Sector/Region: Resources/Global

Carbon capture and storage (CCS/CCUS) is a proven and practical tool to reduce CO₂ emissions and thus mitigate climate change. Applying CCS is essential for hard-to-abate industries like cement and steel to attain net-zero emissions on any meaningful timeline.

Risk capital is increasingly available to fund CCS projects. Though funding for CCS projects today relies heavily on public subsidies, we believe market-based project finance schemes can achieve FID once CCS business models mature. This will occur when the avoided cost per tonne of captured CO₂ inevitably declines while the value of CO₂ increases under the EU ETS and similar cap-and-trade schemes.

Based on that premise, the publisher of Global Cement Magazine invited us to speak about Project Finance for CCU/S with an emphasis on market-based solutions (click here for slide deck only).

Our premise applies Carbon Contracts for Difference (CCfD). A CCfD contract entitles the beneficiary to a payment equal to the difference between a fixed “strike” price set by contract and a variable reference price – such as the exchange-traded EU ETS market price. CCfDs are beginning to be applied in Canada and elsewhere.

Pledging this instrument as collateral can rapidly scale project finance when the emitter’s levelized cost-per-tonne of CO2eq avoided consistently falls below its quoted market value under the EU ETS and similar schemes. But EU ETS prices are today subject to considerable fluctuation. While they reached €100 per ton of CO₂ in Q3 2023, they fell to about €66.45/t on 1 May 2024.

The inaugural Global CemCCUS Conference on carbon capture for the cement and lime industries took place in May 2024 in Oslo. Over 150 delegates attended from 31 counties. On the closing day, attendees visited the Brevik Carbon Capture Plant, the world’s first carbon-neutral cement plant, owned and operated by Heidelberg Materials. Brevik itself is the upstream component of Norway’s Longship/Northern Lights project, the world’s first cross-border CO2 transport and storage facility, open to third parties.

Sector/Region: Resources/South Asia/Afghanistan

Griffin Capital was appointed by a privately held resource developer to evaluate, plan and implement responses to strategic opportunities in the Eurasian markets.  In particular, we were tasked to advise and assist in winning pre-qualification approval from Ministry of Mines & Petroleum of Afghanistan for a proposed $300MM cement plant redevelopment project.

Griffin developed a risk mitigation strategy and arranged for the CEO to visit the Pentagon in Washington, DC where he presented to senior officials and mining experts at the US Secretary of Defense’s Task Force for Business and Stability Operations (TFBSO) and the US Geological Survey.

After five months of due diligence, undertaken by an international team of consultants in Washington, Paris, Dubai and Kabul, Griffin arranged a secure site inspection in Afghanistan for our client’s CEO and two lead directors as guests of the TFBSO.  Following team meetings in Kabul, Frankfurt, Istanbul and Dubai, our client was short-listed for pre-qualification approval in early 2014.  Amid allegations of fraud in Afghanistan’s April 2014 presidential election, the project was set aside. Project details: https://www.globalcement.com/magazine/articles/941-afghanistan-s-only-operational-plant-ghori-i

Sector/Region: Energy/EMEA

Acting on behalf of a UK institutional investor, Griffin Capital arranged acquisition finance for 6 industrial grid-connect PV generators in Germany of 13.7MW rated capacity.

Griffin raised c. €46MM of senior term facilities with KfW, several German banks and a leading mezzanine fund. These groups funded 85% of project cost at a fixed rate for 18 years.  Due to the involvement of KfW, the interest rate on the senior debt was below market.

Griffin arranged Operations and Maintenance contracts for the monitoring and repair and maintenance of the parks that removed, to the greatest extent possible, the revenue volatility from breakdowns in production.  Insurance covered the risk arising from breakages and damage to the equipment. Replacement and repair provisions were made for parts – the inverters – that suffered from wear and tear.

Today Griffin manages the generating companies on behalf of the owner.  Though the equity investors were required to take the risk of volatility in weather and unforeseen breakdowns in the equipment, the equity IRRs have exceeded 11% after tax.

Sector/Region: Energy/EMEA/Kazakhstan, UAE

Griffin Capital was appointed by a Middle Eastern oilfield services engineering company as exclusive advisor to arrange funding to acquire the drilling fleet of a company operating in the Caspian Sea and Western Kazakhstan.

Griffin’s team relocated to Dubai for four months where we worked continuously with the CEO and his top managers and legal teams in Houston, London, New York, Dubai and Almaty, Kazakhstan.   The Griffin team updated management’s valuation scenarios for use by lenders and equity participants in the acquisition; monitored fleet utilization and regional rig rates; arranged for an independent valuation of the drilling fleet; produced and distributed confidential Information Memoranda for debt and equity participants; initiated and led negotiations with a leading Russian bank and Middle Eastern mezzanine fund; supported our client’s negotiations with the seller’s lawyers and investment bankers; and finalized terms for $110MM senior and mezzanine facilities.

Sector/Region:  Resources/EMEA/Georgia

Griffin Capital was appointed in 2015 by Jindal Steel & Power (India) to monetize its 100% holding in Jindal Petroleum Georgia Limited.  JPG conducted oil and gas exploration in Georgia since 2009 on four license blocks – Vll a, lX, X, Xlll a – and production operations on block Xlb.

JPG’s five license blocks covered 16,168 sq km along both sides of the Baku-Tbilisi-Çeyhan Pipeline with access to Black Sea terminals.

The blocks were acquired by Schlumberger Rustaveli Company Limited who later drilled an exploratory well.

Sector/Region: Resources/Eurasia

Griffin Capital was retained to develop and implement capitalization strategies for a private equity backed Central Asian cement group.  Griffin’s broad mandate included refinancing, or sale, of existing and to-be-upgraded plants and affiliates operating within and between Russia, Kazakhstan, Kyrgyzstan and Uzbekistan.

Working closely with the CEO and board of directors, we evaluated financial and operating results of 8 business units and associated plants in all four countries.  Our team identified and made presentations to strategic partners, funds and international lenders and development banks in Europe, North America, China and Japan.   We undertook negotiations with several of the world’s leading cement groups seeking to expand into Central Asia and advised and assisted the CEO and directors during discussions with their leading stakeholders.

Sector/Region: Resources/EMEA/Turkey

Arda Mühendislik San. Ve Tic. Ltd (www.ardagrup.com) is among Turkey’s leading closely held global engineering and construction services companies. In 2017, Arda appointed Griffin Capital as exclusive project finance advisor for the first stage of a 70MWe geothermal power project within the Aydin-Germencik-Omerbeyli field, part of the Büyük Menderes Graben in Aydın province.  That year, Turkey experienced dramatic developments which had an adverse impact on its ability to attract and sustain long-term USD FDI.