Teck said to plan coal spinoff to focus on metals

Bloomberg News | February 16, 2023 | 

Greenhills is one of the five steelmaking coal operations Teck Resources has in the Elk Valley, British Columbia. (Image courtesy of Teck Resources.)

Teck Resources Ltd. is planning to separate its multibillion-dollar steelmaking coal business to focus more on industrial metals, according to people familiar with the matter.


The Canadian miner is expected to make an announcement on the spinoff as early as next week, the people said, asking not to be identified as the matter is private. Deliberations are ongoing and no final decision has been made, the people said.

Shares rose 9.9% to C$61.79 at 10:55 a.m. in Toronto before trading was halted. That marks the highest intraday price in 12 years.

Teck has been weighing options for its coal division for over a year in a strategic shift toward mining more of the metals such as copper that are crucial to the global energy transition. Metallurgical coal is used in steelmaking, which is among the most polluting industries and faces significant pressure from policymakers.

The company declined to comment.

Teck, which is scheduled to report earnings next week, is one of the world’s largest exporters of metallurgical coal. The company produced more than 24 million metric tons in 2021 from four different operations in western Canada, according to its filings. The business accounted for 55% of the company’s gross profit.

Teck has been exploring options for the business since at least September 2021, when people familiar with the matter said the business could be worth about $8 billion.

A coal spinoff would leave Teck with a suite of copper and zinc mines across the Americas, including the Quebrada Blanca 2 copper project in Chile that has long been admired by some of its biggest rivals. It also owns a stake in the Antamina copper and zinc operation with BHP Group and Glencore Plc.

The world’s biggest miners are increasingly looking to exit fossil fuels. Rio Tinto Group has exited coal altogether, while Anglo American Plc has sold out of thermal coal. BHP divested some of its thermal coal and quit oil and gas altogether. BHP and Anglo still have large met coal operations, the sort of coal Teck is looking to hive off.

Attractive target

Separating the coal business would likely make Teck an attractive target for large mining companies such as BHP and Rio Tinto that have been hunting for takeovers to expand in industrial metals — providing the family that controls the shares would be willing to sell.

Teck’s standalone base metals business would make a very attractive M&A target should the controllers ever decide to sell, Citibank analyst Alexander Hacking said in a note Thursday.

“The question going forward is whether additional value can be surfaced by splitting the company, at the expense of the diversification and scale benefits,” RBC Capital Markets analyst Sam Crittenden said in a Thursday note. “We don’t see an obvious buyer for the met coal business so this would largely be a standalone met coal business.”

Bloomberg reported last month that the world’s biggest producers have rediscovered an appetite for mega deals, after years of staying on the sidelines.

(By Thomas Biesheuvel, Dinesh Nair and Jacob Lorinc)

Teck, PolyMet launch NewRange Copper 

Nickel JV to advance Minnesota projects

Staff Writer | February 15, 2023 | 

The NorthMet plant site is the former LTV Steel taconite processing site. PolyMet Mining photo

Teck (TSX: TECK.A, TECK.B; NYSE: TECK) and PolyMet (TSX: POM; NYSE: PLM) have launched the NewRange Copper Nickel joint venture with the aim to supply critical minerals for the clean energy transition across North America. Together, they plan to become the second nickel producer in the US.


NewRange holds both the NorthMet and Mesaba copper, nickel, cobalt, and platinum group metal deposits, two significant clean energy critical mineral resources located in northeastern Minnesota.

The two resources contain measured and indicated resources of 637 million tonnes and 2 billion tonnes for NorthMet and Mesaba respectively, and additional inferred resources of 400 million tonnes and 1.3 billion tonnes respectively.

In total, the two assets represent approximately one-half of the known 7.25-billion-tonne Duluth Complex resource in northeastern Minnesota.

NorthMet is expected to produce 29,000 tonnes of ore per day over a 20-year permitted mine life, with first production targeted for 2026. Over its first full five years of operations, it is expected to deliver annual payable production of 30,000 tonnes of copper, 3,600 tonnes of nickel, 58,000 oz. of palladium, and 12,000 oz. of platinum. Estimates for Metsaba are currently unclear.

PolyMet and Teck are responsible for funding their pro rata share of costs related to the NorthMet and Mesaba projects. The owners have committed to an initial work program with an estimated budget of $170 million to maintain permits, update feasibility cost estimates, and undertake detailed engineering to position NorthMet for a development decision following permit clearances, and to advance Mesaba studies.

Glencore has committed to support PolyMet’s respective portion of NewRange’s initial $170 million work program and certain other costs and expenses in the amount of approximately $100 million.

“NewRange Copper Nickel has potential to be a modern, multi-generational operation that will support North America’s acceleration to a carbon-neutral future, build a better quality of life for people, and diversify and create significant economic benefits for northern Minnesota and beyond,” said Tannice McCoy, the newly appointed general manager of NewRange following a 21-year career with Teck.