Glencore, the Swiss international commodity trading and mining conglomerate managed by South African executive Gary Nagle, has announced a binding agreement to acquire a 77% share in Teck Resources’ steelmaking coal division, Elk Valley Resources (EVR).
The $6.93 billion cash acquisition demonstrates Glencore’s commitment to strengthening its position in the competitive steelmaking coal market.
Teck Resources, Canada’s most diversified mining firm, has formed a joint venture with Nippon Steel Corporation (NSC) and POSCO to maximize its stake in Elkview Operations. Under the terms of the agreement, NSC’s holding in EVR will increase to 20%, while POSCO will exchange its current stakes for a 3% investment in EVR.
The entire transaction also includes the acquisition of Teck, NSC, and POSCO’s portions of a shareholder loan to EVR, which is expected to total $250-300 million upon closure. However, the completion of this historic transaction is dependent on regulatory clearances, including under the Investment Canada Act and competition evaluations, with the expected closing date set for Q3 2024.
Glencore CEO Gary Nagle expressed pleasure with the transaction, highlighting the compatibility of Elk Valley’s assets with Glencore’s existing coal production. Nagle underscored Glencore’s commitment to environmental and social responsibility, promising engagement with government agencies and Indigenous Nations.
After the acquisition is completed, EVR will hold the Elkview, Fording River, Greenhills, and Line Creek mines in Southeast British Columbia, as well as a 46 percent share in Neptune Terminals in North Vancouver. Teck’s strong performance in 2022, with steelmaking coal output of 21.5 million tonnes, EBITDA of C$7.4 billion, and gross assets of C$18.5 billion as of September 2023, demonstrates EVR’s previous success.
Under the direction of CEO Gary Nagle, Glencore has consolidated its position as the world’s largest mining corporation in terms of revenue, becoming a major producer and marketer of more than 60 commodities since its inception as a trading firm in the 1970s.
Glencore is committed to preserving EVR’s success as a Canadian steelmaking coal producer in anticipation of long-term steel demand. The corporation promises significant investments, additional employment, R&D activity, and donations to community projects.
Glencore also intends to demerge its combined coal and carbon steel materials business, including the EVR holding, within 24 months after the acquisition’s completion. This strategic step is consistent with Glencore’s objective to sustainably reduce thermal coal operations and achieve net-zero emissions by 2050.