LONDON, UK: Glencore plc has entered into a binding agreement with Teck Resources Limited for the acquisition of a 77% effective interest in the entirety of Teck’s steelmaking coal business, Elk Valley Resources (EVR), for US$6.93 bn in cash, on a cash free debt free basis, subject to a normalised level of working capital.
Concurrently, Teck Resources has agreed with Nippon Steel Corporation (NSC) that its current 2.5% interest in Elkview Operations will be rolled up to equity in EVR, and that NSC will acquire additional equity in EVR from Teck, such that on closing NSC will hold a 20% equity interest in EVR, a notice read.
POSCO has advised Teck that it intends to exchange its current 2.5% interest in Elkview Operations and its 20% interest in the Greenhills joint venture, for a 3% interest in EVR.
At closing, Glencore will also acquire from Teck, NSC and POSCO’s attributable share of a shareholder loan from Teck to EVR which is repayable out of EVR’s cash flows. The amount payable for this portion of the loan is expected to be some US$250-US$300 million on closing.
The transaction is subject to mandatory regulatory approvals, being Investment Canada Act (“ICA”) and competition approvals. The transaction is expected to close in Q3 2024.
Commenting on the transaction, Gary Nagle, CEO of Glencore, said: “We are pleased to have reached agreement to acquire Teck’s steelmaking coal operations in the Elk Valley. These world-class assets and the experienced people that operate them are expected to meaningfully complement our existing thermal and steelmaking coal production located in Australia, Colombia and South Africa.
“Glencore has high regard for the business that has been developed over many decades in British Columbia and looks forward to maintaining and enhancing its operational performance, environmental stewardship and social contribution.
“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.
“This transaction also deepens our longstanding commitment to Canada, supporting our position as one of the largest diversified miners and suppliers of critical minerals in Canada, in one of the world’s leading mining jurisdictions.
We have a longstanding relationship with NSC and POSCO and we look forward to working closely with them as our future partners in EVR.”
On close, assuming the POSCO roll-up proceeds, EVR will own 100% interests in the entities holding the Elkview, Fording River, Greenhills and Line Creek mines in Southeast British Columbia, and 46% of Neptune Terminals in North Vancouver.