Published on 14 Aug 2024.
RAM Sustainability has completed the external review of SK Nexilis Malaysia Sdn Bhd’s (SKNM or the Issuer) Green Sukuk Framework (the Framework) and accorded it a Gold Sustainable Finance Rating.
We have concluded that the Framework has a Strong disclosure level when assessed against Securities Commission Malaysia’s Sustainable and Responsible Investment Sukuk Framework, the ASEAN Capital Market Forum’s ASEAN Green Bond Standards and the International Capital Market Association’s Green Bond Principles. RAM Sustainability has also assigned a Tier-1 Environmental Benefit rating to SKNM’s eligible energy efficiency project category. Eligible projects under the Framework are those relating to the manufacture or procurement of copper foil to be used in electric vehicle (EV) batteries or renewable energy storage systems – elements necessary to accommodate the build-out of clean energy and transportation vehicles for a low-carbon future.
The Issuer plans to issue Islamic medium term notes (ASEAN Green SRI Sukuk Wakalah or the Green Sukuk) of up to RM2.0 billion in nominal value based on the shariah principle of Wakalah Bi Al-Istithmar (ASEAN Green SRI Sukuk Wakalah Programme or the Sukuk Programme).
In March 2023, SKNM obtained a USD210.0 million (about RM996 million) syndicated green term loan facility (the Green Loan) to part-finance the construction of two copper foil plants in Kota Kinabalu Industrial Park (KKIP) in Sabah, Malaysia with an annual production capacity of about 57,000 tonnes (the KKIP Plants). The first plant was completed and commissioned in October 2023 while the second was completed in July 2024 and is expected to be commissioned and begin trial production by the end of the third quarter of this year. In the immediate term, SKNM will utilise the Green Sukuk to refinance the Green Loan and secure a further USD90 million of financing for capital expenditure. The total to be utilised is expected to be USD300 million (or approx. RM1.4 billion) — about 70% of the Sukuk Programme limit.
The KKIP Plants – SK Nexilis’ first production facilities overseas – currently supply copper foil to EV battery manufacturers. Through SK Nexilis, SKNM’s environmental, social and governance practices are expected to align with those set by SKC Co., Ltd. (SKC), the parent of the two entities.
Incorporated in 2020, SKNM is a wholly owned subsidiary of SK Nexilis, set up for the construction of the KKIP plants, and thereafter, to produce copper foils. SK Nexilis, a manufacturer of copper foil and flexible copper clad laminate in South Korea, is in turn wholly owned by SKC. With six plants in South Korea, SK Nexilis has one of the largest copper foil production capacity globally, holding up to 15% share of the global copper foil market. Around 95% of SK Nexilis’ copper foil output is sold to EV battery makers. Part of the South Korean conglomerate SK Group, SKC is a public listed company with core activities in secondary battery materials production, semiconductor materials and chemicals.
Analytical contacts
Amirah Jamil
(603) 3385 2551
amirah@ram.com.my
Raz Amira Razlan
(603) 3385 2553
raz@ram.com.my
Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my
This external review or second opinion is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for an investor, nor does it involve any audit by RAM Sustainability. It is also not a credit assessment on the proposed Green, Social or Sustainability Bonds/Sukuk.
About RAM Sustainability
RAM Sustainability Sdn Bhd (RAM Sustainability) is a provider of sustainability services and ESG analytics. Incorporated on 31 May 2000, RAM Sustainability is a wholly owned subsidiary of RAM Holdings Berhad (RAM Group). RAM Sustainability is the first ASEAN-based provider of ESG ratings and second opinions and has the distinction of being the first Registered Observer of ICMA’s Green Bond Principles, Social Bond Principles, Sustainability Bond Guidelines and Sustainability-Linked Bond Principles in ASEAN. It was a member of ICMA’s Advisory Council to the Green Bond Principle and Social Bond Principle Executive Committee for three consecutive terms. On 12 August 2020, RAM Sustainability became an Approved Verifier for the certification of climate bonds under the Climate Bonds Standard & Certification Scheme after having been awarded the status by the Climate Bonds Standards Board. For further details, please refer to https://www.ram.com.my/sustainability.
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Publication | Date Published | Category | |
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SK Nexilis Malaysia Sdn Bhd Green Sukuk Framework | 14-Aug-2024 | Green Bond/Second Opinion Report | View PDF |