Nedbank, acting through its corporate and investment banking (CIB) division, has coordinated and structured an innovative financing solution for Harmony Gold to enable the miner to refinance and upsize its key corporate debt facilities through a R10-billion package.
JSE-listed Harmony formally appointed Nedbank CIB to act as a global coordinator and bookrunner, as well as a global sustainability coordinator, to structure and arrange the substantial dual currency, multi-tranche debt package.
The green loan will be used exclusively to finance the construction of Harmony’s second phase of solar photovoltaic projects, which consists of up to 11 separate plants. These are designed to increase the miner’s renewable energy generation capacity by 137 MW, enabling Harmony to transition some of its electricity supply to cleaner sources of energy.
The construction of these solar PV plants forms an integral part of Harmony’s decarbonisation strategy and commitment, which will contribute to the group meeting its target of 30% of its energy mix emanating from renewable sources by 2027.
This will also support the eventual achievement of Harmony’s net-zero commitment.
Nedbank CIB mining and resources co-head Greg Webber says the “landmark” funding package will provide Harmony with sufficient financial flexibility to support its existing operations, the significant role that the miner plays in employment and fiscal contribution in South Africa, as well as Harmony’s growth strategy.
Nedbank CIB sustainable finance solutions head Arvana Singh adds that the rand-denominated component of the funding includes a R1.5-billion green loan, “the first of its kind to be entered into by Harmony”.
There are also three tranches of dollar- and rand-denominated sustainability-linked facilities that enable Harmony to embed its climate-, energy- and water-use-related sustainability ambitions and performance into its facilities.
An independent, second-party opinion was obtained from global climate consultancy Carbon Trust to verify the alignment of the facilities with the core components of the Loan Market Association’s green loan principles and sustainability-linked loan principles, respectively.
According to Singh, the successful conclusion of this transaction is particularly significant in the context of the South African mining industry as a whole, given that mining is one of the country’s primary industrial sectors that has a significant potential impact on the environment.
“Environmentally-sensitive mining is a non-negotiable input into South Africa’s ability to transition to its envisaged green economy,” she explains, adding that the loan positions Harmony, and demonstrates its commitment, to enhance its contribution to the achievement of a green transition, thereby helping to move the country forward to a lower-carbon future.
Harmony treasury CFO Herman Perry says the sustainable finance transaction signals the start of the next important chapter in the mining company’s well-established sustainable development journey.
“Harmony is currently South Africa’s largest gold producer by volume and a significant operator of gold tailings retreatment facilities, which makes us a vital participant in the country’s climate change mitigation plans.”
Therefore, he says, it is essential for Harmony to align its financing structures with its sustainability ethos and strategy.
“Nedbank CIB’s extensive involvement in this transaction helped us to achieve this all-important objective,” Perry comments.