The federal government has signed off on the merger between Teck Resources Ltd. and Anglo American PLC, despite securing little further in concessions that would benefit Canada.
Federal Industry Minister Mélanie Joly said late Monday that the government had determined the deal is a net positive to the country.
“This merger is a significant win for Vancouver, British Columbia, and Canadians across the country,” she said in a statement on social media.
Joly had previously suggested that the terms as proposed weren’t good enough and that the government would be pushing for more.
A spokesperson for the minister declined to answer questions on why the government had approved the deal without securing further benefits.
Teck said in a release that the commitments set out in September when the deal was first announced have been further defined into a set of binding commitments under the Investment Canada Act.
“Establishing Anglo Teck here in Vancouver is wholly aligned with government’s economic focus and will help to further elevate Canada’s role and impact on the global critical minerals stage,” said chief executive Jonathan Price.
Anglo and Teck’s binding commitments include that the global headquarters of the company will forever be in Canada, as will a significant majority of senior management and board of directors.
The deal also has the new company committing to spend at least $4.5 billion in Canada over the next five years, though Teck itself has already approved about half of that after previously green-lighting the $2.4 billion Highland Valley Copper mine life extension.
The companies will also spend up to $850 million on critical minerals processing at Teck’s Trail Operations, an increase from an initial commitment of up to $750 million.
Other spending includes up to $750 million to advance development of the Galore Creek and Schaft Creek copper projects.
The companies will also “cause” spending to be made of at least $300 million in Canadian critical mineral exploration and technology and $100 million on a critical minerals institute and skills training.
Taken all together, Teck says it will mean the combined company is set to spend at least $10 billion in Canada over 15 years.
Both the speed of the approval, and the lack of further benefits, caught some analysts by surprise.
“We had previously noted that this approval could be difficult to obtain without further concessions to the Canadian Government,” said National Bank analyst Shane Nagle in a note.
“Industry Minister Mélanie Joly repeatedly told reporters that her decision on whether to approve or reject the Teck deal could take months and was clear that promises made by Anglo to maintain corporate headquarters and invest in Canada did not go far enough.”
As recently as Dec. 9, after shareholders voted in favour of the deal, Nagle warned that a federal decision could still be months away as similar reviews have often stretched for six months or longer.
With Ottawa’s decision in, the largest obstacles have been cleared, though it still requires approval from regulators in Europe, Japan, South Korea, the United States, Chile and China around antitrust concerns, said Nagle.
“With approval under the Investment Canada Act, and BHP dropping out of making an offer for Anglo, the chances of the merger being completed increase significantly.”
Anglo American CEO Duncan Wanblad, who will stay in the role at the combined company, said in a statement that the deal represents a significant investment in Canada.
“We are all committed to preserving and building on the proud heritage of both companies, in Canada, as home to Anglo Teck’s global headquarters.”
