Metsimaholo Municipality

Project details

  • Date

     November 2, 2014

  • Client

     Metsimaholo Municipality

  • Task

     Metsimaholo Waste Management Project

  • Category

     Case Studies

Project Summary

The Metsimaholo Waste Management Project has opened up an avenue for the attainment of world-class waste disposal standards in South Africa. In particular, it provides a financially feasible solution towards attaining the international benchmark of an 80% diversion rate of waste from landfilling.

Faced with the problem of landfill space, Metsimaholo Municipality has engaged a bankable feasibility study process to establish the financial feasibility of a proposed Material Recovery Facility (MRF) project, which seeks to divert at least 82 % of waste from landfilling. The study also considered other potential options to solving the problem. This was done as a point of departure for MRF, the proposed solution.

Besides doing nothing, the study finds that the municipality has primarily three options of solving the landfill space problem. It [the municipality] can as one option, use the landfill site at Deneysville, which has plenty of space left but is far from Sasolburg where most of the waste is generated. The second option is to secure a new landfill altogether. However, such a landfill is likely to be far from Sasolburg, costly, and can take long to secure and build.

The third and most favourable option, against which the bankability of this study was based, is to establish a material recovery facility (MRF) at Sasolburg, which will process most of the waste into valuable material, and dump the relatively small percentage that cannot be used. This way landfill space will be saved and the landfill will as a result last longer (another 10 to 15 years is our conservative estimation). When that landfill fills up, an alternative landfill, including the one in Deneysville, can then be used in a cost effective way, since only a fraction of the waste from the processing plant in Sasolburg where most of the waste is generated, will require transportation to the landfill site.

With the proposed MRF, non-garden and non-rubble waste is subjected to semi automated splitting and sorting, in order to recover recyclables. From the non-recyclables, combustible components are processed into low and high caloric value refuse-derived fuel (RDF). The rest, which is low value compost or mash, is land-filled. Building rubble and garden waste are processed into construction aggregates and high value compost respectively. In addition to the MRF, methane will also be harvested from the landfill and used in electricity generation. For the beneficiation of the RDF, a Municipal Waste Incinerator (MWI) for electricity generation also forms part of the proposed scope.

Although the MRF option can eliminate the need for the other two which rely on securing additional landfill space, neither of the two options can eliminate the need for the MRF. It is within this context that the focus of the study was mainly the financial viability of the MRF option.

To evaluate it, data that was gathered from various sources including the municipality, other independent organizations and persons locally and internationally, as well as our international technical partner ASA, in Austria. The latter is central Europe’s largest waste management company which builds and operates a number of MRFs in that part of the world. They bring invaluable experience and knowledge to the project.

The most important parameters in the data were the quantity and composition of the waste at Metsimaholo. Together with other data and information, this data was subjected to a simulation, which tested the economic feasibility of the project at Metsimaholo. Local conditions were also applied with the help of local specialists in the recycling industry. Another important element of the data was prices, both for products and materials. Care was taken in this regard to use the most accurate estimation and this was done through consultation with suppliers and sellers of similar products. Potential buyers were also consulted for product prices where applicable. This way, a much more representative picture of the situation was arrived at.

From the process above, a picture emerged which showed that the incorporation of the Municipal Waste Incineration (MWI) plant would be feasible only if it is funded with interest-free capital. This is due to the high capital cost required to build it. In this regard, its implementation is held as a second phase option, to be considered only after the successful implementation of the MRF and Methane plants. These two elements of the scope are relatively cheaper and financially feasible as well as quicker to complete. Most importantly, provided that an agreement is reached with current operators of coal incinerators to collect the RDF either at a basement price or free of charge, these elements are able to fully resolve the space problem on their own. The importance of the MWI plant is in ensuring that the RDF is used up and not dumped, in case there is no uptake by a third party user.

Overall, the result of the simulation, coupled with the moderation in terms of local conditions, concluded that it is financially feasible to build and operate a MRF and Methane plant, and that such a plant can divert at least 82% of the waste away from the landfill. As indicated above, the MWI component has been found to be feasible only if the capital used attracts no interest, while the MRF and Methane plants are feasible even with interest-bearing capital. The tables below illustrate these points and also provide the key elements of the conclusion of the study.

Phase 1 (MRF and Methane without MWI)

Element

Value (at WACC of 13.25%)

Landfill material reduction/diversion

82%

Capital (Rm)

56.63

NPV (Rm)

10.38

IRR

17.50%

Number of jobs

78 people

Electricity generated (MWh/a)

 2520

CO2 Reduction (tons/a)

 2469.6

Risk profile

M (due to dependence on third party for RDF use)

Phase 2 (MRF and Methane with MWI)

Economic indicator

Value (at WACC of 13.25%)

Value (at WACC of 0%)

Landfill material reduction

82%

82%

Capital (Rm)

377.91

377.91

NPV (Rm)

-132.52

32.6

IRR

1.2%

1.2%

Number of jobs

95 people

95 people

Electricity generated (MWh/a)

34807

34807

CO2 Reduction (tons/a)

 34110.86

 34110.86

Risk profile

L (no dependence on third party for RDF use)

Accompanying the conclusion of the study is a fundable model for the design, construction, and operation of the proposed facility. The model also proposes the type of ownership and management arrangement that must be employed. In particular, it proposes a public private partnership model (PPP), in which the waste disposal operation is ceded to an independent operating company that is co-owned with, and managed by, a private partner company.

In terms of financing, the project has been designed so as to take into consideration the cost of finance, and results show that it is a financeable project. Built into the model is a two-year implementation plan for the MRF and Methane plants and evaluation of the decision on the MWI. It is within the context of these findings together with the accompanying project model, that it is recommended that the municipality and the sponsor accept the results of the study and garner the necessary resources to implement the project. This will solve the space problem and create at least 78 direct, and scores of indirect jobs as well as boost the local economy.