An aerial view of Teck Resources' Highland Valley Copper Mine in British Columbia.
(Credit: THE CANADIAN PRESS/Darryl Dyck)
The Canadian government has approved Vancouver-based Teck Resources Ltd.’s merger with Anglo American PLC, which will create a major copper producer with operations centred in the Americas.
The new company, to be called Anglo Teck, will keep its primary listing in London rather than in Canada — it will keep a listing on the Toronto Stock Exchange — but its headquarters will be in Vancouver; a compromise that helped the two companies win approval for their merger under the Investment Canada Act.
The deal involving Canada’s largest miner of copper, a key metal for electrification, has been closely watched by investors because the federal government has promised to raise a high bar before approving any foreign takeovers or mergers of critical minerals companies.
In recent years, many Canadian mining executives have complained that foreign takeovers of domestic companies mean that many of the country’s largest mines are controlled by executives in other countries and have few connections to Canada.
Industry Minister Mélanie Joly called the Anglo American-Teck deal “a merger of equals” and a “significant victory” for Canadians.
“It is an unequivocal endorsement of the federal government’s efforts to build the strongest economy in the G7,” she said in a statement on Tuesday.
Joly also said the companies made a series of legally binding commitments, such as maintaining Teck’s current employment levels within Canada, amounting to about 4,000 jobs; making sure 66 per cent of the senior executives must primarily reside in Canada and pay taxes there; and having 50 per cent Canadian representation on the board for seven years and 33 per cent thereafter.
She said that will keep management oversight and decision-making in Canada “in perpetuity regardless of any future transactions.”
The companies also committed to invest $4.5 billion in Canada over the next five years and $10 billion over the next 15 years. The new entity will also proceed with an extension of the Highland Valley Copper Mine in British Columbia and make enhancements to its smelter in Trail, B.C.
The Canadian government’s approval under the Investment Canada Act came about one week after shareholders of both companies voted overwhelmingly in favour of the deal. A number of trade organizations, including the Greater Vancouver Board of Trade, British Columbia Chamber of Commerce and Mining Association of British Columbia, have strongly supported it.
The merged company also will have assets in Chile, Peru, Brazil, South Africa, Australia and other countries.
The deal still needs to gain additional regulatory approvals, including in other counties, which could take months.
Under the proposed new company, Teck chief executive Jonathan Price will become deputy CEO, while Anglo chief executive Duncan Wanblad will retain his title.
From the beginning, the companies said the deal would create strong synergies because both control stakes in major copper mines adjacent to one another in Chile and could share certain assets. By putting them together, the companies could produce an additional 175,000 tonnes of copper per year and increase their annual earnings before interest, taxes, depreciation and amortization by $1.4 billion.
The companies said they also expect an additional $800 million in recurring synergies.
Wanblad has said the new company will maintain ties to both Canada and South Africa, where Anglo American was founded.
“We are all committed to preserving and building on the proud heritage of both companies, in Canada, as home to Anglo Teck’s global headquarters, in South Africa, where our commitment to investment and national priorities endures, and across our entire global operational and commercial footprint,” he said in a statement.
• Email: gfriedman@postmedia.com
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