AIIM consortium has reached a financial close on 89MW Castle Wind Farm (Castle) to supply renewable energy to Sibanye-Stillwater’s South African mining operations via an Eskom wheeling agreement.

The consortium consists of African Infrastructure Investment Managers (AIIM), through its renewable energy project development and delivery platform African Clean Energy Developments (ACED), and Reatile Renewables.

This milestone marks the effective date of the Power Purchase Agreement (PPA) between the project company and Sibanye-Stillwater and the commencement of construction.

The energy will originate from Castle Wind Farm, located near the town of De Aar in the Northern Cape province of South Africa 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 increased power generation capacity to the national grid will contribute to offsetting the power deficit currently being experienced in the country. 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 also help address the significant infrastructure backlog the country is facing.

The backlog includes power generation and transmission infrastructure, rail and ports infrastructure, as well as the water sector.

In the power generation sector alone, AIIM has identified an equity investment opportunity of more than R100bn in the period to 2030. Sechaba Selemela, Investment Principal at AIIM, noted that “the transaction was another step towards greater reliance on renewable energy and solving South Africa’s energy crisis”.

Selemela added that, “with this transaction, which follows on a similar wind farm development Msenge Emoyeni reaching financial close in March, AIIM continues to be committed to, and 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, said: “We are delighted to have reached financial close on this project and support big businesses such as Sibanye-Stillwater that create employment in South Africa. We continue to bring tangible solutions to alleviating load shedding by bringing sustainable generation capacity to the grid in South Africa”.

This transaction will be the second private wind power wheeling project in South Africa to have reached financial close.

This milestone is a proud one for ACED as it has been the originator of both projects.

James Cumming, General Manager at ACED, said: “ACED is pleased to have reached Financial Close on Castle for Sibanye-Stillwater and 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 now look forward to reaching commercial operation, all the while bringing more renewable energy projects to life over the short term and beyond, which the country is obviously in urgent need of.”

Rand Merchant Bank, a division of FirstRand Bank, 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 not only play a pivotal role in reducing carbon emissions and mitigating climate change but also results in cost savings on electricity and provides energy security benefits for Sibanye-Stillwater's SAoperations. Additionally, it will also contribute to addressing the electricity challenges in South Africa. We look forward to bringing the project into operation.”