Teck CEO confident biggest B shareholder China Investment Corp. will support split, not side with Glencore

Teck Resources Ltd.TECK-B-T chief executive officer Jonathan Price expressed confidence its biggest B-shareholder, China Investment Corp. (CIC), will vote for the Canadian miner’s proposed split and not back Glencore’s GLNCY hostile takeover proposal, as he battles to correct misinformation that has seeped into the market.

Mr. Price disputed a Bloomberg news article on Friday that cited unnamed sources who claimed CIC was leaning toward voting down Teck’s split. The article, which did not carry a byline, also claimed that Glencore executives had already spoken with CIC executives about the matter.

“I spoke with CIC last night, and they’ve confirmed to me that they have not met with Glencore, and that the media reports are false,” Mr. Price said in an interview with The Globe and Mail.

Glencore declined to comment on whether it had met with CIC.

CIC did not respond to a request for comment.

So far, few B shareholders with significant stakes in Teck have made their positions clear on which way they will vote. British-based Egerton Capital last week told The Globe that it is intending to vote for Teck’s planned split. Egerton is the fifth-biggest B shareholder, holding approximately 11.4 million shares. Teck’s B shares carry a single vote, while the A shares controlled by the Keevil family carry 100 votes apiece.

Teck’s A and B shareholders will meet on April 26 to decide on whether to proceed with Teck’s planned split, which would separate the company into Teck Metals, which would hold its critical minerals mines, and Elk Valley Resources, which would hold its metallurgical coal assets.

At least two-thirds of votes cast in both classes of shares must be in favour for the split to go forward.

While Mr. Price said it would not be appropriate to speculate on what CIC will ultimately decide, he is optimistic that it will vote for Teck’s proposed split. CIC must first take the matter to its internal investment committee, after which it will decide.

“CIC has been a long-term shareholder of Teck. They’ve been with us since 2009. It’s a very open, collaborative relationship, and we look forward to continuing to work with them going forward,” Mr. Price said.

CIC first invested in Teck during the depths of the great financial crisis, paying $1.7-billion for a 17.5-per-cent equity stake. Teck was forced to raise cash from CIC, and in turn significantly dilute its investor base because it was having trouble meeting debt payments incurred owing to its top-of-the-market acquisition of Fording Canadian Coal Trust. Over the years, CIC has sold down a significant part of its holdings in Teck, and now holds 10.3 per cent. According to Refinitiv, the next-biggest B shareholder is United States fund manager Dodge and Cox, which holds a 5.3-per-cent stake.

Glencore is hoping that Teck shareholders will vote against the split as a sign that they are instead in favour of being acquired by the giant Swiss miner.

Glencore earlier this month offered US$23.1-billion to buy Teck, which amounted to a 22-per-cent premium to the Canadian miner’s market value. In rejecting the proposal, Teck has said any deal with Glencore would destroy shareholder value, expose the company to significant execution risk, and harm its environmental, social and corporate governance reputation.

If Glencore ends up acquiring Teck, it plans to split it in two, creating a giant coal company holding its thermal coal as well as Teck’s metallurgical coal assets, and another company housing the metals mines of both companies, along with Glencore’s energy trading assets.

Teck’s controlling A shareholder, Norman B. Keevil, who is staunchly against the Glencore approach, has called it the wrong deal, at the wrong time. Post-split, Teck Metals is expected to attract a lot more mergers-and-acquisitions interest from major mining companies because of its growing copper portfolio. Glencore is seen as one of the few suitors that would be interested in buying Teck currently, because of Teck’s heavy coal exposure.

“There are numerous mining industry parties who have their eyes on Teck and would be interested in partnering or investing in Teck Metals after it separates its base metals and steelmaking coal businesses,” Mr. Keevil said in a statement. “I would support a transaction, whether it be an operating partnership, merger, acquisition or sale – with the right partner.”

The Globe reported on Sunday that Teck has already been approached by more than half a dozen major miners, including Vale Ltd., Anglo American PLC and Freeport-McMoRan Inc., all of whom are interested in transactions with Teck Metals post-split.

“Given Teck’s wealth of expertise and its exposure to world-scale projects, I have no doubt all of us in the industry would be interested in partnering with them on growing Teck Metals post-spin-out, whether it be an operating partnership, merger, acquisition, or sale,” Robert Friedland, founder and executive co-chairman of Vancouver-based Ivanhoe Mines Ltd., said in a Twitter thread on Monday.

Ivanhoe operates the massive Kamoa-Kakula copper mine in the Democratic Republic of the Congo.

Mr. Keevil made it clear in an interview on Friday with The Globe that while his personal preference would be to see Teck remain in Canadian hands post-split, he would not block such a deal if the board, management and the majority of B shareholders are in favour, saying he will not swim against the tide.

Michael Goehring, CEO of the Mining Association of British Columbia, said in a statement on Monday that he hopes Teck will remain Canadian-owned, and came out firmly against a takeover of the company by Glencore, or any other foreign mining giant.

“The potential loss of BC’s long-standing mining champion and head office jobs in Vancouver is not in the best interests of British Columbians. We should be growing more local head office jobs in Vancouver, anchored by companies like Teck Resources, rather than see them go elsewhere,” he said.

“The company is vital to a variety of stakeholders, including thousands of workers, service and supply firms throughout the province, as well as Indigenous people and local communities.”

Teck’s history goes back to 1913, when Hughes Gold Mines Ltd. started up a gold mine in Teck Township on the shores of Kirkland Lake, Ont. The Keevil family have been in control of Teck since the late 1950s. Since that time, Teck has grown from a $25-million company to one worth more than $31-billion.

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