Postcard
- Towards the end of October 2024, we accompanied investors on a site visit to the Central Basin Acid Mine Drainage site and the Vaal Dam.
- The aim of the visit was to see firsthand some of the main challenges facing water infrastructure in Gauteng and to understand the importance of safeguarding the region’s water resources through infrastructure investments.
- We share some key insights from the trip and explain why private participation in water infrastructure projects is key to safeguarding the region’s water resources.
Thanzi Ramukosi, Investment Specialist
Kim Haupt, Client Director
Johannesburg’s water issues have been well-documented in recent years. But perhaps an element of the story that hasn’t quite received as much attention is the hard work being done to resolve many of these challenges.
One of the organisations doing great work within the region is the Trans- Caledon Tunnel Authority (TCTA) – a government organisation that was initially established to work on the Lesotho Highlands Water Project – but whose scope has since expanded to cover other areas of bulk water infrastructure projects.
Thanks to a long-standing relationship with the TCTA, dating back to the 2000s, we were able to show investors some of the main solutions for water supply within the region. Two key sites were identified, the first being the Central Basin Acid Mine Drainage (AMD) treatment plant site in Germiston, which is where our excursion began.
Remnants of the gold rush: Groundwater challenges in Johannesburg
To fully appreciate the importance of AMD treatment plants within the area, it’s important to understand the history of the city. Johannesburg, also known as the City of Gold, has its origins in the gold rush of the 1850s, leaving behind a legacy of abandoned mine shafts and complex underground tunnels. While the remnants of old mining activity would ordinarily be a non-issue, rainwater passing through these abandoned mines turns acidic due to water reacting and leaching metals from the disturbed rock. While this weathering is a natural process, it is accelerated and exacerbated due to the mining activity. If not treated, this contaminated water could find its way into the water system, thereby contaminating the supply of drinking water.
To tackle this problem, the TCTA set up treatment plants near abandoned mine shafts to pump water out of the shafts, neutralise acidity levels, remove contaminants, and then release it as clean water into nearby rivers and streams.
It was especially interesting to see how the process unfolds, where contaminated water starts out looking visibly brackish in colour before changing to a more recognisable transparent hue after treatment.
What was even more striking was the realisation that without the work done by organisations like the TCTA, acidic water would have otherwise contaminated the natural water systems, with detrimental effects on the environment, including agricultural activities. It was a relief to know that there were processes in place to ensure the protection of the local biosphere whilst also reusing a critical water resource to augment the scarce supply.
Figure 1: Sedimentation tank to remove the suspended solids from the water
Source: Ninety One, October 2024.
Figure 2: The storage cylinders which house the chemicals used to purify the acidic water
Source: Ninety One, October 2024.
Integrated water resource management
Our next stop was the Vaal Dam, the largest supplier of raw water to the City of Johannesburg.
When we arrived, the Dam’s water level stood at 35%, far lower than the 70% recorded in 2023. By early December, the Department of Water and Sanitation (DWS) reported that dam levels had fallen further to a low of 28.2%.
The culprit? We were told that there were various factors at play, such as the below-average rainfall in the region, a prolonged heat wave that resulted in faster evaporation rates, and the temporary closure of the Lesotho Highlands transfer tunnel. The tunnel, which accounts for around 25% of the water fed into the Vaal system, has been closed for six months for maintenance and repairs. The combination of these factors all contributed to the sharp decline in water levels, leaving behind a fairly sombre picture. Quite literally in fact, as can be observed when dam levels are very low, and remnants of an old graveyard that would have otherwise been covered in water can be seen.
Figure 3: Vaal Dam sluice gates closed due to low water levels
Source: Ninety One, October 2024.
As concerning as these water levels are, it was comforting to hear that there are contingency measures in place. If the water level reaches 18% or below, the Sterkfontein Dam would be opened, and water would be pumped into the Vaal Dam. Sterkfontein Dam, in comparison, has a water level of nearly 100% and is much larger in size. Although the contingency plan comes with a hefty energy bill (due to the distance that the water would need to travel to reach the Vaal Dam), the good news is that it would essentially prevent Johannesburg from reaching ‘day zero’ should the water in the Vaal Dam ever become depleted.
As a concluding thought, our site visits to the Central Basin Acid Mine Drainage site and the Vaal Dam were both insightful and incredibly eye-opening. We left the trip with a sense of optimism that many of the challenges facing water delivery in the area can and are being mitigated. But the reality is that the government simply cannot do it alone. The call for increased private participation in infrastructure-related projects is a very real one, and we can visibly see the impact that organisations like the TCTA are having in this space. At Ninety One, we are fortunate to be able to work with organisations like these and many others who are doing outstanding work in helping to build the country’s infrastructure networks. As long as there are those from within the private sector willing to work alongside the government to help rebuild this country’s infrastructure, we believe the future looks promising and optimistic.
Meet the team
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Our team manages numerous strategies across illiquid and liquid credit, including 17 vintages of the Credit Opportunities Fund, closed-ended funds that focus on private and illiquid credit in South Africa and the rest of Africa. |
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R58bnInvested in infrastructure over 20 years |
R7 billionRate of deployment per annum |
130+Projects and borrowers supported |
R100bn +Assets under management |
50%of illiquid debt strategies are in infrastructure |
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Infrastructure investing
