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Glencore, the Swiss multinational commodity trading, and mining giant led by South African executive Gary Nagle has announced a definitive agreement to acquire a 77-percent stake in Teck Resources‘ steelmaking coal business, Elk Valley Resources (EVR).
The cash transaction, valued at $6.93 billion, underscores Glencore’s commitment to bolstering its position in the competitive steelmaking coal market.
Simultaneously, Teck Resources, Canada’s largest diversified mining company, has forged an alliance with Nippon Steel Corporation (NSC) and POSCO to optimize its interests in Elkview Operations. Under the terms of the deal, NSC’s share in EVR will rise to 20 percent, while POSCO will exchange its current stakes for a 3 percent interest in EVR.
Glencore’s Gary Nagle optimistic as landmark $6.93 billion deal advances
The comprehensive agreement also includes the acquisition of Teck, NSC, and POSCO’s portion of a shareholder loan to EVR, totaling an estimated $250-300 million upon closing. However, the success of this landmark deal is contingent upon regulatory approvals, notably under the Investment Canada Act and competition reviews, with the anticipated closing set for Q3 2024.
Expressing satisfaction with the acquisition, Glencore CEO Gary Nagle highlighted the complementarity of Elk Valley’s assets with Glencore’s existing coal production. Nagle emphasized Glencore’s dedication to environmental stewardship and social responsibility, pledging collaboration with governing bodies and Indigenous Nations.
Upon completion of the transaction, EVR will assume full ownership of Elkview, Fording River, Greenhills, and Line Creek mines in Southeast British Columbia, along with a 46-percent stake in Neptune Terminals in North Vancouver. Teck’s robust performance in 2022, with steelmaking coal production of 21.5 million tonnes, EBITDA of C$7.4 billion, and gross assets of C$18.5 billion as of September 2023, underscores the historical success of EVR.
Glencore solidifies position as the world’s largest mining group under Gary Nagle
Founded in the 1970s as a trading company, Glencore has solidified its position as the world’s largest mining group in terms of revenue, becoming a major producer and marketer of more than 60 commodities under the leadership of CEO Gary Nagle.
In anticipation of long-term steel demand, Glencore commits to sustaining EVR’s success as a Canadian steelmaking coal producer. The company pledges substantial investments, increased employment, research and development activities, and contributions to community programs.
Furthermore, Glencore outlines plans to demerge its combined coal and carbon steel materials business, including the EVR stake, within 24 months from the acquisition’s close. This strategic move aligns with Glencore’s commitment to responsibly declining thermal coal operations and striving for net-zero emissions by 2050.
