The Canadian government has granted approval for Glencore’s $6.93 billion acquisition of Teck Resources’ steelmaking coal unit under stringent conditions aimed at safeguarding jobs, announced Industry Minister Francois-Philippe Champagne on Thursday.
Glencore, in securing the approval, has committed to maintaining Elk Valley Resources’ Canadian headquarters for a minimum of 10 years. Additionally, a majority of EVR’s directors must be Canadian citizens, and significant employment levels at EVR must be upheld for at least five years, according to the ministry.
Teck Resources, in a separate statement, disclosed its intention to utilize proceeds from the transaction to repurchase up to C$2.75 billion ($2 billion) of its Class B subordinate voting shares. The company also plans to reduce its debt by as much as $2 billion and fund imminent copper growth initiatives.
The transaction, expected to finalize by July 11, marks a strategic move for Glencore, which will acquire a 77% stake in Teck’s metallurgical coal business for $6.9 billion in cash. Japan’s Nippon Steel will hold a 20% interest, building upon its existing 2.5% stake, while South Korea’s POSCO will exchange stakes in two of Teck’s coal operations for a 3% share in Elk Valley Resources.
Minister Champagne emphasized a rigorous approach to future net-benefit reviews for mergers and acquisitions involving critical Canadian companies in the minerals sector. Such transactions, he stated, will only be deemed beneficial under exceptional circumstances going forward.
Glencore CEO Gary Nagle expressed commitment to Canada, citing significant undertakings made to ensure the transaction’s long-term benefits for British Columbia and the country at large.
This approval underscores one of the largest recent transactions in the mining sector, reflecting Glencore’s strategic expansion and the global interest in securing critical mineral resources.
