Glencore to acquire 77% stake in Teck’s steelmaking coal business for $6.9bn

Glencore plc has announced its binding agreement with Teck Resources Limited for the acquisition of a 77% effective interest in Teck’s steelmaking coal business, Elk Valley Resources (EVR), for a substantial sum of US$6.93 billion in cash. This transaction is set to bolster Glencore’s position in the coal industry, marking a pivotal moment in their growth strategy.

Concurrently, Teck has reached an agreement with Nippon Steel Corporation (NSC) to roll up its existing 2.5% interest in Elkview Operations into equity in EVR. Additionally, NSC will acquire further equity in EVR from Teck, ultimately resulting in NSC holding a 20% equity interest in EVR. POSCO, another key player, plans to exchange its current 2.5% interest in Elkview Operations and its 20% interest in the Greenhills joint venture for a 3% stake in EVR.

At the time of closing, Glencore will also acquire the attributable share of a shareholder loan from Teck to EVR, which is expected to amount to approximately US$250-US$300 million. This transaction underscores Glencore’s commitment to strengthening its position in the industry and expanding its mining portfolio.

However, it’s important to note that the deal is subject to mandatory regulatory approvals, including those under the Investment Canada Act (ICA) and competition approvals. The expected timeline for the transaction to close is in the third quarter of 2024.

Gary Nagle, CEO of Glencore, expressed his views on the transaction, stating, “We are pleased to have reached an agreement to acquire Teck’s steelmaking coal operations in the Elk Valley. 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.”

Nagle further emphasized Glencore’s commitment to Canada, with a focus on employment, environmental stewardship, and engagement with Indigenous Nations in the Elk Valley. He stated, “This transaction also deepens our longstanding commitment to Canada, supporting our position as one of the largest diversified miners and suppliers of critical minerals in Canada, in one of the world’s leading mining jurisdictions.”

Nagle also highlighted Glencore’s anticipation of collaborating with NSC and POSCO, stating, “We have a longstanding relationship with NSC and POSCO, and we look forward to working closely with them as our future partners in EVR.”

Upon closing, assuming the POSCO roll-up proceeds, EVR will have full ownership of the entities holding the Elkview, Fording River, Greenhills, and Line Creek mines in Southeast British Columbia, as well as a 46% stake in Neptune Terminals in North Vancouver. This strategic move further solidifies Glencore’s presence in the mining sector, positioning them for continued success in the years ahead.