VANCOUVER – Ottawa says it has approved Teck Resources Ltd.‘s sale of a majority stake in its steelmaking coal business to Swiss commodities giant Glencore.
In a statement posted Thursday, Industry Minister François-Philippe Champagne said the green light comes with “strict” conditions and represents a “much narrower” transaction than Glencore’s hostile takeover attempt of Teck last year.
Teck said the latest development means the sale of its remaining 77 per cent interest in the steelmaking coal business, Elk Valley Resources, has now received all necessary regulatory approvals and is expected to close next Thursday.
The Vancouver-based miner said it expects to receive $9.5 billion from the sale, excluding closing adjustments.
“This transaction marks a new era for Teck as a company focused entirely on providing metals that are essential to global development and the energy transition,” said the company’s president and CEO Jonathan Price in a statement.
“Completion of this transaction will provide substantial funding for our projects, giving Teck a pathway to increase copper production by a further 30 per cent as early as 2028.”
As part of the transaction, Champagne said Glencore has committed to establishing and maintaining a Vancouver head office for Elk Valley Resources for at least 10 years, along with regional offices in Calgary and Sparwood, B.C.
The conditions also include ensuring the majority of Elk Valley Resources’ directors, and two-thirds of its executives or senior managers, are Canadian for the same duration.
Ottawa said Glencore has also agreed to “maintain significant employment levels” at Elk Valley Resources for at least five years.
Glencore’s $25-billion hostile takeover attempt had “raised very serious concerns and was rejected by shareholders,” Champagne said.
The approved steelmaking coal deal, originally announced last November, represented the best possible outcome after nearly a year of battling over the future of the company, Price said at the time.
Teck said at the time that Japanese company Nippon Steel Corp. would also acquire a 20 per cent stake in exchange for its interest in one of Teck’s coal operations and US$1.7 billion in cash, while South Korean steelmaker Posco would swap its interest in a pair of Teck’s coal operations for a three per cent stake in the overall steelmaking coal operations.
Teck had been weighing the future of its steelmaking coal business since it became apparent its plan to spin off the operations into a separate company did not have the required shareholder support.
This report by The Canadian Press was first published July 5, 2024.
Companies in this story: (TSX:TECK.B)
