Teck Split and Takeover Continues

A very public breakup is happening right now and we’re not talking about Taylor Swift Joe Alwyn. Mining giant Teck Resources was in the middle of splitting into two public companies when giant-er Glencore tried to take it over.

Background: Teck is a Canadian-owned company that produces both coal and critical minerals and has been exploring ways to maximize its value to shareholders. In February, the company announced it was splitted into two companies: one focused on zinc and copper (Teck Metals) and the other focused on steelmaking and coal (Elk Valley Resources).

• Some investors are keen on the sustainability angle and growth of critical minerals but would rather do without coal, while others love how cheap coal assets for the profit levels.

And then: Last week, Swiss-owned Glencore made an unsolicited $22.5 billion bid for Teck. The offer also planned to split the company into two firms, named creatively MetalCo and CoalCo. Teck, which is controlled by the Keevil family, rejected the offer.

The mining industry has been unusually active over the past year, with several high-profile deals being announced as companies are looking to fill the gap in supply of key metals for electric vehicles and the broarder energy transition.

• According to Lundin Mining CEO Peter Rockandel, “For the first time in a long time, we have seen M&As start to pick up and I think that theme is going to continue. A lot of the big companies are talking about the challenges of finding more copper and wanting to grow their production”.

Bottom line: 85-year-old former Teck chairment Norman Keevil, who owns the majority of the company’s supervoting shares, put on his most patriotic hockey jersey and said “It’s not a matter of price. Canada is not for sale”.