Global mining conglomerate Anglo American has signed an agreement with carbon reduction company First Mode that will see it pump a further $200 million (R3.4 billion) into its nuGen Zero Emissions Haulage Solutions (ZEHS) project.
It will form a combined business with First Mode to accelerate the development and commercialisation of the project.
First Mode partnered with Anglo American to develop the project three years ago. The funds, as part of the new combined venture, will support its ongoing development.
The agreement comes after the mining giant unveiled its pilot hydrogen plant and hydrogen-powered mine haul truck at its Mogalakwena mine in Limpopo in May – saying it expects the prototype to replace its global fleet of 400 diesel haul trucks by 2040.
In a Sens statement issued on Wednesday, the group said the agreement with First Mode is expected to be concluded in January 2023. It will make the additional capital investment in the combined business.
Anglo American added that, upon completion, the transaction will value the business at approximately $1.5 billion (over R25 billion).
It initially acquired a 10% strategic equity interest in First Mode in 2021. The new agreement will see Anglo American owning a majority shareholding in First Mode, while the balance (undisclosed) will, on full completion of the transaction, be held by a number of First Mode’s founders and employees.
“The new combined business retains the First Mode name and will prioritise developing nuGen ZEHS, building on three years of extensive development by Anglo American and First Mode,” the mining group said.
“In addition to accelerating the development and commercialisation of the ZEHS technology, the new combined business will allow strategic third parties to co-invest alongside Anglo American and First Mode, offering the opportunity to accelerate their own decarbonisation and participate in the potential offered by the clean ZEHS technology.”
Anglo American noted that after the transaction is closed, it will enter into a supply agreement with First Mode to decarbonise its global fleet of mine haul trucks in line with its carbon neutral operations.
It said the supply agreement includes the appropriate provision of critical supporting infrastructure such as refuelling, recharging, and facilitation of hydrogen production.
“The roll-out across Anglo American’s haul truck fleet over the next 15 years is subject to the completion of agreed and committed studies across seven mine sites, certain performance and cost criteria, and relevant regulatory, corporate and shareholder approvals,” it added.
Nondumiso Lehutso is a Moneyweb intern.