Glencore is obsessed with Teck

Like us hanging up on a seemingly endless stream of telemarketers, Canada’s largest diversified miner is repeatedly turning down an offer it has zero interest in.  

Driving the news: Vancouver-based miner Teck Resources has, for a second time now, rejected an unsolicited US$23.2 billion takeover offer from Swiss mining giant Glencore. 

Catch-up: Glencore first tried to acquire Teck earlier this month in a deal that Teck’s CEO called “value destructive,” “fundamentally flawed,” and “a non-starter,” among other things.

  • The main concern was that the deal would combine the companies’ coal businesses, even though Teck deals in steelmaking coal and Glencore deals in coal for energy. 
  • Teck was worried that, given the global green energy push and how decidedly not green coal heating is, this would expose shareholders to substantial material risk. 

Glencore tried to sweeten the pot with its next deal, giving shareholders a choice to trade shares of the coal biz for cash (collectively worth up to US$8.2 billion), but Teck’s board still balked, choosing to stick with its original plan of splitting up its metal and coal businesses. 

Why it matters: Glencore’s pursuit of Teck isn’t about coal, though, it’s about copper. The world is in short supply of the metal, which is already used in countless electronics and only growing more in demand thanks to its vital role in technology for the green energy transition.

  • Last month, the largest private metals trader projected copper prices to reach all-time highs this year due to perilously low reserves and increased demand from China.

Teck is on track to double its copper output in the near future thanks to a new mining project in Chile. Given current market conditions, that makes it a very desirable asset for Glencore. 

Zoom out: Even if Glencore fails to acquire Teck, mining exec Candace MacGibbon warned in The Globe and Mail that “[this] may mark the beginning of a new period of consolidation within the Canadian mining industry, with more foreign takeover attempts to come.”–QH