Zug raw materials giant – Glencore takes over majority of coal business from Canadian Teck – News

• The raw materials company Glencore is getting a chance at the Canadian Teck Group after months of advertising.
• Glencore is taking over a majority stake in its subsidiary Elk Valley Resources (EVR), which includes the steel coal business.
• Glencore is taking over 77 percent of EVR for a purchase price of $6.93 billion, the company announced.

With a little patience, Glencore finally concluded a deal with the Canadian mining company Teck. Glencore may not have been able to get close to Teck’s metals business, but Glencore is now taking over a majority of their coal business in a deal worth billions.

Glencore originally wanted to completely take over Teck in a deal worth around $23 billion and spin off the combined coal business. This is how the companies “MetalsCo” (metals business) and “CoalCo” (coal business) were created. However, the plans failed due to resistance from Teck and Canadian politicians.

Nine billion US dollars “appropriate”

With a slimmed-down version, Glencore is now taking over and taking over a majority stake in the Teck subsidiary EVR. In a conference call, Glencore boss Gary Nagle described the valuation of nine billion US dollars for EVR as “appropriate”. It came about after an in-depth examination of the books and negotiations with Teck. In an initial offer, Glencore valued EVR at 8.5 billion, which was rejected by Teck as insufficient.

After the transaction, a minority of 20 percent of EVR will be held by Nippon Steel Corporation (NSC), the remaining three percent by South Korean steel producer Posco.

As a first step, Glencore is merging EVR with its existing coal business and will later sell the merged entity. “It is our intention to list the steel coal business within two years of the completion of the transaction,” said Nagle. The transaction is scheduled to close in the third quarter of 2024, subject to customary regulatory commitments.

As a standalone entity, the steel coal business has better prospects as a “leading and cash-generating” company, Nagle said. It will also attract many investors. The initial listing will therefore take place in New York on the NYSE, combined with secondary listings in Canada and South Africa.

We can grow our copper business even without Teck and invest in our own projects.

According to Nagle, Glencore can count on the support of the majority of shareholders for the planned transaction. “I am confident about the completion of the transaction,” he said.

Glencore has long been an important player in Canadian mining. Including contractors and suppliers, the company employs around 9,000 people there and produces mainly nickel, copper, zinc and cobalt at seven locations. “We can grow our copper business even without Teck and invest in our own projects,” said Nagle. A further offer for Teck’s metal business is not planned.