Canadian Regulators OK Glencore, Teck Resources Deal: Future M&A Sanctions Need 'Exceptional Circumstances'

The Canadian government approved Glencore‘s GLCNF acquisition of Teck Resources TECK metallurgical coal business Elk Valley Resources (EVR) for more than $6.93 billion.

The deal is expected to close on July 11, with Glencore acquiring a 77% stake in the British Columbia-based company. After that, the Swiss multinational miner could explore a spinoff of its coal business.

This approval follows Glencore's attempt last year to execute a hostile takeover of Teck Resources, Canada's largest diversified miner, which faced strong objections from the government and rejection from shareholders. Eventually, Glencore shifted focus and successfully negotiated to acquire Teck’s metallurgical coal business.

“The acquisition of EVR will further enhance the quality of our portfolio, broadening our ability to provide high-quality steelmaking coal, an important transition-enabling commodity, to customers around the world as well as contributing significant expected cashflows to the Glencore group,” said Glencore CEO Gary Nagle.

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To secure approval, Glencore made several commitments to ensure the stability and sustainability of the Canadian operations. These include:

• Maintaining a Canadian head office for EVR in Vancouver and regional offices in Calgary and Sparwood for at least ten years.
• Ensuring the majority of EVR's directors are Canadian for the next decade.
• Filling at least 66% of all executive and senior management roles with Canadians.
• Maintaining significant employment levels at EVR for at least five years.
• Adhering to binding environmental commitments, extending stewardship of the assets until 2050, beyond existing regulatory obligations.
• Engaging constructively and meaningfully with Indigenous Nations in the Elk Valley region.

For Teck, the sale of the coal business marks a new era. Teck CEO Jonathan Price stated the company will now “entirely focus on providing metals that are essential to global development and the energy transition,” such as copper.

The proceeds from the sale are expected to help Teck with enough funding to increase copper production by 30% as early as 2028. Shareholders will also benefit, with Teck planning to return $2.6 billion and reduce debt by up to $2 billion.

The approval of this deal is part of Canada's broader strategy to regulate foreign capital in the mining sector more strictly.

“Canada welcomes foreign investment and acknowledges its importance to the mining sector. However, the government will not hesitate to act when it is of the view that a transaction would be harmful to Canada's economic interests or the environment,” said Industry Minister François-Philippe Champagne.

“Future mergers and acquisitions involving Canadian mining firms engaged in critical minerals operations will only be sanctioned under the most exceptional of circumstances,” he added.

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