Notice

Category B project supported: AESC EDG, UK

Published 2 June 2025

1. Project description

UK Export Finance has agreed to provide support to AESC UK Plant 2 UK Limited (AESC) in respect of the construction and operation of an electric vehicle battery manufacturing facility in the International Advanced Manufacturing Park (IAMP), Sunderland, UK.

A key aim of the Project is to support the transition to net zero by providing additional capacity for battery manufacturing for automobile manufacturers producing electric vehicles.

The Project comprises an industrial unit that will house: manufacturing areas, storage and production areas, a dispatch area, research and development areas, and offices. The Project will have a capacity of 15.8 gigawatt hours (GWh) per year - powering up to 100,000 EVs each year.

The Project is adjacent to AESC’s existing battery plant and other manufacturing sites.

Lenders to the Project include HSBC, Standard Chartered Bank, Société Generale, SMBC Group, and BBVA.

2. Project sector

The Project is in the Renewable Energy & Transition sector.

3. Project sponsors

The Project is being developed by AESC Group Ltd.

4. UK exporters

AESC UK Plant 2 UK Limited (AESC).

5. Agent Bank

HSBC.

6. Amount of UK Export Finance Support

The maximum liability of the support is approximately £389 million.

7. ECD common approaches and Equator Principles

UK Export Finance categorised the Project as Category B, i.e. having environmental, social and human rights (ESHR) impacts that are few in number, site-specific, few (if any) of which are irreversible, and for which mitigation measures are more readily available in accordance with the definition in the Equator Principles (2020).

WSP UK (WSP) was commissioned to undertake an independent environmental and social due diligence review on behalf of the Lender group.

8. Environmental, social and human rights standards

Project related ESHR documentation was reviewed for their alignment against relevant UK legislation and international standards, i.e. the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and relevant World Bank Group Environmental, Health and Safety (EHS) Guidelines.

The applicable IFC PS were:

• PS1: Assessment and Management of Environmental and Social Risks and Impacts;

• PS2: Labour and Working Conditions;

• PS3: Resource Efficiency and Pollution Prevention;

• PS4: Community Health, Safety and Security;

• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources;

• PS8: Cultural Heritage;

The applicable World Bank Group EHS Guidelines were:

• General EHS Guidelines (2007);

• EHS Guidelines for Semiconductors & Other Electronics Manufacturing (2007).

Other standards used include:

• OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (2016)

9. Nature of ESHR Impacts

The review of potential ESHR risks and impacts took into account the following impacts, receptors and issues during the construction and operational phases of the Project:

• health and safety;

• resource efficiency (energy and water);

• emissions to the atmosphere (air);

• noise generation;

• stormwater management;

• waste and hazardous material management;

• emergency planning and response;

• grievance mechanisms;

• biodiversity impacts;

• community engagement.

10. Assessment of ESHR impacts

A review was undertaken in line with the requirements of the Equator Principles to identify potential ESHR risks and impacts of the Project and how these would be effectively managed.

The review was supported by WSP, who was commissioned to undertake an E&S due diligence of the Project on behalf of UKEF and the other lenders.

The review included:

• Site visit, including representatives from WSP, AESC and UKEF;

• Desk-based review of project-related documentation: E&S policies, procedures, Environmental and Social Impact Assessment, and Environmental and Social Management Plans;

• Follow-up meetings and interviews with relevant Project representatives.

The results of this review formed the basis for the evaluation of the Project’s alignment with relevant international standards, and recommendations for future compliance and monitoring.

Taking account of the review, the Project was deemed to have potential to cause a number of adverse environmental and social impacts both during construction and operation. However, a proposed suite of controls as part of the Project’s environmental and social management systems should facilitate the management of these impacts.

11. Climate change considerations

UKEF considered the potential direct and indirect green house gas (GHG) emissions of the Project and effects of climate change factors on the Project as part of its ESHR review.

The Project’s GHG emissions have been calculated in alignment with the methodology set out in the Greenhouse Gas Protocol. Operational Scope 1 and 2 emissions were estimated respectively at 56,380 tCO2e/year and 9,455 tCO2e/year. Most emissions during operations will be from natural gas boilers which will provide the high temperatures needed for the manufacturing process. Emissions were estimated conservatively, using a worst case position since it assumed constant operation of the gas boilers throughout the year. In practice, boiler output will be modulated to meet process energy needs. The calculations also do not account for a change in the composition of gas supplied via the national gas network. 3. The review revealed that the Project design has considered potential physical impacts of climate change such as changes to rainfall and temperature.

12. Decision

Various actions have been agreed between the Project developer, operator, and parties involved in the financing, which are necessary to ensure the Project’s on-going alignment with international standards. Following agreement of these commitments, it was concluded that the Project should meet the relevant international standards over the Project cycle.

A condition of support is that the Project will be subject to monitoring and reporting in order to provide satisfaction that the Project is aligned with the relevant international standards throughout the duration of support.