An African Infrastructure Investment Managers (AIIM) led consortium has reached financial close on the 89 MW Castle Wind Farm (Castle) to supply renewable energy to Sibanye-Stillwater’s South African mining operations via a wheeling agreement with Eskom.
Financial close on the Castle Wind Farm marks the start of construction on this 89 MW private wind power wheeling project.
The consortium involves African Infrastructure Investment Managers (AIIM), through its renewable energy project development and delivery platform African Clean Energy Developments (ACED), and Reatile Renewables (Pty) Ltd.
This milestone marks the effective date of the Power Purchase Agreement (PPA) between the project company and Sibanye-Stillwater and the start of construction. The energy will be generated by the Castle Wind Farm, located near the town of De Aar in South Africa’s Northern Cape and will result in energy cost savings, increased energy security and decarbonisation benefits for Sibanye-Stillwater, a multinational mining and metals processing group. The addition of more power generation capacity to the national grid will contribute to offsetting the power deficit that the country currently faces.
AIIM has been a strong proponent of increasing the ability of South African pension funds to invest in unlisted infrastructure investments. These assets provide an attractive option for pension funds to meet their investment return aspirations and can help address the significant infrastructure backlog in South Africa. The backlog includes power generation and transmission infrastructure, rail and ports infrastructure, as well as infrastructure in the water sector. In the power generation sector alone, AIIM has identified an equity investment opportunity of more than R100 billion in the period to 2030.
Sechaba Selemela, Investment Principal at AIIM, noted that “the transaction is another step towards greater reliance on renewable energy and solving South Africa’s energy crisis”. Selemela added, “With this transaction, which follows a similar wind farm development – Msenge Emoyeni – reaching financial close in March, AIIM continues its commitment to successfully executing its mandate of investing in renewable energy projects that can deliver strong returns for our investors and make an impact over the long term.”
AIIM is a division of Old Mutual Alternative Investments (OMAI) and has invested in the project through the IDEAS Managed Fund, one of South Africa’s largest domestic infrastructure equity funds which invests in the SADC region's economic, social, and energy infrastructure. ACED is a renewable energy developer and asset originator within the AIIM stable.
Simphiwe Mehlomakulu, Executive Chairman of Reatile Group, marked this as another win for South Africa. “We are delighted to have reached financial close on this project and to support big businesses such as Sibanye-Stillwater that create employment in South Africa. We continue to drive solutions to alleviate loadshedding by bringing additional sustainable generation capacity to the national grid.”
The transaction will be the second private wind power wheeling project in South Africa to have reached financial close. ACED has been the originator of both projects.
James Cumming, General Manager at ACED said, “We are pleased to have reached financial close on Castle for Sibanye-Stillwater and we must thank and congratulate all those involved at Sibanye-Stillwater, AIIM, Reatile, and our lenders, RMB. It takes a huge effort to conclude these transactions and thanks must also go to our advisers on the project. We look forward to reaching commercial operation and to bringing more renewable energy projects to life over the short- and longer term, as the country so urgently needs.”
Rand Merchant Bank, a division of FirstRand Bank Limited, is the sole mandated lead arranger for the project.
Neal Froneman, CEO of Sibanye-Stillwater said, “This marks our first major step in delivering over 550 MW of our renewable project portfolio and is a significant milestone in our journey to carbon neutrality by 2040. The project will play a pivotal role in reducing carbon emissions and mitigating climate change and it results in cost savings on electricity and provides energy security benefits for Sibanye-Stillwater's SA operations. Additionally, it will contribute to addressing the electricity challenges in South Africa. We look forward to bringing the project into operation.”
For more information visit: www.aced.co.za