The Canadian government has approved Glencore’s $6.93 billion acquisition of Teck Resources’ steelmaking coal unit, with stringent conditions to protect jobs and Canadian interests. Industry Minister François-Philippe Champagne announced the approval on Thursday, emphasizing the government’s commitment to maintaining control over critical mineral resources.
To secure approval, Glencore has committed to maintaining a Canadian headquarters for Elk Valley Resources (EVR), the acquired coal unit, for at least 10 years. Additionally, the company will ensure that a majority of the EVR board of directors are Canadians. Glencore has also pledged to maintain significant employment levels at EVR for at least five years.
Teck Resources plans to utilize the proceeds from the sale to buy back up to C$2.75 billion ($2 billion) of its Class B subordinate voting shares, reduce debt by up to $2 billion, and fund near-term copper growth projects. The deal is expected to close by July 11.
“Today I approved under strict conditions a much narrower transaction whereby Glencore will acquire Teck Resources metallurgical coal business,” said Champagne. He emphasized that the government will establish a high bar for future mergers and acquisitions involving Canadian companies in the critical minerals sector. “Henceforth, such transactions will only be found of net benefit in the most exceptional of circumstances,” he added.
Glencore CEO Gary Nagle expressed the company’s commitment to the Canadian government, stating that they have made “significant commitments” to ensure the transaction benefits Canada and British Columbia in the long term.
The deal is one of the largest in the mining sector. Glencore will hold a 77% stake in EVR, with Japanese steelmaker Nippon Steel acquiring 20% and South Korea’s POSCO receiving 3% in exchange for stakes in two of Teck’s existing coal operations.