Canada Approves Glencore-Led Deal for Teck Coal Assets — Update
By Paul Vieira
OTTAWA--Canada approved late Thursday a Glencore-led $9 billion deal to acquire coal assets from Teck Resources, after officials secured commitments from both companies about additional investment in the country.
Furthermore, Canada's industry minister, François-Philippe Champagne, said pending approvals of foreign-led deals involving critical minerals would only be granted in "the most exceptional of circumstances."
Glencore unveiled last November its proposed purchase of Teck Resources' coal assets. As structured, Switzerland-based Glencore would acquire a 77% stake in Teck's coal operations, which valued the assets at $9 billion.
Under Canada's foreign-investment law, foreign-led deals over a certain dollar threshold, or in certain strategic economic sectors, require government approval to ensure the deal as structured provides a so-called net benefit to the domestic economy.
In a statement, Champagne said Glencore made a series of "significant" undertakings such as keeping executive offices in western Canada; ensuring a majority of directors of the coal business are Canadian; pledging to follow certain environmental rules; and honoring commitments Teck has made to indigenous communities.
Champagne added that Teck, based in Vancouver, British Columbia, has also committed to invest a chunk of the sale's proceeds into its copper assets, "which will position Teck for leadership in the pivotal area of critical minerals."
Representatives for Glencore and Teck didn't immediately respond to a request for comment.
Along with approval of the Glencore-Teck deal, Champagne said future approvals of foreign-led deals in the critical minerals space would only be granted "in the most exceptional of circumstances." He said, "this high bar is reflective of the strategic importance of Canada's critical minerals sector and how important it is that we take decisive action to protect it."
In 2022, Canada ordered three Chinese companies to divest their shares from domestic companies involved in extracting critical minerals, citing national-security concerns. And last month, an Australian company that operates a rare-earth mine in northern Canada said it had ditched a proposed sale of stockpiled material to a Chinese company in favor of a Canada-backed transaction, after Canadian officials warned they had concerns about security implications.
Last year, Glencore made a hostile-takeover bid for Teck, proposing a roughly $23 billion merger between the companies. Under that plan, it proposed forming two separate companies for Glencore and Teck's merged metals and coal businesses, and then spinning off the combined coal business. At the time, Teck rebuffed the offer, and Champagne's statement said he also had "very serious concerns" with the proposed merger.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
July 04, 2024 23:16 ET (03:16 GMT)
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