Teck Resources announced Nov. 14 that it’s turning over a majority of its Elk Valley Resources steelmaking coal operations to Swiss-based Glencore and a minority stake to Nippon Steel Corp., a deal totalling close to US $9 billion.
Under the agreement, Glencore acquires 77 per cent of EVR for US $6.9 billion in cash, while NSC gains a 20 per cent interest, in exchange for its current 2.5 per cent share of the Elkview operations. The Japanese steel giant will also pay out US $1.3 billion to Teck.
“This sale sets the stage for Teck for continued growth as a major Canadian-based producer of copper and other future-oriented metals, while preserving the jobs and operations of the coal mines in the Elk Valley,” said the company’s chairman emeritus, Norman B. Keevil.
The deal, made public in Alberta early Tuesday morning, has other moving parts. South Korean steelmaker Posco has said it intends to trade in its 2.5 per cent interest in Elkview and its current 20 per cent interest in the Greenhills joint venture for a three per cent stake in Elk Valley Resources.
“This transaction will be a catalyst to refocus Teck as a Canadian-based critical minerals champion,” said president and CEO Jonathan Price, who added it will help to unlock the full value potential of the company.
Board chairwoman Sheila Murray believes the sale will be good for the current operations and into the future.
“Glencore has made strong commitments that will create new benefits for Canada and the Elk Valley and ensure responsible stewardship of the steelmaking coal operations for the long term,” she said.
Among the commitments made by Glencore is a $2-billion capital investment over the first three years of operation. It’s also pledged to maintain significant employment levels, including continuing to operate offices out of Vancouver, Calgary and Sparwood, and to sustain strong community ties.
On its website, Glencore CEO Gary Nagle stated, “We are dedicated to working with all governing bodies and stakeholders to ensure that the transaction is of benefit to Canada, which includes a commitment from Glencore regarding employment, engaging in further reclamation efforts and to engage constructively and meaningfully with the Indigenous Nations in the Elk Valley.”
Teck will continue to operate the steelmaking coal business until the transaction has gone through the proper channels.
Dave Lueneberg, Local Journalism Initiative Reporter, Shootin' the Breeze