Swiss miner Glencore PLC is in talks with Teck Resources Ltd. to buy the Canadian miner’s coal assets, both companies said on Monday, introducing a twist to a takeover saga that has dominated the global mining industry for several weeks now.
Business
Glencore offers to buy Teck’s coal business as takeover battle takes a turn
The announcement comes a week after Teck said multiple companies had sent in proposals to buy the miner’s steelmaking coal assets in British Columbia.
Glencore said its proposal to only acquire Teck’s coal assets does not mean it has dropped the idea to buy the Canadian miner in its entirety, something it has been attempting to do since April. Teck has rejected the Swiss miner twice so far.
If Glencore ends up buying Teck’s coal assets, it will eventually create a separate company that would include both Teck and Glencore’s thermal and steelmaking coal assets.
The takeover battle between the two companies started in February when Teck said it was going to split its company and create Teck Metals, a standalone company that would focus on copper and other minerals considered key for the energy transition away from fossil fuels, and Elk Valley Resources Ltd., which would focus on coal.
The company said the move was designed to unlock more value for shareholders by creating a company for investors who want a clean break from fossil fuels.
But Teck Metals would have depended on cash flow from the coal unit for at least three years following the separation, keeping the coal and metals business intertwined and seemingly going against the proposal’s main selling point to investors.
As it stands, Teck depends on steelmaking coal for about 60 per cent of its revenue, though it has been trying to rebalance its portfolio to produce more metals.
A month later, Glencore said it wanted to take over Teck and undergo its own separation. Glencore, which posted revenue of about US$250 billion last year compared to Teck’s US$13 billion, produces an array of commodities including, gold, copper, cobalt, zinc, nickel, oil and coal.
After merging with Teck, Glencore proposed creating two companies. One would control the combined metals portfolio, and could become the world’s third-largest copper producer. The other would become a publicly-traded company focused on coal.
Glencore’s plan differs from Teck’s in that the two new companies would not depend on the other for revenue.
Teck was forced to cancel that shareholder vote just hours before it was scheduled to take place since it didn’t expect the separation to be approved by two-thirds of its shareholders, the necessary threshold needed for the plan to go through.
The battle between the two companies has also dominated the political front with politicians urging the federal government to prevent such a deal from taking place in a bid to ensure that Teck’s copper continues to be owned by a Canadian company.
Copper is expected to play a key role in the shift away from fossil fuels given it is essential for most electricity-related infrastructure, including electric vehicles and wind turbines, and to transfer electricity. But analysts said that most big mining companies have limited growth opportunities for the red metal, which has set the tone for large-scale mergers.
Industry minister François-Philippe Champagne declined to comment on Glencore’s proposal at a press conference announcing Rio Tinto Ltd.’s $1.4 investment in an aluminum smelter in Quebec.
“I would say we are welcoming foreign investments … but in the specific case of Teck, we like them as a Canadian company,” he said.
In the past, the mayors of the towns of Sparwood and Elkford, B.C., which are near Teck’s steelmaking coal mines and supply most of Teck’s workers, have criticized the possible sale of Teck’s assets to Glencore in April.
Thermal coal is responsible for about 70 per cent of Glencore’s coal business. In the long run, Glencore hopes to run down its coal assets, but believes the commodity is still required as a transition fuel.
Bank of Nova Scotia analyst Orest Wowkodaw said it was unclear whether an offer for Teck’s coal segment represents a shift in Glencore’s strategy to try to acquire the whole company.
Liam Fitzpatrick, analyst at Deutsche Bank AG, said he views Glencore’s proposal to buy Teck’s steelmaking coal as an “attractive middle ground” between the two companies.
“It would provide Teck with a cleaner exit from coal and allow Glencore to split its own business,” he said in a note to clients.
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Human Resources Officers must be very busy these days what with the general turnover of employees in our retail and business sectors. It is hard enough to find skilled people let alone potential employees willing to be trained. Then after the training, a few weeks go by then they come to you and ask for a raise. You refuse as there simply is no excess money in the budget and away they fly to wherever they come from, trained but not willing to put in the time to achieve that wanted raise.
I have had potentials come in and we give them a test to see if they do indeed know how to weld, polish or work with wood. 2-10 we hire, and one of those is gone in a week or two. Ask that they want overtime, and their laughter leaving the building is loud and unsettling. Housing starts are doing well but way behind because those trades needed to finish a project simply don’t come to the site, with delay after delay. Some people’s attitudes are just too funny. A recent graduate from a Ivy League university came in for an interview. The position was mid-management potential, but when we told them a three month period was needed and then they would make the big bucks they disappeared as fast as they arrived.
Government agencies are really no help, sending us people unsuited or unwilling to carry out the jobs we offer. Handing money over to staffing firms whose referrals are weak and ineffectual. Perhaps with the Fall and Winter upon us, these folks will have to find work and stop playing on the golf course or cottaging away. Tried to hire new arrivals in Canada but it is truly difficult to find someone who has a real identity card and is approved to live and work here. Who do we hire? Several years ago my father’s firm was rocking and rolling with all sorts of work. It was a summer day when the immigration officers arrived and 30+ employees hit the bricks almost immediately. The investigation that followed had threats of fines thrown at us by the officials. Good thing we kept excellent records, photos and digital copies. We had to prove the illegal documents given to us were as good as the real McCoy.
Restauranteurs, builders, manufacturers, finishers, trades-based firms, and warehousing are all suspect in hiring illegals, yet that becomes secondary as Toronto increases its minimum wage again bringing our payroll up another $120,000. Survival in Canada’s financial and business sectors is questionable for many. Good luck Chuck!. at least your carbon tax refund check should be arriving soon.
Steven Kaszab
Bradford, Ontario
skaszab@yahoo.ca
NORMAN WELLS, N.W.T. – Imperial Oil says it will temporarily reduce its fuel prices in a Northwest Territories community that has seen costs skyrocket due to low water on the Mackenzie River forcing the cancellation of the summer barge resupply season.
Imperial says in a Facebook post it will cut the air transportation portion that’s included in its wholesale price in Norman Wells for diesel fuel, or heating oil, from $3.38 per litre to $1.69 per litre, starting Tuesday.
The air transportation increase, it further states, will be implemented over a longer period.
It says Imperial is closely monitoring how much fuel needs to be airlifted to the Norman Wells area to prevent runouts until the winter road season begins and supplies can be replenished.
Gasoline and heating fuel prices approached $5 a litre at the start of this month.
Norman Wells’ town council declared a local emergency on humanitarian grounds last week as some of its 700 residents said they were facing monthly fuel bills coming to more than $5,000.
“The wholesale price increase that Imperial has applied is strictly to cover the air transportation costs. There is no Imperial profit margin included on the wholesale price. Imperial does not set prices at the retail level,” Imperial’s statement on Monday said.
The statement further said Imperial is working closely with the Northwest Territories government on ways to help residents in the near term.
“Imperial Oil’s decision to lower the price of home heating fuel offers immediate relief to residents facing financial pressures. This step reflects a swift response by Imperial Oil to discussions with the GNWT and will help ease short-term financial burdens on residents,” Caroline Wawzonek, Deputy Premier and Minister of Finance and Infrastructure, said in a news release Monday.
Wawzonek also noted the Territories government has supported the community with implementation of a fund supporting businesses and communities impacted by barge cancellations. She said there have also been increases to the Senior Home Heating Subsidy in Norman Wells, and continued support for heating costs for eligible Income Assistance recipients.
Additionally, she said the government has donated $150,000 to the Norman Wells food bank.
In its declaration of a state of emergency, the town said the mayor and council recognized the recent hike in fuel prices has strained household budgets, raised transportation costs, and affected local businesses.
It added that for the next three months, water and sewer service fees will be waived for all residents and businesses.
This report by The Canadian Press was first published Oct. 21, 2024.
The Canadian Press. All rights reserved.
TORONTO – A new report says many Canadian business leaders are worried about economic uncertainties related to the looming U.S. election.
The survey by KPMG in Canada of 735 small- and medium-sized businesses says 87 per cent fear the Canadian economy could become “collateral damage” from American protectionist policies that lead to less favourable trade deals and increased tariffs
It says that due to those concerns, 85 per cent of business leaders in Canada polled are reviewing their business strategies to prepare for a change in leadership.
The concerns are primarily being felt by larger Canadian companies and sectors that are highly integrated with the U.S. economy, such as manufacturing, automotive, transportation and warehousing, energy and natural resources, as well as technology, media and telecommunications.
Shaira Nanji, a KPMG Law partner in its tax practice, says the prospect of further changes to economic and trade policies in the U.S. means some Canadian firms will need to look for ways to mitigate added costs and take advantage of potential trade relief provisions to remain competitive.
Both presidential candidates have campaigned on protectionist policies that could cause uncertainty for Canadian trade, and whoever takes the White House will be in charge during the review of the United States-Mexico-Canada Agreement in 2026.
This report by The Canadian Press was first published Oct. 22, 2024.
The Canadian Press. All rights reserved.
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