Glencore makes a cash grab for Tech Resources’ coal business

Swiss mining and trading giant Glencore is looking to buy Tech Resources’ coal business for cash, the latest twist in the battle for the mining industry’s biggest takeover in a decade.

Under the new proposal, Glencore would buy Teck’s steel-making coal business for an undisclosed valuation and then after a year or two create a new company by combining its own coal and Teck’s coal assets.

This would create a coal mining giant with few rivals in scale anywhere in the world, producing only 100 million tonnes of thermal coal and 30 million tonnes of steel-making coal per year.

The offer marks the first time that Glencore – the world’s most profitable coal mining company – has publicly outlined how it will expand its coal business even in the absence of a full acquisition of Tech Resources, which has so far rejected multiple acquisition offers. Is done.

Glencore had previously offered to pay up to $8.2 billion in cash for Teck’s coal business as part of its wider offer to buy Teck Resources in a $23 billion cash-and-share deal.

Teck’s coal business, which includes four metallurgical coal mines in British Columbia, Canada, earlier this year as part of an investment deal with Nippon Steel worth more than C$11 billion (US$8.2 billion). There was an implicit assessment, the purpose of which is to take one. 10% stake in the business.

Glencore made an unsolicited offer in April for the entire Canadian conglomerate – including its copper and zinc mines across the US. Under that proposal, it planned to split the combined companies’ assets after the merger, eventually creating a metals mining and trading business and a separate listed coal business.

Teck said it was in talks with Glencore to discuss a possible coal deal, but noted that Glencore’s offer was just “a number” of proposals under consideration.

The Canadian mining group is working on finding a simpler way to separate its coal business from its metals business after shareholders put a hold on its complex original proposal to separate the two companies.

Canadian mining investor Pierre Lassonde said in May that he was assembling a consortium of investors to bid for Teck’s coal business, without disclosing further details.

Glencore said it was “ready to go ahead” with its original offer to buy the entire company, despite Teck’s rebuttals twice.

Glencore’s search for tech has been complicated by the Canadian conglomerate’s dual-class share structure. Norman Keville, a Canadian who actually controls the company through overseeing Class A shares, has strongly opposed the deal.

Glencore chief executive Gary Nagle said in May that buying only Teck’s coal business would be a “distant second” in terms of the benefits that could be gained from the merger.