Canadian miner Teck Resources to restructure steelmaking coal business

Canadian mining company Teck Resources will separate its business into two independent, publicly-listed companies to offer investors a choice of enterprises with unique fundamentals and value propositions.

Post-closing, Teck Resources will change its name to Teck Metals, a premier, growth-oriented energy transition metals producer, while the newly created Elk Valley Resources will be a pure-play, high-margin steelmaking coal producer.

Teck Metals will trade on the Toronto and New York stock exchanges while Elk Valley Resources will hold 100% of its steelmaking coal operations and list its common shares on the Toronto Stock Exchange.

Jonathan Price — Teck Resources CEO said: “This transformative transaction creates two strong, sustainable, world-class mining companies committed to responsibly providing essential resources the world needs.

“Both Teck Metals and EVR [Elk Valley Resources] have high-quality operating assets and strong financial foundations, with talented and dedicated employees, committed to ensuring safe and responsible operations.

“The transaction simplifies the portfolio of each company, allowing for strategic and financial focus and the ability to pursue tailored capital allocation strategies.

“It provides investors with choice in response to the evolving investment landscape, and establishes a pathway to the full financial separation of the two companies over time.”

Canadian miner Teck Resources to restructure steelmaking coal business. Photo courtesy of Olle August from Pixabay.

Teck Metals will retain a substantial stake in steelmaking coal cash flows for the transition period in the form of an 87.5% interest in a gross revenue royalty.

In addition, Tech Metals will receive preferred share redemption amounts that will in aggregate equal 90% of Elk Valley Resources free cash flow.

The steelmaking coal joint venture partner and major customer Nippon Steel will acquire a 10% stake in Elk Valley Resources for CAD 1.025 billion in cash and for exchange of its current 2.5% interest in Elkview Operations.

The close of the transaction is expected to complete in the second quarter of 2023, subject to Teck Resources’ shareholder and court approvals as well as certain customary closing conditions.