Anglo American takes on an industry-first sustainability-linked loan

Anglo American (LSE: AAL) has agreed to a US$100 million, 10-year loan from the International Finance Corporation in what is understood to be the mining industry’s first known sustainability-linked financing focusing exclusively on social development indicators.

Anglo American will use the funding to build its so-called Sustainable Mining Plan further. The initiative aims to support community development in rural communities close to Anglo American’s South Africa-based mining operations. The project is expected to generate jobs and improve the quality of education for more than 73,000 students.

Anglo American’s Sustainable Mining Plan includes targets to support schools in our host communities to perform within the top 30 percent of state schools nationally and to create or support three offsite jobs for every onsite job at its operations by 2025.

“Sustainability-linked financing is a powerful tool for mobilizing capital and incentivizing companies that seek to contribute to a more sustainable future,” said IFC director for South Africa and Nigeria, Kevin Njiraini, in a press release.

Workers at the Grosvenor coal mine. Credit: Anglo American/Flickr.

This loan is part of a broader Anglo American engagement with IFC on local social development, including in Peru, where Anglo American, IFC and other partners support regional development initiatives.

To achieve its education target, Anglo American will strengthen the public education system by training educators, practitioners, and school management teams. It will also upgrade basic school infrastructure and equipment, including providing Wi-Fi and computers at over 100 primary and secondary public schools in South Africa.

The company already supports more than 73,000 students from early childhood development centres, primary schools and secondary schools, with more children to benefit in Phase 2 of the programme. To achieve its livelihood aims, it plans to provide mentorship, capacity building, skills development, and access to finance to small businesses in the mining value chain and other sectors, with a focus on women and young people.

Since 2018, the company has supported over 13,500 jobs and facilitated R430 million (C$35.3 million) of loans to small businesses in South Africa through Anglo American’s Zimele Loan Fund.

Anglo American CEO Mark Cutifani told The Northern Miner in March that through the company’s integrated technology and sustainability program, it was well-positioned to run the business safely and sustainably. “[ESG is] further enhancing our competitive position and – disciplined with our capital – deliver value-adding growth as a foundation for future returns,” he said at the time.

The Northern Miner reported earlier this week EY’s Americas and Canada sector leader for mining and metals, Theo Yameogo, who stressed the critical importance of how higher ESG ratings could unlock a larger pool of attractively priced capital.