Anglo American Platinum signs 20-year renewable energy agreement with Envusa Energy

Anglo American Platinum, through its subsidiary Rustenburg Platinum Mines Limited (RPM), has formalized a 20-year Energy Offtake Agreement (EOA) with Envusa Energy Proprietary Limited (Envusa Energy), a joint venture between EDF Renewables and Anglo American plc. The agreement is contingent on several outstanding conditions.

Envusa Energy, operating as an energy trader, will source approximately 460 MW of renewable energy from its Koruson 2 solar and wind projects and supply it to RPM through the Eskom electricity grid. The Koruson 2 projects, set to commence construction in 2024, are expected to reach commercial operation by 2026.

This collaboration supports Anglo American Platinum’s commitment to reduce greenhouse gas emissions by 30% (off a 2016 baseline) by 2030 and achieve carbon-neutral operations by 2040 (scope 1 & 2 emissions). The EOA is projected to result in about 35% renewable energy usage by RPM at steady state.

Craig Miller, CEO of Anglo American Platinum, highlighted the significance of the EOA, emphasizing its contribution to decarbonization goals and the sustainability of PGM metals production. The renewable energy generated from the wind and solar projects is also expected to enhance Eskom’s national electricity provision and reduce electricity costs.

As a related party transaction under the JSE Listing Requirements, the entry into the EOA was categorized as an ordinary course of business transaction. The JSE has advised that it falls within this category based on the essential nature of energy for normal business operations.

Key Terms of the EOA:

• 20-year term with an option to purchase energy post the initial 20 years at a to-be-agreed tariff.

• Tariff determined by considering capital cost, operating cost, funding, and expected equity return.

• Take-or-pay arrangement for RPM, with ~30% savings on the EOA tariff compared to the current Eskom tariff.

• Minimum performance guarantee provided by Envusa Energy.

• Allocation of risk aligned with market practice for wheeled energy offtake arrangements.

• Envusa Energy to maintain a minimum BBBEE rating.

• Remedies for force majeure and network events.

• Termination clauses for events of default.
  

Corporate Governance Processes:

The independent non-executive directors of Anglo American Platinum, constituting the Governance Committee, have reviewed the EOA and opined that it is in the ordinary course of business and executed on an arm’s length basis. The company engaged the JSE, independent advisors, and external counsel in accordance with JSE Listing Requirements, ensuring thorough scrutiny of the transaction’s terms and overall impact.

The Governance Committee approved the execution of the EOA after multiple committee meetings, where members received necessary information and had opportunities for queries and clarification