Canada approves acquisition of Teck Resources coal business by Glencore

The Swiss Glencore will receive 77% of the shares

Canada approved the acquisition by the Swiss commodity trader Glencore of the metallurgical coal business Teck Resources – Elk Valley Resources, based in British Columbia, for $6.9 billion, Bloomberg reports.

In a deal announced last fall, Glencore will acquire a 77% stake in the Canadian company’s coal business. Meanwhile, steel companies Nippon Steel and POSCO, which own minority stakes in Teck coal mines, will hold the rest.

Industry Minister François-Philippe Champagne said in a statement that the government had secured Teck’s commitment to reinvest a significant amount of revenue into its copper portfolio, positioning the company as a leader in critical minerals.

In addition, the minister also raised the bar for approval of any future foreign transactions involving major Canadian mining companies engaged in important operations with minerals. Henceforth, any such acquisitions will be deemed to be in Canada’s best interest only in «exceptional circumstances.»

According to Champagne, Glencore has made certain legal obligations, in particular environmental, as well as obligations to maintain a significant level of employment in Elk Valley Resources, maintain offices in Canada and represent Canadians in management.

At the same time, Teck Resources announced that it would use the funds from the deal to buy back its shares in the amount of $2 billion, reduce debt by up to $2 billion and finance the growth of copper production in the near future.

According to Glencore, the transaction is expected to be completed on July 11, 2024.

«The acquisition of EVR will further enhance the quality of our portfolio, expand the ability to provide high-quality metallurgical coal, an important raw material for the transition period, to customers around the world, and provide significant expected cash flows for the group,» the company said.

As GMK Center reported earlier, the Ministry of Natural Resources of Canada added high-quality iron ore to the list of critical minerals. The list, which has already reached 34 types of raw materials, also includes phosphorus and silicon.