A proposed amendment to the Investment Canada Act could complicate Glencore PLC’s GLNCY takeover ambitions around Canadian miner Teck Resources Ltd. TECK-A-T
Last fall, federal Industry Minister François-Philippe Champagne announced a series of changes to the Investment Canada Act that aim to toughen oversight over proposed acquisitions of domestic companies by foreigners. The changes include requiring acquirers to give Ottawa early notification of their intent to buy Canadian companies, extending the time period for national security reviews, and increasing financial penalties for those who don’t comply with the rules.
Bill C-34, which would enact these changes, has been making its way through committee hearings this year, and must be passed by the House of Commons and the Senate before becoming law.
While changes proposed by Mr. Champagne would already add hurdles for foreigners intent on buying Canadian companies, an amendment to the bill proposed by Conservative MP Rick Perkins could make life even harder for Glencore in its pursuit of Teck.
His amendment would mean that an acquirer of a Canadian company that has been convicted of bribery or corruption must be subject to a “Section 25.2″ security review by the federal government. Glencore has a significant track record of bribery and corruption offences internationally.
Currently all proposed acquisitions of Canadian firms by foreign firms are subject to an initial security screening, but a Section 25.2 review goes much deeper. It signifies that Ottawa believes the acquisition could be injurious to Canada’s national security. Section 25.2 reviews typically take a long time to conduct, often stretching to a year or more, compared to screenings, which in the past have taken as little as 45 days.
Glencore, alongside several other suitors, has submitted a bid for Teck’s coal business. Teck put its coal business out for tender after an attempt to spin off the division failed this year because of insufficient shareholder support.
Glencore last week reaffirmed its interest in Teck, saying it has set aside billions of dollars in capital to be put toward a potential transaction.
While Glencore is focused on acquiring Teck’s coal business, it is still open to buying all of Teck, which would include its significant portfolio of critical minerals mines. It maintains this interest even after Teck’s board rejected Glencore’s US$23.1-billion proposal.
Mr. Perkins, who alongside Conservative Leader Pierre Poilievre voiced his opposition to Glencore buying Teck, said he proposed the amendment to Bill C-34 in large part because of the Swiss company’s pursuit of Teck.
“Delving into the Glencore [pursuit of] Teck Resources, and Glencore’s history around the world, prompted me to think of this,” Mr. Perkins said in an interview.
Last year alone, Glencore paid more than US$1-billion in fines to settle bribery and market manipulation cases with U.S., British and Brazilian regulators.
After admitting to five counts of bribery and two counts of failure to prevent bribery, Glencore chair Kalidas Madhavpeddi in a statement characterized the company’s conduct as “inexcusable.” But he also signalled that Glencore has made big changes to its practices, saying it is committed to “operating transparently under a well-defined set of values, with openness and integrity at the forefront,” and that it had implemented a world-class ethics and compliance program.
Even if the amendment proposed by Mr. Perkins doesn’t end up being made law, there is good reason to believe that any takeover agreement Glencore may finalize with Teck would garner far more than a cursory security screening by Ottawa.
Several federal ministers have already expressed reservations about Glencore buying Teck, including Mr. Champagne, Natural Resources Minister Jonathan Wilkinson and Deputy Prime Minister Chrystia Freeland.
In addition to an amendment that targets Glencore, Mr. Perkins proposed another amendment that takes aim at Chinese state-owned enterprises with designs on Canadian companies. Any enterprise that doesn’t have a trade agreement with Canada would be subject to a net-benefit review under his amendment, regardless of the size of the acquisition. Under the current rules, acquisitions under a $512-million threshold are exempt.
“I got the government to agree to put that threshold to zero dollars,” said Mr. Perkins.
Last year, the Liberal government faced intense criticism for allowing the sale of Neo Lithium Corp., a Canadian critical minerals company, to a Chinese state-owned firm with only a cursory national security screening.
China dominates the supply chain of many critical minerals, including lithium, cobalt and graphite. In recent years, relations between the West and China have deteriorated and countries such as Canada and the United States have attempted to firm up domestic supply chains of critical minerals in order to wean themselves off their dependence on China.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
