Integrated poultry producer Astral Foods said on Tuesday the water supply constraints stemming from the deterioration of infrastructure in the Lekwa municipality which supplies its processing plant in Standerton were having significant cost implications for the company.
In its recently reported interim results for the six months ended March 31, Astral said the worsening infrastructure had led to water supply interruptions to its poultry plant, despite the proximity of Lekwa municipality to a substantial water source in the Vaal river.
"A substantial ongoing under supply of water has escalated, and this notwithstanding a permanent order of court requiring the municipality to secure a minimum necessary supply," the company said on Tuesday.
"The total calculated impact on profits is currently at least R85-million."
It said in spite of active engagement with a number of stakeholders on the issue, cooperation from the Lekwa local municipality had not been forthcoming.
"Due to the unpredictability of the outcome of the ongoing discussions with the authorities, the group is not in a position to provide an estimate of the impact on profits of the short supply of water beyond what is stated above," the company said.
Astral was actively seeking alternative water supply solutions in an attempt to mitigate any further cost impacts under the ongoing water supply interruptions.
"All possible avenues are being explored which includes continued legal action to secure water supply through the municipal infrastructure," it said.