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HARMONY GOLD MINING COMPANY LIMITED – Harmony concludes ESG-linked loans and starts construction of three 10MW solar photovoltaic plants – SENS – Moneyweb

Harmony concludes ESG-linked loans and starts construction of three 10MW solar photovoltaic plants
Harmony Gold Mining Company Limited
Registration number 1950/038232/06
Incorporated in the Republic of South Africa
ISIN: ZAE000015228
JSE share code: HAR
(“Harmony” and/or “the Company”)
Harmony demonstrates ESG(1) in action as it concludes ESG-linked loans and
starts construction of three 10MW solar photovoltaic plants
Johannesburg, Thursday, 2 June 2022. Harmony Gold Mining Company Limited
(“Harmony” and/or “the Company”) is pleased to announce that it has
concluded a new syndicated multi-tranche, multi-currency, loan facility,
aimed at sustainable development, as well as a power purchase agreement
(“PPA”) facilitating Phase 1 (30 megawatts “MW”) of its renewable solar
photovoltaic (“PV”) energy initiative.
The first phase of Harmony’s renewable energy journey consists of a 30MW
solar energy plant in the Free State. In Phase 2, the Company will be
building an additional 137MW of renewable energy at our various longer-life
mines while Phase 3 is in planning stage and progressing as anticipated.
Harmony expects Phase 2 of its renewable energy project to deliver over
R500 million per annum in electricity cost savings once it reaches full
production in FY25.
“Responsible stewardship is the first of our four strategic pillars. ‘Mining
with purpose’, has shown that there is an inextricable link between ESG
performance and financial performance. Through extending the lives of mines,
responsibly rehabilitating land and our ongoing economic support in the
countries we operate in, we have shown ESG in action,” said Peter Steenkamp,
Harmony’s chief executive officer.
“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 socio-economic
benefits. ‘Mining with purpose’ is ensuring that our investors and other
stakeholders continue to derive value and positive returns in a global
climate of energy uncertainty,” Steenkamp added.
The conclusion of the following transactions demonstrate Harmony’s
commitment to sustainable development – in particular decarbonisation:
1 Phase 1 of the solar PV power purchase agreement
In Phase 1 of Harmony’s decarbonisation strategy, the Company has
established an independent power producer (“IPP”) for the construction of
the three PV plants. These plants will have a total installed capacity of
30MW and will deliver more than 68 gigawatt hours (“GWh”) of clean power to
Harmony’s Free State operations, mitigating 65 000 tonnes of carbon dioxide
emissions in their first 12 months of operation. 1.3 terawatt hours (“TWh”)
of clean energy is expected to be delivered over their 20-year lifespan.
The solar plant projects were jointly developed by Harmony, Energy Group (a
specialist advisor and investor in industrial clean energy projects in
Southern Africa), and BBEnergy (a South African engineering company that
specialises in solving complex engineering problems in the energy and water
The project was funded by a project finance debt solution from Rand Merchant
Bank, a division of First Rand Bank Limited, and with the support of African
Clean Energy Developments (ACED), equity-funded by African Infrastructure
Investment Managers and Mahlako Energy Fund.
The plants rank amongst the biggest solar PV plants for private offtake in
South Africa to date and first energy is expected to flow from the plants
in March 2023.
2 Syndicated multi-tranche, multi-currency, loan facility of US$400
million and R4 billion
Harmony’s goal is to be net carbon zero by 2045. Phase 1 and 2 of Harmony’s
renewable energy programme are key interventions, supported by science-
based targets, as the Company journeys towards this ambition.
The syndication was led by ABSA Bank Limited (acting through its Corporate
and Investment Banking Division) (ABSA), and Nedbank Limited (acting through
its Corporate and Investment Banking Division) (Nedbank) and was well
supported by a variety of local and international banks and financial
institutions (jointly referred to as “the lending group”).
The syndicated, multi-currency, multi-tranche loan facilities include the
following components:
– a Green Loan (“Green Loan”): a R1.5 billion term loan ring-fenced for
renewable energy projects as part of Phase 2 of Harmony’s renewable energy
roll out; and
– sustainability-linked loans consisting of:
– a R2.5 billion revolving credit facility
– a US$300 million revolving credit facility
– a US$100 million term loan
The Green Loan of R1.5 billion is designated to fund Phase 2 of Harmony’s
solar PV strategy (Phase 2 targets up to 137MW of peak generation capacity).
The cash flow profile of this loan has been tailored to closely match the
expected cash flow of the solar PV build, followed by the expected savings
in energy costs for Harmony’s South African mining operations. Phase 2 of
the solar PV project is currently in the feasibility stage and we are
working on obtaining the necessary permits and licenses.
The three sustainability-linked loans align with the Company’s ESG and
sustainable development targets. As part of the transaction, Harmony and
the lending group have agreed on the following progressive sustainability
targets, or key performance indicators (“KPIs”), over the next three
financial years:
1. KPI 1 – GHG(2) emissions: Reduction of Scope 1 and 2 emissions from an
FY21(3) baseline of 4 896 000 tons to 4 074 000 tons by FY25
2. KPI 2 – Renewable energy mix: Targets a 20% renewable energy mix by
FY25 from a 0% baseline in FY21
3. KPI 3 – Potable water consumption: Target a reduction to 19 436 mega
litres (“Ml”) of potable water consumption by FY25 from a baseline of
21 083 Ml in FY21
An independent service provider applying the Sustainability Linked Loan
Principles as issued by the Loan Market Association (amongst others), has
independently verified the credibility of these targets.
Upon meeting the KPIs, Harmony will receive meaningful interest savings,
while inversely similar penalties become payable if all targets are missed.
The sustainability-linked loans have an original term to maturity of 3
years, and includes extension options to that could add a further 2 years
to the final maturity date.
More information on Harmony’s decarbonisation projects and plans
For details of Harmony’s energy rollout and decarbonisation plans, see the
dedicated energy tab on the company’s ESG portal
Download links
Harmony ESG Report 2021 – https://www.har.co.za/21/download/HAR-ESG21.pdf
Climate related financial disclosures –
¹) ESG = Environmental, social and governance
2) GHG = Greenhouse gas
3) FY = financial year
For more details, contact:
Jared Coetzer
Head: Investor Relations
+27 (0)82 746 4120
Johannesburg, South Africa
2 June 2022
J.P. Morgan Equities South Africa Proprietary Limited
Date: 02-06-2022 02:56:00
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