Glencore takes majority stake in Canadian coal business

Glencore takes majority stake in Canadian coal business

Glencore's Teck takeover bid sparked criticism over the Swiss group's commitment to coal
Glencore's Teck takeover bid sparked criticism over the Swiss group's commitment to coal. Photo: Fabrice COFFRINI / AFP/File
Source: AFP

PAY ATTENTION: Let yourself be inspired by real people who go beyond the ordinary! Subscribe and watch our new shows on Briefly TV Life now!

Swiss commodities giant Glencore will acquire a majority stake in the steelmaking coal business of Canadian miner Teck Resources, the companies said on Tuesday, capping fraught negotiations between the groups.

Glencore said it would take a 77-percent effective interest in Elk Valley Resources for $6.93 billion in cash.

Japan's Nippon Steel Corporation will acquire a 20-percent minority stake in Elk Valley, while South Korea's POSCO will grab three percent.

Vancouver-based Teck Resources put the value of its steelmaking coal business at $9.0 billion.

Glencore's coal strategy has attracted fierce criticism, including from some shareholders.

The latter want it to separate coal from the rest of its activities in order to concentrate on its other resources, such as copper and cobalt, which are in high demand for the energy transition.

Read also

Apple supplier Foxconn says profits fuelled by holiday season demand

Glencore, which is active in both commodity trading and mining, had unveiled a nearly $23-billion offer in early April for Teck Resources to combine their coal and metals activities and then spin them off.

The offer disrupted Teck's plan to spin off its coal business and sparked political scrutiny in Canada.

Prime Minister Justin Trudeau told Bloomberg in April that the takeover bid would go through a "rigorous process", while opposition Conservatives urged the government to block the deal over concerns about jobs.

The Canadian firm twice rejected the offer, with the support of its two largest shareholders.

Teck had warned that the proposed merger would bring Glencore's thermal coal into its business.

Used to produce electricity and heat, thermal coal is attracting much more criticism because of its climate-heating carbon dioxide emissions.

Read also

Climate groups demand COP28 aims for formal energy transition deal

In June, Glencore made an alternative offer to buy Elk Valley Resources.

'Benefits for Canada'

Glencore said the transaction is expected to close in the third quarter of 2024, pending the approval of Canadian regulators.

"We are pleased to have reached agreement to acquire Teck's steelmaking coal operations in the Elk Valley," Glencore chief executive Gary Nagle said.

"These world-class assets and the experienced people that operate them are expected to meaningfully complement our existing thermal and steelmaking coal production located in Australia, Colombia and South Africa," he said.

Teck Resources, one of the top mining companies in Canada, wants to focus on metals such as copper that are key to the global energy transition.

"This transaction will be a catalyst to re-focus Teck as a Canadian-based critical minerals champion with an extensive portfolio of copper growth projects, unlocking the full value potential of the company," Teck CEO Jonathan Price said.

Read also

Nations negotiate terms of plastics treaty in Nairobi

"Glencore has made strong commitments that will create new benefits for Canada and the Elk Valley and ensure responsible stewardship of the steelmaking coal operations for the long term," he said.

PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ click on “Recommended for you” and enjoy!

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.