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Glencore Plc and Zambia’s state-owned mining company ZCCM-IH could jointly lend Mopani Copper Mines $200 million to help cover running costs under a proposal made by the global miner last week, a letter seen by Reuters showed.

Glencore, which owned Mopani until March 2021, is prepared to lend up to $100 million as a short-term cash injection to Zambia’s Mopani copper mine, the global miner said in a Sept. 12 “non-binding letter of intent”.

Mopani Copper Mines is a large mine and smelter complex that Glencore sold to state mining investment firm ZCCM-IH in 2021 after drawing the ire of the Zambian government by putting it on care and maintenance in 2020 at a time of lower copper prices.

Switzerland-based Glencore however kept the exclusive right to sell Mopani’s production when it sold its majority stake in the asset to ZCCM-IH in a $1.5 billion deal funded by debt.

The more than 90-year-old mine has the potential to produce 225,000 tonnes of copper annually, nearly three times its expected 2022 production, Mopani Copper Mines officials have said, but it needs investment of at least $300 million to fund a complicated underground expansion.

With copper production falling and Mopani struggling to pay suppliers on time, ZCCM-IH in June hired investment bank Rothschild & Co for a strategic review that aims to find a new investor for the mine.

While Mopani waits for new investment, its production has fallen, making running costs increasingly hard to cover.

In the letter to Rothschild, Glencore said Mopani needs $200 million in “short-term liquidity”, and proposed to split that equally with ZCCM-IH. The cash would help Mopani cover general costs including buying reagents and paying workers and contractors, according to a source with knowledge of the letter.

Neither Glencore nor Rothschild commented on the contents of the letter, possible negotiations between the parties or progress of the strategic review.

ZCCM-IH declined to comment on the letter, saying only: “Rothschild… are looking at a range of expressions of interests and letters of intent from various stakeholders aimed at ensuring the sustainability, growth and profitability of Mopani.”

Zambia’s mines ministry did not respond to questions about the letter.

In the letter, Glencore said it has already lent Mopani $47 million through procuring letters of credit to cover copper concentrate purchases and electricity bills. Under the proposal, Glencore would provide up to $53 million more through letters of credit.

The proposal did not specify the interest rate for the loan.

Reuters reported in May that Glencore was helping to pay some of the company’s running costs, including electricity bills.

It is in Glencore’s interest for Mopani to keep producing because ZCCM is paying off its $1.5 billion debt to Glencore through Mopani’s copper.

Glencore would require $120 million worth of copper concentrates, anodes, and cathodes to be at the Mopani smelter or being transported to the border as a guarantee for its $100 million loan, according to the letter.

With future demand for copper expected to be strong due to the growth of electric vehicles, charging stations and other renewable energy infrastructure as the world seeks to decarbonise, Zambia sees expanding the mine as an opportunity to generate much-needed income.


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