Harmony Gold expects a pipeline of renewable energy projects will save it in excess of R500 million in annual electricity cost savings from 2025 onward.
As the gold miner progresses its greening ambitions, it this week announced the conclusion of power purchase agreement for three 10MW solar photovoltaic plants – the first phase of its decarbonisation plans.
The plants rank among the biggest solar PV plants for private off-take in South Africa to date and the first energy is expected to flow from the plants in March next year.
In the second phase, the company will build an additional 137MW of renewable energy at its longer-life mines. These projects are expected to reach full production in 2025, at which point the significant electricity costs savings are expected to be realised.
Harmony said phase 3 is in planning stage and is progressing as anticipated.
Supporting the miner’s decarbonisation strategy are syndicated multi-tranche, multi-currency loan facilities of $400 million (about R6.1 billion) and R4 billion.
The syndication was led by Absa and Nedbank and was supported by a variety of local and international financial institutions.
It includes a R1.5 billion loan for the phase 2 renewables projects as well as three sustainability-linked loans that are aligned with Harmony’s Environmental, Social and Governance (ESG) and sustainable development targets.
The sustainability-linked loans require the miner to meet certain targets relating to its carbon emissions, its renewable energy use and its potable water consumption.
Upon meeting these targets, Harmony will receive meaningful interest savings. But inversely similar penalties become payable if the targets are missed.
Harmony’s CEO, Peter Steenkamp, said there is an inextricable link between Environmental, Social and Governance (ESG) performance and financial performance.
"The ESG-linked financial transactions that we have concluded, alongside the construction of the solar energy plants, are a watershed moment for Harmony and our host communities. Not only will these transactions help us to deliver on our environmental and social obligations and undertakings, but they will also de-risk the business and deliver many socioeconomic benefits," he said.
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