Vedanta Aluminium Raises $250 Million in Sustainability Linked Loans
Vedanta Aluminium, India’s largest producer of aluminium, has raised USD 250 million through Sustainability Linked Loans from leading international banks, for financing its capex initiatives and reducing carbon footprint.
The loans were granted on the basis of specific performance parameters for decarbonization and safety, which the company aims to meet by deploying these funds towards capital expenditure. This will fuel the company’s growth journey as well, including achieving a higher degree of backward integration and production of value-added aluminium products.
The lenders include some of the largest international banks from the Middle East and Far East like Mashreq Bank, First Abu Dhabi Bank, Qatar National Bank Q.P.S.C., CTBC Bank and others, all of whom have newly started term lending relationships with the Vedanta Group through this facility.
This is Vedanta Group’s first such sustainability linked loan and sets the ball rolling on the company’s aspirations to invest in green growth. This serves as a positive reinforcement of the company’s endeavours to decarbonize its operations. For instance, Vedanta Aluminium has reduced its greenhouse gas (GHG) emissions intensity by 24% in FY 2022 from the 2012 baseline. It was also India’s largest consumer of renewable energy in the previous fiscal at 3 billion units, which was used to produce India’s first low carbon ‘green’ aluminium by the company, branded ‘Restora’.
See related article: Australian ‘net zero’ sustainability linked loans surge
Speaking about the funding, Mr Rahul Sharma, CEO – Aluminium Business, Vedanta Ltd. said, “Aluminium will be indispensable to a low-carbon future, with critical applications across a vast spectrum of industries ranging from electric vehicles to renewable energy and more. We intend to conceive our growth plans on the bedrock of sustainability, with a sharp focus on people safety, decarbonization of our value-chain and water positive operations. The funds raised via Sustainability Linked Loans will be invested towards growing our business sustainably and responsibly.”
Mr Tarek El Nahas, Group Head of International Banking at Mashreq, said: “We are delighted to lead this flagship deal and partner with Vedanta, the largest aluminium producer in India, in its first sustainability linked loan. We see the transition to a low carbon and resilient economy as a real opportunity to double our commitment to sustainable finance and invest in sectors that will drive responsible economic growth. This partnership represents a notable addition to the robust sustainability framework that we are deploying to create more value for our people, customers, and shareholders.”
Mr Fawaz Abusneineh, Acting Head of Global Corporate Finance, First Abu Dhabi Bank (FAB), said, “FAB is pleased to support Vedanta’s sustainability agenda through our innovative finance solutions, and to continue to deepen our investment in India’s environmental and economic future. As a leading financial institution, we are firmly committed to setting benchmarks for sustainability in banking and finance, having issued the Middle East’s first green bond in 2017, and being the first bank in the GCC to commit to achieving net-zero greenhouse gas emissions across our operations and lending portfolios. We are confident that this latest partnership will achieve significant impact by helping drive the transition to cleaner and greener manufacturing.”
Vedanta Aluminium, a business of Vedanta Limited, is India’s largest producer of aluminium, manufacturing more than half of India’s aluminium i.e., 2.27 million tonnes in FY22. It is a leader in value-added aluminium products that find critical applications in core industries. Vedanta Aluminium ranks 2nd in the Dow Jones Sustainability Index (DJSI) 2022 world rankings for aluminium industry, a reflection of its sustainable development practices. With its world-class aluminium smelters, alumina refinery and power plants in India, the company fulfils its mission of spurring emerging applications of aluminium as the ‘Metal of the Future’ for a greener tomorrow.