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Nedbank Corporate and Investment Banking (CIB) leverages ecosystem expertise to play a key role in financing the North West project.
A R4 billion solar photovoltaic (PV) installation that is one of South Africa’s largest solar projects constructed under a corporate power purchase agreement (PPA) has started supplying electricity to the South African operations of mining company, Tronox.
Two 100 megawatts (MW) solar farms in Lichtenburg, North West, are among the 1st to wheel their energy through Eskom’s high-voltage transmission network. The electricity they produce is being used at Tronox operations in KwaZulu-Natal (KZN) and the Western Cape.
With CIB as the joint lead mandate arranger, the project reached a financial close in September 2022. Its 387 000 solar panels now cover 430 hectares in Ditsobotla Local Municipality.
The two solar farms are expected to generate about 580 Gigawatt hour (GWh) of electricity per year, equivalent to the annual consumption of more than 40 000 households. Tronox, a New York Stock Exchange-listed world leader in the mining, production and marketing of inorganic minerals and chemicals, expects the project to reduce its global scope 1 and scope 2 carbon emissions by about 13% compared to its 2019 baseline.
The company’s energy-intensive operations, which include mines in Mtunzini on the KZN coast and Brand-se-Baai on the Namaqualand coast, concentration plants, and smelters in Empangeni and Saldanha Bay, are expected to draw 40% of their electricity from the solar PV project.
The projects’ total investment is close to R4 billion, with debt financing at about R3 billion. CIB committed roughly R827 million to the debt for these 2 solar PV projects, handling the associated interest rate hedges. Developed by the SOLA Group and constructed by Wilson Bayly Holmes WBHO, these projects are among the 1st in South Africa (SA) to use wheeling for private offtake agreements. CIB’s involvement showcases its leadership in financing renewable energy projects across Africa, reinforcing its position as one of the leading banks in energy finance.
Nedbank’s support for the Lichtenburg project and projects in the government’s Independent Power Producer Procurement Programmes and other private power purchase agreements doesn’t only cement its position as South Africa’s sustainability bank. It also demonstrates its commitment to the Just Energy Transition, economic growth, and alleviating pressure on the Eskom grid.
As an increasing number of organisations leverage the government’s liberalisation of the energy market, Nedbank taps into its extensive ecosystem to make connections and bring about accelerated, sustainable growth unmatched by any other entity. The deal to supply energy to Tronox highlights Nedbank’s ability to see the integral link between a business and its ecosystem. In supporting Tronox’s energy expansion, Nedbank furthers the company’s interests and also improves the broader ecosystem, generating a positive ripple effect across SA.
In this scenario, lower energy costs and greater energy security drive the business’s growth, while ecosystem benefits include a reduced likelihood of load-shedding, the creation of more than 900 employment opportunities during construction, and an important proof point for SA’s rapidly liberalising energy market. Identifying and leveraging these synergistic connections foster sustainable growth.
The Lichtenburg project showcases South African talent, fully developed and executed within an industry frequently dominated by foreign entities. Despite the typical finance and construction hurdles, its swift as well as effective execution showcases local capabilities in designing, implementing, and operating large-scale energy projects. This effort promotes national pride and indicates a shift towards local empowerment and leadership in the renewable energy field.
Nedbank’s contribution to sustainable energy extends beyond generation – the bank has begun to support energy aggregators. These intermediaries play an important role in the energy market by purchasing electricity from diverse independent power producers and supplying it to various consumers, such as mining firms, industrial entities, local governments, and Eskom. Using the transmission and distribution grid, aggregators wheel power from generation points directly to consumption sites. This system streamlines the distribution of electricity and enhances the efficiency and sustainability of the energy supply chain. Additionally, by pooling the demand of multiple consumers into a singular, large volume, aggregators can negotiate favourable tariffs and terms with renewable energy generators. This innovative approach is setting the stage for transformative growth in the sector, demonstrating a model that alters the energy market dynamics.
Nedbank is also closely monitoring the Electricity Regulation Amendment Bill, passed in March by the National Assembly. This bill aims to create a competitive electricity market and points the way to a distributed model with multiple buyers and generation methods.
The Tronox deal showcases a broader perspective, revealing an unexpected but protective link. Among the suite of minerals which Tronox extracts is titanium dioxide. Renowned for its light-diffusing properties, it is an additive in the pigment sector. This mineral is used across various industries, including paints, surface finishes, polymer applications, paper products, and even as a colourant in food production.
Titanium dioxide’s ability to absorb and scatter ultraviolet rays, protecting the skin from sunburn, is also a common ingredient in sunscreens. In an era where the circular economy is regarded as an increasingly important element of the drive to reduce waste and decrease humanity’s environmental impact, there’s something irresistible about power from the sun being used to safeguard people – from the power of the sun.
This post and content is sponsored, written and produced by Nedbank.
