Global private equity inves- tor International Housing Solutions (IHS) has funded a R1.35-billion housing project, in Mpumalanga’s coal mining belt, which has set a benchmark for the provision of employer-assisted affordable housing.

The provision of workforce housing for the private sector could be the answer to squalid informal shack settlements that have sprung up, owing to the lack of affordable housing in South Africa.

The Spring Valley Housing Project, located in Duvha Park, eMalahleni, is targeted at the lower- to middle-income market and comprises 2 951 residential stands for freestanding houses and six stands earmarked for the develop- ment of sectional title walk-up units. It is situated on 220 ha of land in Duvha Park Extensions 3 to 14 and includes the installation of required bulk and link infrastructure.
Moreover, provision has been made for schools, churches, crèches and retail developments. The development was launched in mid-2008 and all the essential development approvals have been obtained.
“We are very excited about the project and the development prospects in eMalahleni, which has a strong demand for afford- able, quality accommodation,” says IHS managing partner Rob Wesselo. He adds that the overall Spring Valley project will provide a range of options, from freestand- ing residential dwellings housed in gated estates to higher-density sectional title units.

“Bulk services for the first phase have been completed and construction has started on a large scale. Spring Valley is developing a very strong profile in the area, as there are no other township developments of this size and scale to compete with it.”
To date, 500 stands have been sold to development company MDV Developments, which specialises in affordable housing. MDV has completed about 150 houses, with the balance still under construction.

Anglo Thermal Coal
Diversified mining major Anglo American’s thermal coal division, Anglo Thermal Coal, has partnered with the Spring Valley development to provide affordable housing for its employees in the area through Anglo’s home-ownership scheme.

After approaching Spring Valley in 2011 to finalise a deal, Anglo Thermal Coal offered the development a R16-million interest-free loan for the installation of services on one of the project’s phases.

“To redeem the loan, each time an Anglo American employee buys a house in that development, they get a R60 000 discount on the house,” says Wesselo.

He further explains that Anglo would pay about R290 000 for a house – which would typically cost R350 000 – thereby recouping the R60 000 difference from Anglo American’s initial loan.

Anglo American says the scheme aims to have the majority of its workforce living in sustainable settlements that are located in urban centres and within the vicinity of its mining operations.

Since awareness campaigns began last year, more than 187 transactions have been finalised. This is out of a maximum of 272 houses that can be sold to Anglo American employees at a significant discount.

“Anglo took the bull by the horns, strategised and made a plan for their employees that was cost-effective for everybody, including the employees, who get a 20% discount on a house,” says Wesselo, adding that, from an affordability point of view, this is equity that has been immediately created and a bond that owners do not have to service.

He tells Mining Weekly that R11-million of the loan – all of which goes directly towards helping Anglo employees buy a house – has already been repaid.

“This kind of innovation is useful. We have more houses available at Spring Valley and we’d like to talk to more mining houses in the area,” Wesselo says.
Anglo Thermal Coal owns and operates nine mines and has a 50% interest in the Mafube Colliery and the Phola washing plant.
There are about 45 coal mines currently operating close to eMalahleni, with at least another four set to start operations in the near future. These mines supply coal to export and local markets and to State- owned power utility Eskom’s five operational power stations in the area, with another power station currently under construction.

Despite the obvious benefits of a model similar to Anglo Thermal Coal’s, Wesselo tells Mining Weekly that, while there appears to be a gap in the South African market for IHS, several mining houses have turned down the company’s offer to help with housing projects.

“I don’t think they want to – or are able to – invest a lot of their own equity in housing projects, but we do,” he says.

Wesselo adds that the IHS is willing to consider similar funding models with other mining companies and would also be willing to own rental accommodation.

Project History
The Spring Valley Housing Project was partially funded by the IHS’s R1.9-billion South African Work Force Housing Fund (SAWFHF), launched in South Africa six years ago, with additional funding by Citibank, the Development Bank of South Africa, the Public Investment Corporation and the Overseas Private Investment Corporation, among other North American and Southern African organisations.

To develop the project, a special purpose vehicle, Spring Valley Developments, was established by the SAWFHF, which holds 62.6% as a majority shareholder, and Diluculo Property Trading, which holds a 37.4% share of the development.