LUSAKA, Feb 2 (Reuters) – Zambia has agreed to restructure a $1.5 billion debt owed by Mopani Copper Mines to Glencore, which arose from its acquisition of Mopani in 2021, state-owned mining firm ZCCM-Investment Holdings (ZCCM-IH) ZCCM.LZ said on Friday.

Last November, Zambia picked the United Arab Emirates’ International Resources Holdings (IRH) as the new strategic equity investor in Mopani, to take up a 51% stake in return for a $1.1 billion capital injection. IRH’s interest in Mopani will be held through its wholly-owned subsidiary, Delta Mining Ltd.

As part of the deal, IRH, a unit of Abu Dhabi’s most valuable listed company, International Holdings Company (IHC), will provide $400 million as a shareholder loan towards clearing Mopani’s debt. Of that, $300 million is earmarked for the Glencore debt and the remaining $100 million will be used to settle third-party letters of credit secured by Glencore for Mopani.

“The effect of this is that the gross debt owed by Mopani to Glencore … will be replaced by the above shareholder loan owed to Delta of up to $400 million, resulting in an overall net reduction in Mopani debt of over $1.2 billion,” ZCCM-IH said.

Glencore was not immediately available to comment.

Mopani and Glencore also agreed on a royalty agreement which will see the global commodities giant receiving an unspecified share of Mopani’s profit in the event that the copper price exceeds $12,000 per ton.

ZCCM-IH said “the relationship between Glencore and Mopani will be restructured” following the agreed settlements and “there shall be no indebtedness between Glencore and Mopani”.

IRH’s investment will provide funding to support Mopani’s target to raise its output to 200,000 tons of copper annually in the next three years, ZCCM-IH said.

The miner produced 72,694 metric tons of copper in 2022, down from 87,618 metric tons in 2021.

(Reporting by Chris Mfula; Editing by Nelson Banya and David Evans)