VANCOUVER - Teck Resources (NYSE:TECK) Limited has entered into a definitive agreement to sell its entire interest in Elk Valley Resources (EVR) to Glencore (OTC:GLNCY) and Nippon Steel Corporation (NSC) for an enterprise value of $9.0 billion. In a strategic move announced today, Jonathan Price, President and CEO of Teck, confirmed that Glencore will acquire a 77% stake for $6.9 billion, while NSC will purchase a 20% stake for $1.7 billion.
The sale is part of Teck's broader strategy to transform into a leader in the Canadian critical minerals sector, with a particular focus on expanding its copper growth projects. This divestiture follows Teck's spring 2023 consideration to separate its coal and copper businesses. The decision comes after Glencore made an unsolicited takeover bid of $22.5 billion earlier this year.
Despite facing rising costs at its Quebrada Blanca 2 copper project last month, Teck has maintained its commitment to maximizing value from its base metals business. The company aims to ensure robust returns for shareholders while keeping a strong balance sheet.
Sheila Murray, Chair of the Board at Teck, highlighted that the transaction unlocks significant value for shareholders. Dr. Norman B. Keevil, Chairman Emeritus, further emphasized Teck's continued growth as a major Canadian-based producer of copper and other future-oriented metals.
Proceeds from the sale will be used to strengthen Teck’s balance sheet, return cash to shareholders, and enhance the company's copper growth portfolio, which includes the HVC2040 project and Galore Creek project. Until the closure of Glencore's transaction, estimated for the third quarter of 2024, Teck will operate the steelmaking coal business and retain all cash flows from EVR, expected to be around $1 billion.
Glencore has outlined plans to establish a Canadian head office for the steelmaking coal business in Vancouver and maintain regional offices in Calgary, Alberta, and Sparwood, British Columbia. They have also committed to preserving significant employment levels in Canada. The completion of Glencore's acquisition is contingent upon regulatory approvals under the Investment Canada Act and competition approvals.
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