Anglo-Teck $53B merger may topple Escondida as copper leader
Anglo American (LON: AAL) and Teck Resources’ (TSX: TECK.A, TECK.B)(NYSE: TECK) planned $53 billion merger could create the world’s largest copper mine by the early 2030s, surpassing BHP’s Escondida in Chile, according to analysts.
The centrepiece of the deal is the integration of Teck’s Quebrada Blanca (QB) mine with Anglo’s Collahuasi operation. Together, they could generate about one million tonnes of copper annually, industry analysts say.
“It is absolutely feasible that a Collahuasi-QB complex could surpass Escondida’s level of copper out-turn in the early 2030s,” CRU Group analyst William Tankard said in a note.
A proposed 15-kilometre conveyor would link Collahuasi’s high-grade ore to QB’s processing facilities, adding the equivalent of a new mine’s output. The system is projected to deliver an extra 175,000 tonnes of copper per year between 2030 and 2049, at lower costs and shorter timelines than a standalone development.
If completed, the combined Anglo-Teck entity would rank among the world’s top five copper producers, with 1.35 million tonnes in output a year. In comparison, Escondida produced about 1.28 million tonnes of copper in 2024. The deal would also mark the mining sector’s biggest transaction of the decade.
The companies project $800 million in annual pretax synergies, and up to $1.4 billion in additional EBITDA gains from shared procurement and operational efficiencies.
“I think it’s conservative,” George Cheveley, portfolio manager at Ninety One, wrote this week. “The optionality to expand and develop that complex over multiple decades is not in that number.”
Execution risks loom large. Teck’s QB mine has struggled with cost overruns, pit instability, plant outages, and waste-storage issues. Anglo American, meanwhile, does not fully control Collahuasi, where Glencore (LON: GLEN) and other partners hold significant stakes.
Analysts caution that operational fixes at QB are critical before the combined complex can challenge Escondida.
Wood Mackenzie values Teck at $10.8 billion on a post-tax, sum-of-the-parts basis: $13.8 billion from copper and $1.1 billion from zinc, offset by $4.1 billion in central costs through 2040. That estimate excludes potential synergies with Collahuasi, QB’s growth options and a life extension at the Red Dog mine, but also factors in downside risk from QB’s operational setbacks.
(With files from Bloomberg)
MMG’s $500M nickel deal with Anglo American faces EU doubts
China-backed miner MMG expects to secure European approval for its $500 million bid to buy Anglo American’s nickel assets, even as regulators question Beijing’s grip on critical mineral supply chains.
Troy Hey, MMG’s executive general manager of corporate relations, confirmed that European antitrust officials had raised concerns about the company’s Chinese majority ownership, but said the firm is confident the deal will clear.
“From a competition basis, we’re very confident that as new entrants to this market . . . and with very strong demand in Europe, we’re in a good place,” Hey told the Financial Times.
Brazil’s competition authority has already opened a probe, as Anglo’s nickel operations are located there. Although MMG does not currently operate in Brazil, Europe remains a key destination for the ferronickel produced at Anglo’s mines, which primarily supply stainless steel manufacturers.
Steelworkers complain
The deal is also drawing scrutiny in the United States. The American Iron and Steel Institute has urged Washington to block the acquisition, arguing it would hand Beijing direct influence over major nickel reserves. Nickel is a critical material for both electric vehicle batteries and stainless steel.
The proposed sale forms part of Anglo American’s (LON: AAL) wider restructuring. The company spun off its platinum business in May, creating Valterra (JSE: VAL), and in July classified its nickel and steelmaking coal divisions as discontinued operations pending divestment.
Anglo is sharpening its focus on copper, positioning itself to become the world’s fifth-largest producer if its proposed $53 billion merger with Canada’s Teck (TSX: TECK.A TECK.B)(NYSE: TECK) goes ahead.
Anglo-Teck deal hinges on troubled copper mine in Chile
At the heart of one of the mining industry’s most ambitious combinations is a plan to fix a problematic Teck Resources Ltd. copper mine high in Chile’s Atacama desert, and ultimately to integrate it with a vast neighboring operation that has long been a jewel in Anglo American Plc’s crown.
That, however, will require resolving complex operational troubles that have plagued Quebrada Blanca, known as QB — and then navigating relationships with partners in Collahuasi, a mine Anglo doesn’t control.
Teck has staked its growth plans on QB, but a major overhaul of the mine was a headache from its early days, coming in more than 80% over budget and years behind schedule. While delays and overruns are not unheard of in the industry, the operation has also since struggled with instability in the pit and plant, a ship-loader outage and now waste storage.
The travails forced Teck to trim output guidance in July, and earlier this month — just days before announcing a more than $50 billion merger agreement with Anglo — it said it would defer decisions on growth projects to focus on fixing QB.
“Quebrada Blanca has sizable technical challenges to reach capacity,” said Juan Ignacio Guzman, who heads GEM, a mineral consulting firm in Chile. “The synergies it could have with Collahuasi aren’t simple.”
Still, the benefits of a working combination would be hefty, in an industry where vast, usually distant, operations mean substantial synergies are hard to come by. Tying up with Collahuasi, specifically processing its richer ore at QB plants, could mean an average annual boost to Ebitda of $1.4 billion, the two companies said. The revenue synergies would come on top of the $800 million a year in cost savings from more standard areas like procurement and corporate functions in a combined company.
“I think it’s conservative,” said George Cheveley, portfolio manager at Ninety One, referring to the $1.4 billion boost. “The optionality to expand and develop that complex over multiple decades is not in that number.”
Under plans sketched out by the two companies this week, a roughly 15-kilometer (9.3-mile) conveyor would be built to feed Collahuasi’s high-quality ore into QB’s new processing plants. That would generate the equivalent of a new mine’s worth of supply — an incremental annual output of about 175,000 tons of copper from 2030 to 2049 — at a fraction of the time and per-ton cost.
One scenario could see combined annual output approach 1 million tons by the early 2030s, according to industry consultancy CRU Group. That could put it above BHP Group’s Escondida, though not necessarily for the long-haul, as the world’s largest copper mine.
“It is absolutely feasible that a Collahuasi-QB complex could surpass Escondida’s level of copper out-turn in the early 2030s,” said CRU analyst William Tankard.
It’s the kind of cost-saving arrangement the industry has been touting for decades, where neighboring mines gain outsized benefits with relatively small investments, helping to boost global production of a metal vital for the energy transition.
But these deals are slow and challenging. Chilean state-owned giant Codelco and Anglo have held discussions for years over ways to integrate their Los Bronces and Andina mines, and are yet to finalize an arrangement.
Collahuasi and QB have more complicated ownership structures. Collahuasi — jointly owned by Anglo and Glencore Plc, with 44% each, plus a Mitsui & Co.-led consortium holding 12% — is independently managed. At QB, Teck does own the majority share, but still has Japan’s Sumitomo Metal Mining Co. together with Sumitomo Corp. as a 30% partner, and Codelco with a 10% stake.
“Among the challenges will be governance, due to the multiplicity of partners,” said Juan Carlos Guajardo, founder of consultancy Plusmining.
Then there’s the scale of the problems at QB. To grapple with these before committing, Anglo sent technical experts to QB and sat with independent engineers, Anglo chief executive officer Duncan Wanblad told analysts this week.
The troubles are such that some Teck shareholders worry Anglo may be getting a steal by swooping in at a low point — but Anglo’s investors fear it may be getting more than bargained for.
“It’s beyond me why Teck would surrender control of one of the world’s great copper-rich mining companies for nil premium, especially when they’ve inexplicably chosen to price the deal after underperforming Anglo by so much,” said Tim Elliott, head of mining at Regal Funds Management. “Teck should fix their key asset first, then test the market properly from a position of strength.”
Unions at the site say teams have been filling cracks around the tailings dam embankment, while waste is piling up because of the filtering issues and there’s also been pipe corrosion. The slower-than-expected ramp-up, meanwhile, is squeezing production bonuses for workers.
“This hits the wallet,” said David Munoz, an official at one of the main unions at the mine. “We don’t do less work than at other mines but we get less because of these issues.”
QB uses the so-called centerline cycloned sand dam method, which splits coarse material from fines, with the sand used to raise the embankment. The slower-than-expected drainage creates a bottleneck for production.
Earlier this month, Teck stepped up efforts to resolve the tailings issues, bringing in a former senior BHP executive as special adviser. Work is focusing on mechanically raising the dam wall and improving drainage times, the company said in an emailed response, adding that dam and pipe maintenance is normal and doesn’t pose any risk.
The ramp-up troubles are not dissimilar to Anglo’s own at Quellaveco in Peru, Wanblad said, a reminder of the copper industry’s struggles to expand supply just as the world demands more of the red metal. Quellaveco uses a similar tailings system.
“The reality is that these major operations do just sometimes take time,” he said.
(By James Attwood)
Vale CEO sees copper growth driven by project pipeline over M&A
Vale SA chief executive officer Gustavo Pimenta said the company “fell behind in the copper race” and will seek to regain ground by accelerating the development of its own mining assets, rather than looking at potential deals.
“Our opportunity lies more in developing our mining potential than in possibly making a transaction,” Pimenta said Wednesday on the sidelines of a conference in Sao Paulo. “Our potential for product development is greater than that of our competitors.”
The global mining industry has seen a flurry of dealmaking, driven largely by the desire to expand production of copper — a metal essential to the global energy transition. This week, Anglo American Plc agreed to acquire Canada’s Teck Resources Ltd., creating a more than $50 billion company in one of the biggest mining deals in over a decade.
Pimenta cited the Teck-Anglo combination as highlighting the favorable supply-demand outlook that’s underpinning copper.
Vale will focus on accelerating projects in Brazil’s Amazon rainforest, Pimenta said. The company earlier this year said it was spending 70 billion reais ($13 billion) on Amazon investments for iron ore and copper by 2030.
The Brazilian company produces about 350,000 tons of copper a year and forecasts doubling that amount by 2035. Speeding up copper projects including Alemao and Bacaba is a top priority, Pimenta said.
The Rio de Janeiro-based miner cut its full year capital expenditure guidance for 2025 to a $5.4 billion-$5.7 billion, from a previous $5.9 billion estimate. The reduction is concentrated in the copper and nickel business. Pimenta said the adjustments came from efficiency gains and that Vale isn’t giving up on any projects.
(By Mariana Durao and Dayanne Sousa)
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