Credit facility will be used to refinance the low carbon aluminium producer's more expensive debt, the firm said
Russian low carbon aluminium producer Rusal has agreed a $200m loan with the interest paid subject to a discount or a premium depending on the firm's achievement of key sustainability performance measures.
The company, which is part of the EN+ Group and manufactures aluminium using its own independent hydropower plants, said key performance indicators were still to be agreed, but confirmed proceeds from the sustainability-linked credit facility would be used to refinance more expensive debt.
The loan is secured by the assignment of proceeds from offtake contracts, including those for low carbon aluminium produced under Rusal's brand Allow, it added.
Rusal claims the smelters which produce the Allow low carbon aluminium have a carbon footprint that is four times lower than the industry average for Scope 1 and 2 emissions worldwide.
Oleg Mukhamedshin, deputy chief executive of EN+ and Rusal, said the sustainability-linked loan demonstrated support from the financial community for the firm's environmental strategy.
"As demand amongst customers grows for more sustainable and environmentally friendly aluminium, the Group is committed to driving down the carbon footprint of its products and this facility will enable us to further strengthen our ESG credentials," Mukhamedshin added. "This is also important in view of the recently announced En+ ambition to become net zero by 2050 and to reduce greenhouse gas emissions by at least 35 per cent by 2030."
The move forms part of EN+ Group's wider low carbon aluminium and decarbonisation efforts, which has seen the firm commit to a reforestation programme that has to date planted 1.1 million trees in Siberia.
Several banks and financial firms were involved in arranging the loan facility, including Societe Generale, Crédit Agricole Corporate and Investment Bank, and Natixis.
Stephanie Clement de Givry, Societe Generale's global head of mining, metals, and industries finance, said: "We are very pleased to accompany Rusal in delivering low carbon aluminum to its buyers worldwide. By linking its commercial objectives with the structure of new facility, Rusal is mobilising its financial partners towards supporting sustainable metal production and greater transparency."