Teck and Anglo American Agree to Landmark Mining Merger
Vancouver’s Teck Resources Ltd. and London’s Anglo American PLC ., two mining giants that each recently fended off hostile takeover offers, have agreed to merge in a US$50-billion deal that will create world’s fifth-largest copper producer.
The all-share, no-premium merger proposal was mostly driven by the companies’ desire to expand their critical metals operations and ensure the viability of Teck’s massive copper mine, Quebrada Blanca (QB), in the Chilean Andes, which has suffered enormous cost overruns and operational difficulties.
Anglo, which owns 44 per cent of the nearby Collahuasi mine, will attempt to combine the two mines’ operations. “When you have cost overruns, scale helps,” Norman B. Keevil, Teck’s chairman emeritus and controlling shareholder through his super-voting A shares, told The Globe and Mail.
If the merger goes ahead, Anglo shareholders will own 62.4 per cent of the new company, to be called Anglo Teck; Teck shareholders will own 37.6 per cent. In a conference call Tuesday morning, Anglo CEO Duncan Wanblad, 58 and his Teck counterpart, Jonathan Price, 49, called the deal “a true merger of equals” in spite of the lopsided share ownership structure.
Mr. Wanblad, who was born in South Africa, will become the CEO of Anglo Teck. Mr. Price, a Briton who became Teck’s CEO in 2022, will become the deputy CEO. The operational headquarters of the company will be in Vancouver, where both executives, along with the senior management teams, will be based. Anglo will keep its office in London, where its shares are listed, but will lose some head office employees. “The London office will be more streamlined,” Mr. Wanblad said.
Anglo Teck will have its primary listing in London and secondary listings in Toronto and Johannesburg. The company also plans a New York listing through American Depository Receipts.
The no-premium deal suggests that Teck was highly motivated to create synergies between QB and Collahuasi to help overcome the cost overruns. The COVID-19 pandemic lengthened QB’s expansion schedule, as did various engineering setbacks, ensuring the development went way over budget. The original cost estimate of the expansion, known as QB2, came in at US$5.2-billion; the final price will be as much as US$8.8-billion. QB2’s first output came in March, 2023, almost two years later than planned.
The companies said the QB-Collahuasi pretax synergies would come to US$800-million a year through the combination of activities such as procurement. The synergies would create as much as US$1.4-billion a year in EBITDA “uplift,” they said. The acronym stands for earnings before interest, taxes, depreciation and amortization.
“The industrial logic is pretty self-evident,” Mr. Wanblad said, referring to combining the Collahuasi and QB operations. “You can see the logic of moving some of the high-grade ore from Collahuassi to the QB plant.”
Glencore of Switzerland, the world’s biggest commodities trader and one of the biggest mining companies, also owns 44 per cent of Collahuasi. Glencore was not consulted on the Anglo-Teck merger but has said for years that two mines should be put together to save costs.
Glencore seems unlikely to launch a rival bid for Teck. It tried to buy the Canadian company in 2023 and retreated after several rejections by the Teck board of directors. Glencore later received a consolation prize by winning the bidding process for Teck’s massive metallurgical coal operations in British Columbia. Shorn of coal, the deal allowed Teck to reinvent itself as a global copper company, with zinc at its side.
Bloomberg was the first to report late on Monday that the merger talks were under way, sending Teck shares up by 20 per cent in after-hours trading. Before news of the merger talks leaked, Teck had fallen by about the same amount over the past year. Anglo surged as about 10 per cent in London on Tuesday, raising its market value to almost US$40-billion. Anglo shares have climbed by 26 per cent in the last 12 months.
BHP of Australia, the world’s biggest mining company, tried to buy Anglo in 2024. The deal was rejected and Anglo embarked on a restructuring that would shed non-core assets, allowing it focus on copper, iron ore and crop nutrients. The company also owns the De Beers diamond business, which it plans to sell or spin off shortly.
Partly financed by the asset sales, Anglo said it will pay a special dividend of US$4.5-billion, or US$4.19 a share, before the merger with Teck is completed. Teck is paying no special dividend, instead relying on the potential synergies to convince shareholders that the deal is in their best interests.
The merger attempt will be scrutinized closely by Ottawa, which will have to be convinced that the deal is not a full-blown takeover by Anglo. The federal and provincial governments are aware that most of Canada’s big mining companies, including Inco and Falconbridge, have been absorbed by foreign companies, losing their head offices and the jobs that go with them.
In a statement issued early Tuesday, Industry Minister Mélanie Joly said the merger will be reviewed under the Investment Canada Act to ensure that there is a “net benefit” to Canada. “Any new investments must support our core mission of building one economy in the best interests of Canadians,” she said on X.
Anglo and Teck said the review is expected to take 12 to 18 months.
Mr. Keevil said he will vote his A shares in support of the merger. “It makes us both better companies,” he said. “Teck’s future is secured. It will become more resilient.”
He suggest that Mr. Price could be the next CEO of Anglo Teck if Mr. Wanblad, who is a decade older than Mr. Price, were to retire. Neither Mr. Wanblad or Mr. Price would comment on that scenario.
Mr. Price, as deputy CEO, said he will concentrate on implementing the merger and driving the synergies between the two companies.
This article was first reported by The Globe and Mail
