Nedbank Limited (acting through its Nedbank Corporate and Investment Banking division) (“Nedbank CIB”) has successfully co-ordinated and structured an innovative and market-leading financing solution for Harmony Gold Mining Company Limited (“Harmony”) to enable Harmony to refinance and upsize its key corporate debt facilities.
Harmony, a listed mining company on the JSE, 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.
“This landmark circa R10 billion funding package will provide Harmony with sufficient financial flexibility to support its existing operations, and the significant role that they play in employment and fiscal contribution in South Africa, and its growth strategy,” says Greg Webber, Co-Head of Mining and Resources at Nedbank CIB.
According to Arvana Singh, Head: Sustainable Finance Solutions at Nedbank CIB, the ZAR 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 USD and ZAR denominated sustainability-linked facilities that enable Harmony to embed its climate, energy and water use related sustainability ambitions and performance into its facilities.
“The green loan will be used exclusively to finance the construction of Harmony’s second phase of solar PV projects, which consists of up to 11 separate plants, designed to increase the company’s renewable energy generation capacity by 137MW,” Singh explains, “thereby 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 intent.
An independent second party opinion was obtained from Carbon Trust, a global climate consultancy, to verify the alignment of the facilities with the core components of the Loan Market Association (LMA) 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 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, “and this transaction positions Harmony and demonstrates its commitment to enhance its contribution to the achievement of such, thereby helping to move the country forward to a lower-carbon future.”
Harmony agrees, and says that 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,” explains Herman Perry, CFO: Treasury at Harmony, “so it was essential for us to align our financing structures with our sustainability ethos and strategy. Nedbank CIB’s extensive involvement in this transaction helped us to achieve this all-important objective.”
Nedbank CIB considers it a great privilege to have been able to combine its mining finance, syndication and sustainable finance expertise to deliver a solution for our long-standing client that epitomises our purpose of using our financial expertise to do good.