Glencore’s bid for Teck shows it’s willing to abandon coal
Bloomberg News | April 3, 2023 |

Credit: Glencore

Glencore Plc’s rejected $23 billion proposal for Teck Resources Ltd. has offered the first concrete sign that the biggest shipper of coal — and for years one of its most vocal defenders — is thinking about exiting the business.


While many rivals have long retreated from thermal coal under pressure from investors, Glencore has continued reaping massive profits from mining the dirtiest fuel. In an interview just last month, chief executive officer Gary Nagle called coal “a necessary fuel for today,” and the company has argued that it is better placed than others to responsibly manage the decline in production over time.

Now, Glencore has proposed an all-share deal to acquire Canadian miner Teck and then spin off the combined companies’ coal operations into a new business. Teck has rejected the proposal, but Glencore indicated on Monday it is doubling down on the idea and seeking discussions with the other company’s management.

Glencore’s current plan is to simply run its coal business to closure by 2050. The company has previously said that it was only prepared to exit the coal business if a majority of its shareholders asked for it.

But the Teck proposal “shows that Glencore do see merit in spinning off coal, which they’ve never said before,” said George Cheveley, a portfolio manager at Ninety One UK Ltd., who owns both Glencore and Teck. “If they can’t do Teck, then people will ask whether it would make sense just to do a coal spin-off.”

The stance on coal has faced pushback from some investors, with almost a quarter of shareholders voting against its climate report in October. The company’s sprawling coal mines, which stretch from Australia to Colombia, have also weighed on the share price by dampening its appeal as an ESG-compliant play.

And the coal assets have also been seen as a possible deterrent for any potential suitor for Glencore itself, at a time when the world’s biggest mining companies are finally regaining their appetite for mega deals. Glencore is a major producer of copper, nickel and cobalt — all strategic metals seen as key to electrifying the world. However, industry leader BHP Group itself is in the process of slowly exiting coal, while others like Rio Tinto Group are out already.

Coal has traditionally vied with copper as Glencore’s biggest driver of earnings. Last year high coal prices meant it contributed $17.9 billion of profit, compared with $5.7 billion for copper. Glencore said Monday that the two combined coal companies would have posted profit of $26 billion last year, while the base metal divisions would have made $16 billion.

Speaking to investors, Nagle argued the Glencore proposal would create more value than Teck’s own plan to split its business.

“What we are doing here is something different, not just a vanilla divestment,” Nagle said. “This is something that’s using the divestment of the coal assets to create value for Glencore and Teck shareholders.”

(By Thomas Biesheuvel, with assistance from Jack Farchy)

Teck said to be open to offers once coal spinoff is complete

Bloomberg News | April 4, 2023 | 

Highland Valley Copper operation in British Columbia. (Image courtesy of Teck Resources).

Teck Resources Ltd. is willing to entertain offers from potential suitors after it finishes the spinoff of its steelmaking coal business, according to people familiar with the matter.


The Canadian miner said Monday it rejected an unsolicited $23 billion proposal from Glencore Plc and will forge ahead with an April 26 shareholder vote on separating its metals and coal divisions. If investors approve, the split is expected to happen by the end of May, with the base metals producer being renamed Teck Metals Corp.

At that point, the Teck board is likely to be open to hearing offers from prospective partners or buyers including Glencore, the people said, asking not to be identified as the matter is private.

The Swiss commodities firm’s offer for Teck, at a 20% premium, is another sign that big mining companies are on the hunt for acquisitions. BHP Group Ltd. and Rio Tinto Plc are also said to be actively looking to increase their copper exposure.

“The board and special committee are confident that the proposed separation into Teck Metals and Elk Valley Resources is in the best interests of Teck and all its stakeholders,” Chris Stannell, a spokesperson for Teck, said in an emailed statement. “Teck’s proposed separation positions Teck Metals and EVR for success and does not foreclose future opportunities for other value-enhancing transactions at the appropriate point and time.”

In rejecting Glencore’s all-share offer, Teck chief executive officer Jonathan Price said Monday that the spinoff structure proposed by the Swiss firm would expose Teck shareholders to its large thermal coal and oil trading businesses. Norman Keevil, Teck’s chairman emeritus, said that “now is not the time to explore a transaction of this nature.”

Teck has also proposed ending the dual-class share structure that gives control to Class A shareholders — the Keevil family and its partners. But that change wouldn’t take effect for six years. In the meantime, a hostile takeover of Teck is impossible.

(By Jacob Lorinc and Dinesh Nair)