Teck Resources announced on Monday the sale of the majority of its steelmaking coal operations to Swiss mining giant Glencore in a US$6.9 billion cash deal, with the remaining amount to be acquired by two steelmakers, totaling a US$9 billion deal.  

In addition, Glencore has made commitments to Teck that it will retain a Canadian workforce and continue to operate the newly formed company, called Elk Valley Resources (EVR), in Canada through a head office in Vancouver and regional offices in Calgary, Alberta and Sparwood, B.C. and honour current Indigenous partnerships and work with other local Indigenous Nations to increase participation in its activities.  

The ownership of EVR will be divided into three: 77 per cent of the company will be acquired by Glencore, while 20 per cent will be owned by Japan’s Nippon Steel Corporation and the remaining three per cent by South Korean steel giant POSCO.

A timeline of the Glencore-Teck bid   

CIM Magazine covered the critical moments of the prolonged deal after several back-and-forth negotiations over the past year.

February 21, 2023: Teck announced intentions to split its business into two: Teck Metal Corps. for its copper-focused, base metals production, and EVR, a spin-off of its steelmaking coal business into a publicly traded company.

April 3, 2023: Teck rejected a 76 per cent Glencore merger proposal that would see Glencore acquire the entirety of Teck’s business and create two standalone businesses, one metals-focused (MetalsCo) and a thermal and metallurgical coal miner (CoalCo). The unsolicited deal was priced at US$23.1 billion and Teck turned the deal down, stating that it ran contrary to the company’s environmental, social and governance (ESG) commitments and put shareholders at “significant jurisdictional risk” due to exposure to thermal coal and Glencore’s oil trading.

April 11, 2023: Glencore added an additional US$8.2 billion cash component and 24 per cent ownership of MetalsCo, to its offer in a second attempt to acquire Teck, eight days after its rejection of the deal.

April 13, 2023: Teck rejected the new deal, citing a lack of change in Glencore’s bid, other than the cash component.

April 19, 2023: Frustrations rose as Glencore CEO Gary Nagle wrote an open letter appealing to Teck’s Class B shareholders, writing that Teck’s board “consistently refused any engagement” with Glencore. Nagle urged Class B shareholders, who owned a majority of the company’s equity, to support Glencore’s merger-demerger attempts amid looming share price value decline.

April 20, 2023: Sumitomo Metal Mining Co. (SMM), which held 18.9 per cent of Class A shares, part of the controlling shareholder group, announced that it would vote in favour of Teck’s plans of separating its business into two independent companies.

April 26, 2023: Only hours before its annual shareholder meeting, Teck withdrew its separation plans to split the company but said it would pursue a simple and more direct approach in separating its companies. Glencore’s proposal was still not being considered, Teck said in a press release.

June 11, 2023: After several months behind closed doors, Teck confirmed it was engaging in non-binding preliminary negotiations with Glencore to acquire Teck’s steelmaking coal business.

November 13, 2023: Teck announced the full sale of its steelmaking coal business.

The road ahead 

While the companies have agreed on the sale, the closure of the deal is pending federal government approval as a review under the Investment Canada Act (ICA) may take a long time.

The deal has received local opposition. In a video interview with BNN Bloomberg, Pierre Lassonde, chair emeritus at Franco-Nevada Mining, raised concerns over what this could mean for the Canadian mining industry.

“I’m very disappointed, not for myself, but for Canada. For British Columbia, for the employees,” Lassonde told BNN Bloomberg. “Elk Valley Resources is a great Canadian company, it’s 11 per cent of British Columbia’s economy, it’s 11,000 jobs.” 

Back in May, Lassonde offered to invest in Teck himself to save the company from Glencore’s hostile takeover bid.

Scott Lunny, director of the United Steelworkers (USW) Western Canada union, which represents more than 4,000 Teck employees, highlighted the B.C. mining industry’s leadership in ESG and sustainability goals and stated it will not support the deal without further commitments from Glencore.

“We need specific assurances and details about future plans for the Elk Valley operations from Glencore, including its commitment to the Fording River Expansion (FRX), before we can consider support for this sale,” Lunny said in a Nov. 15 news release.

While Glencore has released details on promises to encourage the federal government to give the deal the greenlight, Lassonde questioned if the company will follow through given its track record.

“Glencore, last year, paid US$1.75 billion in penalties to the U.S., U.K. and to Brazil for bribery, market manipulation and corruption,” Lassonde told BNN Bloomberg in the video interview. “They’re not exactly choir boys.”

Glencore plans to move ahead to combine Teck’s coal business with its coal assets when the acquisition is closed in the third-quarter of next year.