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Canada Approves Glencore-Led Deal for Teck Coal Assets

commitments from Glencore and Teck Resources about additional investment in the country. PHOTO: CHRIS HELGREN/REUTERS

OTTAWA—Canada approved a Glencore GLEN 0.80%increase; green up pointing triangle-led $9 billion deal to acquire coal assets from Teck TECK.B 0.16%increase; green up pointing triangle Resources late Thursday, after officials secured commitments from both companies about additional investment in the country.

Furthermore, Canada’s industry minister, François-Philippe Champagne, said pending approvals of foreign-led deals involving critical minerals would only be granted in “the most exceptional of circumstances.”

Glencore unveiled last November its proposed purchase of Teck Resources’ steelmaking coal assets. As structured, Switzerland-based Glencore would acquire a 77% stake in Teck’s coal operations. Teck said it expects to receive total cash proceeds of about $7 billion.

Under Canada’s foreign-investment law, foreign-led deals over a certain dollar threshold, or in certain strategic economic sectors, require government approval to ensure the deal as structured provides a so-called net benefit to the domestic economy.

In a statement, Champagne said Glencore made a series of “significant” undertakings such as keeping executive offices in western Canada; ensuring a majority of directors of the coal business are Canadian; pledging to follow certain environmental rules; and honoring commitments Teck has made to indigenous communities.

Champagne added that Teck, based in Vancouver, British Columbia, has also committed to invest a chunk of the sale’s proceeds into its copper assets, “which will position Teck for leadership in the pivotal area of critical minerals.”

A representative for Glencore didn’t immediately respond to a request for comment. In a statement, Teck Chief Executive Jonathan Price said the company would use proceeds to reduce debt and finance metals growth, with an aim toward increasing copper production by as much as 30% starting as early as 2028.

“This transaction marks a new era for Teck as a company focused entirely on providing metals that are essential to global development and the energy transition,” Price said. Teck added that it is offering to acquire up to $1.25 billion of the company’s debt securities, and repurchase up to $2 billion in shares.

Along with approval of the Glencore-Teck deal, Champagne said future approvals of foreign-led deals in the critical minerals space would only be granted “in the most exceptional of circumstances.” He said, “this high bar is reflective of the strategic importance of Canada’s critical minerals sector and how important it is that we take decisive action to protect it.”

In 2022, Canada ordered three Chinese companies to divest their shares from domestic companies involved in extracting critical minerals, citing national-security concerns. And last month, an Australian company that operates a rare-earth mine in northern Canada said it had ditched a proposed sale of stockpiled material to a Chinese company in favor of a Canada-backed transaction, after Canadian officials warned they had concerns about security implications.

Last year, Glencore made a hostile-takeover bid for Teck, proposing a roughly $23 billion merger between the companies. Under that plan, it proposed forming two separate companies for Glencore and Teck’s merged metals and coal businesses, and then spinning off the combined coal business. At the time, Teck rebuffed the offer, and Champagne’s statement said he also had “very serious concerns” with the proposed merger.