALANCE. Polokwane. Note: Already allocated in Flag Boshielo. 9 0. 49. Mogalakwena. 140. LWUA. 77. 78.

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DWA - ORWRDP - Technical Workshop Mogalakwena Regional Raw Water Scheme (MRRWS)

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  1. DWA - ORWRDP - Technical Workshop Mogalakwena Regional Raw Water Scheme(MRRWS) 21 Feb 2013 Ossie Rossouw Victor Couto Bertus Bierman

  2. ORWRDP PH2 – SCHEME BALANCE Polokwane Note: Already allocated in Flag Boshielo 90 49 Mogalakwena 140 LWUA 77 78 Note: Already allocated in Flag Boshielo LWUA Mines (new) LWUA Mines (new) Social (new) 39 Mooihoek 59 2B 38 31 Flag Boshielo Dam 12 Note: Already allocated in Flag Boshielo Phase 2C Mines 2D 10 13 Ml/d currently available in the existing Lebalelo system from Havercroft for Mooihoekpurification plant 133 Steelpoort 5 12 Loskop Dam Existing LWUA South 138 2C Sekhukhune Witbank Dam 27 165 • Demand • Available Water De Hoop Dam 165 DWA Data Yield Analysis Feb. 2011 coincide with DWA Recon Study, March 2012 2A

  3. COST EFFECTIVE SOLUTION - PHASE 2B Polokwane • MOGALAKWENA PIPELINE • LWUA application for extension of area of jurisdiction • Phase 2B extended beyond Pruissen to Sekhuruwe • LWUA can construct as one contract with significant savings • LWUA mine members are willing to provide significant portion of capacity for Mogalakwena Municipality free of charge Note: Already allocated in Flag Boshielo Sekuruwe 90 Mogalakwena 49 LWUA 140 77 78 2B Note: Already allocated in Flag Boshielo LWUA Mines (new) LWUA Mines (new) Social (new) 39 59 Mooihoek 38 Note: Already allocated in Flag Boshielo 31 Flag Boshielo Dam 12 Phase 2C Mines 2D 10 133 Steelpoort 5 12 Existing LWUA South Loskop Dam 138 2C Sekhukhune Witbank Dam 27 165 • Demand • Available Water De Hoop Dam 165 2A

  4. COST EFFECTIVE SOLUTION - OPTIMIZATION & UPGRADING OF LWUA INFRASTRUCTURE Polokwane • OPTIMIZATION OF LWUA EXISTING INFRASTRUCTURE • The existing LWUA pipeline from Havercroftcan support all the social and mining demands in the Phases 2E and 2D areas up until 2021 • 2021 - 2025augment 12 Ml/d (4x106 m3/a) from the De Hoop Dam side by reverse pumping through the existing LWUA pipeline up until 2025 • 2030 Demand: 28.4 Ml/d (10x106 m3/a) will need to be augmented from De Hoop Dam by 2024 with the Phase 2D pipeline or 12.5 km upgrade of the existing LWUA pipeline (35 Ml/d (13x106 m3/a)) Sekuruwe 90 Mogalakwena 49 Havercroft Weir LWUA 140 77 78 LWUA Mines (new) LWUA Mines (new) Social (new) Note: Already allocated in Flag Boshielo 39 Note: Already allocated in Flag Boshielo 59 Mooihoek 2B 38 Note: Fig 9.13 Surplus high growth – 82 Ml/d (30x106mᵌ) 31 Flag Boshielo Dam 12 Phase 2C Mines 2D 10 133 Steelpoort 5 12 Existing LWUA South Loskop Dam 138 2C Sekhukhune Witbank Dam 27 165 • Demand • Available Water Note: Fig 9.7 Upper Olifants River surplus – 110 Ml/d (40x106mᵌ) De Hoop Dam 165 Note: 60 – 100 Ml/d AMD already included in river balance 2A

  5. ORWRDP PH2 – PoE AGREEMENTS • Accept recon study – resource/yield • 2C – by TCTA - review line size for revised yield • 2D – not required now. 13 Ml/d of social water available now • LWUA can implement appropriate upgrade of existing LWUA infrastructure when required (2025) • Aligned to current LWUA infrastructure and associated changes/upgrades • No risk or contribution from DWA (member agreement) • 2B – to proceed

  6. MRRWS (2B+) 2B+ Proposed Scope 120Ml/d R2.4bn (2B+ 2011 scope - excl contingency) Old 2B Scope

  7. EXPECTED MEMBERSHIP • “Industrial members” - possibly 5 to 8 new members: • Anglo American Platinum Limited • Akanani Mining (Proprietary) Limited • Tameng Mining and Exploration (Pty) Limited • Lesego Platinum Mining Limited • Platreef Resources (Pty) Limited • Polokwane Iron Ore Company (Proprietary) Limited • Messina Platinum Mines Limited • Ironveld (Pty) Limited • Minmetals First Chrome Mine (Pty) Limited • “Ordinary members” - possibly 2 members: • Respective Municipalities

  8. MRRWS - SCOPE • MRRWS Scope • Historical - TCTA 2B based on ~77km pipeline delivering 60Ml/d between Flag Boshielo and Pruissen • Historical - 2011 LWUA concept assessment based on ~118km pipelines delivering 120Ml/d between Flag Boshielo, Pruissen and Sekuruwe (R2.4bn in 2011 terms indicative estimate) • Current – forecast to include ~195km of pipelines delivering 140Ml/d scheme between Flag Boshielo, Pruissen, Sekuruwe to Akanani and associated mining tee offs • Layout (map) • Bulk Potable Water • Not currently included above scope. LWUA willing to discuss the implementation as separate project funded by government • LWUA willing to support the appointed water services authority in operational readiness set up

  9. WATER REQUIREMENTS IN THE MRRWS AREA Requirement between 120Ml/d and 150Ml/d – Propose 140Ml/d Mining: ~78Ml/d Social: ~62Ml/d (39Ml/d Mog Municipality, 11Ml/d Bakenberg and 12Ml/d Agenang)

  10. MRRWS – SCOPE OPTIONS ASSESSMENT • Require life cycle cost trade offs - Capex and Opex: • Member take off points • Potable water take off points • Storage capacity and points • Power supply trade offs – pump points, member power supply points and alternate power supply points • Pipeline geotechnical data • Land negotiations • 140Ml/d design - allows for future growth requirements (20 years)

  11. MRRWS – FUNDING • Mining members can facilitate implementation of cost efficient projects. Using LWUA, risk of alternative funding cost impacts and capacity issues mitigated • Capped the governments capital contribution on raw water for potable/social - minimizes financial risk to government • LWUA overhead very low • Funding options: • Capital contribution: • Members contribute their full capital component upfront (internally or externally funded) or • Members provide guarantee to LWUA for their full capital component and fund on a 3 or 6 month basis • LWUA borrow on open market (IDC, IFC, WB, other) using member take off and capital guarantees • Take off agreement

  12. MRRWS – CAPEX ASSESSMENT • Capex and cash flow assessment requires scope to be better defined and assessed: • Finalize scheme membership • Finalize scheme capacity • Scope and do trade offs incl cost (capex/opex) and fund modelling • Select preferred option • Do design and final costing • Obtain final member approval • Run funding options in parallel

  13. MRRWS – PROPOSED CAPEX MODEL • Capital cost • Aligned to the current LWUA Constitution and Membership Agreement (incl member voting rights) • The parties will need to agree to an equitable capital contribution based on capacity and point of supply and the associated scope/deliverables • Members accepted that a social component of raw water intended for potable water, be funded as follows: • Mining members: 58% (35/60 l/c/d) and • Government: 42% (25/60 l/c/d) • Applies to the capital cost for the section between Flag Boshielo Dam to Pruissen. Opex to be covered by the domestic users • Beyond Pruissen no allocation agreements have been reached

  14. MRRWS – COST MODEL • Operating Cost • Aligned to the current LWUA Constitution and Agreement • Opex (O&M) constitutes fixed and variable costs: • Fixed costs: • Working capital • Personnel cost • Consultant fees • Variable costs: • Raw water cost • Electricity costs according to demand • Maintenance costs and • Personnel costs associated with overtime • The Olifants River regional tariff principals are to be defined by DWA in conjunction with LWUA/JWF and other stakeholders asap – risk mitigation

  15. PROPOSED PROGRAMME / DELIVERY STRUCTURE • LWUA PM and Procurement processes - adapted to suit member requirements

  16. CURRENT SCHEDULE • Proposed compressed (Optimistic) schedule with a parallel PFS/FS considered - key milestone dates: • Complete the CS in Q3 2013 and review/approval/funding Q4 2013 • Conduct a PFS/FS for completion in Q1 2015 and review, approval and funding in Q3 2015 • Run legislative requirements (EIA, etc.) between Q3 2014 and Q3 2015 and • 24 month construction period allowing first water to be available in Q4 2017 • Currently 3 months late due to delayed approval of area of operation • Optimistic Schedule – Q4 2017

  17. KEY PROGRAMME CONCERNS • Approval by DWA of the implementing agency – time • Alignment (members) – scope, time and cost • Reviews and approvals (members) - time • Funding (members) – time and cost • Legislative requirements (EIA, servitudes, etc) - time

  18. POSSIBLE SCHEDULE RISK MITIGATIONS AND FURTHER OPPORTUNITIES • Approve implementing agent immediately - risk • Agree on demand/scope - risk • Sharing of existing survey, design and environmental information - opportunity • Improved authority (government) turn around times – EIA, borrow pit, servitudes, etc - opportunity • Improved member review, approval and funding turn around times: • Industrial and Ordinary members - opportunity • Option to proceed with study using government funding (part R500m – apportioned contribution to scheme) - opportunity • Run funding model assessment in parallel with upfront study work - opportunity • Option to skip concept study and move into PFS (opportunity) however first need: • Defined scope (140Ml/d and possible growth) • Define trade off options to be assessed • Get member commitment

  19. BEST PRACTICE PROJECT MANAGEMENT • FEL 3 – Single option detailed assessment • Each Programme & Project • PEP and Charter for Selected Option • FEL 2 – Option assessment • Each Programme & Project • SWP/PEP and Charter for Selected Option • FEL 1 – Business Case • Overall • Each Programme • Study Work Plan/Project Execution Plan and Charter for Options • Project Lifecycle Time Influence

  20. CASH FLOW • Based on current Optimistic schedule and 6 month member rolling funding

  21. MRRWS RISKS

  22. DWA CAPACITY BUILDING • LWUA willing to assist DWA with capacity building • Need to better understand DWA requirements for skills development • Propose that DWA second staff to the programme and LWUA provide training as agreed between the parties • DWA cover cost of DWA secondees • Opt for an EPC model with LWUA conducting the Management • LWUA (members) determine the selection process for EPC and suppliers

  23. MRRWS – WAY FORWARD • Obtain approval on extension to area of operation • Obtain historical data/information not previously shared • Commitment and funding for front end loading (studies) • Set up project steering committee • Recruit owners team members • Define DWA capacity building needs and process • Secure support consulting services • Update the Concept study • Review and approve the updated Concept study • Define and agree funding models • Proceed with Pre-feasibility Study/Feasibility Study • Review and approve the Pre-feasibility Study/Feasibility Study (incl funding vehicles) • Approval and funding for execution • Design, procure, fabricate, construct and commission

  24. QUESTIONS

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