JOHANNESBURG (miningweekly.com) – In a step to accelerate South Africa’s just energy transition and establish the country as a global green hydrogen leader, R656-million has been committed to a green hydrogen fund.

South Africa’s State-owned Public Investment Corporation (PIC) asset manager, the State-owned Industrial Development Corporation of South Africa (IDC), and the Development Bank of Southern Africa (DBSA) have committed the equivalent of $37-million to South Africa’s SA-H2 green hydrogen fund, also known as CI3 South Africa.

The pioneering blended finance SA-H2 facility has been designed to stimulate the energy transition with a core focus on the green hydrogen value chain, supporting inclusive economic growth, and driving job creation.

The fund is managed by a partnership between leading climate finance investor, Climate Fund Managers (CFM), and a Dutch development finance institution, Invest International.

The announcement was made on the first day of South Africa’s Green Hydrogen Summit in Cape Town on June 12, at which SA-H2 also announced its first investment: $20-million in development funding for the Hive Hydrogen Coega Green Ammonia Project at Nelson Mandela Bay, in the Eastern Cape.

Hive will become South Africa’s first large-scale green ammonia production plant, producing a million tonnes of green ammonia a year for export. The project will ensure that an annual 2.6-million tonnes of CO₂equivalent does not pollute our planet and create more than 20 000 jobs during construction and operations.

The Development Funding Agreement will cover engineering, procurement, and construction selection; front-end engineering design; and the completion of advanced stage permitting, environmental- and social-impact assessments; leading to offtake finalisation and financial close preparation. It also secures SA-H2’s right to invest up to $200-million in construction funding. Financial close is targeted for the second half of 2026, with commercial operations expected in 2029.

SA-H2 blends public and private capital within a single platform, made up of the:

• Development Tranche, providing early-stage risk capital and technical assistance to prepare projects for financial close. SA-H2 secured its initial commitments in 2024, raising R1.4-billion ($80-million) from Invest International and the European Commission.
• Blended Equity Tranches, to finance construction of projects through a tiered capital structure: The Tier 1 first loss tranche designed to absorb construction-stage risk; the Tier 2 Junior Equity tranche offering enhanced returns, supported by the other tiers; and the Tier 3 Senior Equity tranche, supported by risk mitigation instruments offering moderate risk-adjusted returns. 

Accordingly, the IDC and DBSA have each committed R178-million ($10-million) to the second close of the development tranche, enabling it to achieve its fundraising target. The PIC, on behalf of the Government Employees Pension Fund, has committed an initial R300-million ($17-million) to the equity tranche as the anchor commercial investor in Tier 2. An additional allocation may be considered for the second close, subject to the PIC’s approval processes.

CFM CEO Andrew Johnstone described the commitments of PIC, DBSA, and IDC as signalling what he said was strong market confidence in South Africa’s energy transition and green hydrogen potential.

“These institutions are backing a new generation of infrastructure, such as the Hive Green Ammonia Plant, that will decarbonise the economy, create green jobs, and enhance long-term competitiveness. SA-H2's blended finance model unites local and international partners across public and private sectors to deliver the energy transition at scale,” Johnstone explained.

PIC CIO Kabelo Rikhotso spoke of SA-H2 offering “a compelling, well-structured opportunity“ to participate in a high-impact sector that advances job creation, green industrial development, and a just transition.

“These priorities align with our mandate to advance inclusive, sustainable growth and long-term national resilience,” Rikhotso added.

IDC industry planning and project development division executive Rian Coetzee said: “The IDC is proud to invest in SA-H2 to support the development of energy transition and green hydrogen infrastructure in our country. This commitment aligns with our strategic focus on building industrial capacity in emerging sectors, advancing localisation, and unlocking South Africa’s potential to compete globally in the clean energy economy.”

DBSA acting group executive project preparation division Lebogang Seperepere pointed out that the SA-H2 investment reflected DBSA’s mission to advance a just energy transition by unlocking infrastructure that enabled sustainable, inclusive growth.

“The facility’s blended finance model allows us to deploy our capital in a way that catalyses private sector investment at scale. This is a strategic opportunity to drive development in a critical new sector while supporting South Africa’s long-term infrastructure goals,” Seperepere added.

Hive Hydrogen South Africa executive chairperson Thulani Gcabashe drew attention to  South Africa having the infrastructure, resources, engineering and industrial capabilities to become a global leader in green ammonia production.

“The Hive Coega Green Ammonia Project will not only accelerate the just energy transition but also revitalise the Eastern Cape economy through job creation, infrastructure investment and skills development. SA-H2's investment strengthens our ability to deliver this Lighthouse project to world-class technical, operational, environmental, and social standards, while attracting long-term international investors and partners," said Gcabashe, a former Standard Bank chairperson and Eskom CEO.

Hive Hydrogen South Africa is a joint venture between Hive Energy UK and Gcabashe’s BuiltAfrica. Its Hive Coega Green Ammonia Project in the Coega Special Economic Zone forms a key part of the country’s green hydrogen roadmap and is supported by early-stage international offtakers and public-private stakeholders.

SA-H2 builds on the track record of CFM’s Climate Investor One and Climate Investor Two Funds, which have together mobilised over $2-billion in clean energy, water and climate-resilient infrastructure across emerging markets, Engineering News & Mining Weekly was informed.