Polymetal first to secure green loan among Russian metals, mining peers

Anastasia Bogdanova | November 5, 2020 | Views: 26 | Source: spglobal.com

London — Russia’s second-largest gold producer, Polymetal, has become the first company in the country’s metals and mining sector to secure a Green Loan finance facility, which it will allocate to projects designed to ensure lower emissions, more responsible waste management, and efficient use of resources.

Polymetal has agreed to the $125 million Green Loan with Societe Generale to finance investments in transition to a sustainable and low-emissions economy, it said Nov. 2.

“With the first green loan, we invite lenders to contribute to our ESG projects [that are] aligned with the global Sustainable Development Goals”, said Eugenia Onuschenko, Finance Director of Polymetal.

The loan, provided for six years, but extendable, is structured in line with the company’s recently adopted Green Financing Framework, and will be allocated to projects in the categories of clean transportation, renewable energy and energy efficiency, sustainable waste and water management.

With this finance, Polymetal aims to achieve the following: to cut greenhouse gas emissions from operations by 5% by 2023 versus 2018; to grow renewable and low-carbon energy share in its power consumption to 7% by 2025, from no meaningful share in 2019; to take dry storage of tailings to 15% of the total by 2024, from 10% in 2019, as it significantly reduces land and water use, the possibility of dam failure and eliminates tailings run-off; to reduce fresh water use by 11% by 2023 versus 2018, when the company used 436 cu m to process 1,000 mt of ore; to recycle minimum 16% of waste (rock mainly) by 2023, up from 14% in 2019, for reuse in mines backfilling and own construction.

Polymetal will also invest $47 million in the next two years to decarbonize its transport by replacing diesel-fueled excavators and load haul dump machines with battery-powered electric vehicles.

This is the third sustainability-linked loan in Polymetal’s credit portfolio with the share of ESG instruments now reaching 18%, or a total of $280 million, of its net debt.

Linking loan terms to sustainability indicators is becoming a common practice in the Russian metals and mining sector. A number of other companies, including Metalloinvest, NLMK and Rusal, have already obtained loans whose interest rates, above the LIBOR compound, correlate with the companies’ ESG performances.

However, unlike those mining companies’ and Polymetal’s other two loans, this green facility is not linked to any specific ESG parameters of the company, but simply must be spent on green projects.

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