REG - Drax Group Plc - JV and sale of ash to low-carbon cement industry

DraxAnnouncement

27/03/2025 07:15

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RNS Number : 3925C  Drax Group PLC  27 March 2025

27 March 2025

Drax Group plc

("Drax"; "The Group"; Symbol: DRX)

 

Joint Venture and 20-year agreement for sale of ash to low-carbon cement
industry

 

Drax Power Limited has agreed a 20-year joint venture (JV) agreement with
Power Minerals Limited (PML) which will allow for the development of a
state-of-the-art facility to process pulverised fuel ash (PFA) into a
Supplementary Cementitious Material (SCM), which can be sold to the
construction industry and used in the production of cement with a lower carbon
footprint.

 

The new facility will be located adjacent to the Drax Power Station site, on
land leased from Drax Power Limited.  Under the agreement PML will construct,
own and operate the new facility, whilst Drax will sell PFA to the JV as well
as provide power and water to the facility, in addition to sharing the profits
of the JV's sales of SCM. There is no capital investment required by Drax.

 

The new facility is expected to begin operations by the end of 2026, with an
expected annual production of 400,000 tonnes once operating at full capacity.

 

Drax believes the project could generate incremental Adj. EBITDA of c.£5
million pa for Drax post 2027 through to 2046.

 

Lee Dawes, Drax's Chief Operations Officer, said: "This is a landmark deal not
only for Drax, but for the UK construction industry. Cement production is one
of the most carbon intensive processes in the world and through this
partnership, we will be able to help the construction industry cut its carbon
emissions in the years ahead.

 

"Drax Power Station is integral to the country's energy security and now
through this new agreement it can play a further role in reducing carbon
emissions in UK construction as well.

 

"The opportunity to sell large volumes of PFA from Drax Power Station as part
of a long-term JV is another way in which we can realise incremental value
from the site whilst helping to reduce carbon emissions. It is an exciting
time for Drax as we continue to develop options for long-term investment in
the site, including BECCS
(https://www.drax.com/about-us/bioenergy-carbon-capture-use-and-storage-beccs/)
and a data centre."

 

Background details

PFA is a byproduct of power generation at Drax Power Station and over its
operating life the station has built up a reserve of PFA which can be used to
meet the requirements of the new facility over the 20-year JV period.

 

The production of cement contributes around 8% of global CO(2) emissions
annually. Over the duration of the project, PML estimates the utilisation of
PFA from Drax can reduce emissions of CO(2) by a minimum of 6 million tonnes,
compared to utilising conventional cements.

 

Drax Power Station is the UK's largest source of 24/7 renewable power,
supporting UK energy security with flexible and reliable renewable power
generation and a wide range of system support services. Drax believes that the
size, flexibility and location of the asset make it an integral long-term part
of the UK energy system. The station has 2.6GW of current biomass generation
capacity, in addition to 1.3GW of additional grid connection. As outlined at
the Group's full year results in February 2025, Drax is continuing to assess
opportunities for value creation and growth from the site including BECCS and
a 1.2GW data centre.

 

Notes:

(1)   Adj. EBITDA is Earnings before interest, tax, depreciation,
amortisation, other gains and losses and impairment of non-current assets,
excluding the impact of exceptional items and certain remeasurements, earnings
from associates and earnings attributable to non-controlling interests.

 

 

Enquiries:

Drax Investor Relations:

Mark Strafford

mark.strafford@drax.com

+44 (0) 7730 763 949

 

Chris Simpson

Chris.Simpson@drax.com (mailto:Chris.Simpson@drax.com)

+44 (0) 7923 257 815

 

Media:

Drax External Communications:

Aidan Kerr

Aidan.kerr@drax.com

+44 (0) 7849 090 368

 

Website: www.drax.com (http://www.drax.com/)

 

 

Forward-looking statements

 

This announcement may contain certain statements, expectations, statistics,
projections, and other information that are, or may be, forward looking. The
accuracy and completeness of all such statements, including, without
limitation, statements regarding the future financial position, strategy,
projected costs, plans, beliefs, and objectives for the management of future
operations of Drax Group plc ("Drax") and its subsidiaries (the "Group"), are
not warranted or guaranteed. By their nature, forward-looking statements
involve risk and uncertainty because they relate to events and depend on
circumstances that may occur in the future. Although Drax believes that the
statements, expectations, statistics and projections and other information
reflected in such statements are reasonable, they reflect Drax's current view
and no assurance can be given that they will prove to be correct. Such events
and statements involve risks and uncertainties. Actual results and outcomes
may differ materially from those expressed or implied by those forward-looking
statements. There are a number of factors, many of which are beyond the
control of the Group, which could cause actual results and developments to
differ materially from those expressed or implied by such forward-looking
statements. These include, but are not limited to, factors such as: delays in
the process for finalising the proposed agreement with the UK Government for
Drax Power Station, future revenues being lower than expected; increasing
competitive pressures in the industry; uncertainty as to future investment and
support achieved in enabling the realisation of strategic aims and objectives;
and/or general economic conditions or conditions affecting the relevant
industry, both domestically and internationally, being less favourable than
expected, including the impact of prevailing economic and political
uncertainty, the impact of conflict including those in the Middle East and
Ukraine, the impact of cyber attacks on IT and systems infrastructure (whether
operated directly by Drax or through third parties), the impact of strikes,
the impact of adverse weather conditions or events such as wildfires, changes
to the regulatory and compliance environment within which the Group operates.
We do not intend to publicly update or revise these projections or other
forward-looking statements to reflect events or circumstances after the date
hereof, and we do not assume any responsibility for doing so.

 

END

 

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