Teck Resources has signed a deal to merge with Anglo American to create a single copper producing powerhouse, valued at about US$70 billion.  

Under the deal, Teck shareholders will receive 1.3301 Anglo American shares for each Teck Class A and Class B share they own. To balance valuations since Anglo American is the larger company, the London-based miner will also pay out about US$4.5 billion in dividends to its shareholders.  

After the merger is finalized, Anglo American investors will own 62.4 per cent of the newly formed company named Anglo Teck, with Teck shareholders holding the remaining 37.6 per cent. 

“This merger of two highly complementary portfolios will create a leading global critical minerals champion headquartered in Canada—a top five global copper producer with exceptional mining and processing assets located across Canada, the United States, Latin America and Southern Africa,” said Teck CEO Jonathan Price in a Sept. 9 press statement. 

Price will be taking on the role of deputy CEO at Anglo Teck, while Anglo American CEO Duncan Wanblad will lead as the chief executive. Anglo Teck will be based in Vancouver, with corporate offices in London and Johannesburg. 

The combined Anglo Teck company will control one of the strongest collections of assets in the industry, with six tier-one copper operations, plus high-quality iron ore and zinc businesses.  

Copper is central to the deal as demand for it continues to surge to support the green energy transition. Both Teck and Anglo American already have significant copper positions in South America. Teck operates the Quebrada Blanca (QB) mine in northern Chile, though problems with its tailings management facility and higher-than-expected costs have slowed the ramp-up. Last week, Teck announced an operational review and the launch of an action plan to get performance at QB back on track. 

Meanwhile, Anglo American owns a 44 per cent stake at the nearby Collahuasi mine, which it jointly owns with Glencore and Japan Collahuasi Resources B.V. 

Both Teck and Anglo American expect the merger to boost copper production and reduce costs at their QB and Collahuasi mines, which are located just 15 kilometres apart.  

The companies plan to use the infrastructure at QB to process higher-grade ore from the Collahuasi mine. This integration is expected to add roughly 175,000 tonnes of copper per year and generate an estimated US$1.4 billion in additional annual earnings before interest, taxes, depreciation, and amortization over 20 years. In addition, the combined operations are projected to deliver about US$800 million in annual cost savings by the fourth year following the merger. 

The agreement includes a US$330 million break fee, and the companies expect the merger to close within 12 to 18 months, pending shareholder and regulatory approval.  

In Canada, it will be reviewed under the Investment Canada Act, which allows federal government to block deals that do not provide a “net benefit” to the country. 

There have been long-standing concerns about Canadian mining companies being acquired by larger foreign companies. In the mid-2000s, Brazilian mining firm Vale acquired Inco, and British-Australian giant Rio Tinto took over Alcan. Falconbridge was acquired by Switzerland-based Xstrata in 2006, which itself was later absorbed by Glencore in 2013. 

Recently, both Teck and Anglo have experienced takeover attempts. In 2023, Glencore made a US$23 billion bid to acquire Teck but ultimately purchased only Teck’s coal business for US$7.3 billion. Last year, BHP targeted Anglo American’s copper assets and attempted to purchase it for US$49 billion. 

Industry Minister Mélanie Joly said the federal government will weigh the Teck-Anglo American merger carefully. “Any new investments must support our core mission of building one economy in the best interests of Canadians,” she concluded on social media.