Glencore’s purchase of Elk Valley Resources Review

Glencore’s purchase of Elk Valley Resources (EVR) from Teck Resources Limited is subject to mandatory regulatory approvals, being Investment Canada Act and competition approvals, however is expected to close in Q3 2024.

Glencore entered into a binding agreement with Teck, for the acquisition of a 77% effective interest in the entirety of Teck’s EVR, for US$6.93 bn in cash, on a cash free debt free basis, subject to a normalised level of working capital.

The remaining 23% is owned by Nippon Steel Corporation (NSC) who has acquired a 20% interest and POSCO has a for a 3% interest in EVR. This preliminary deal closed in January, 2024 – read the details here.

On close EVR will own 100% interests in the entities holding the Elkview, Fording River, Greenhills and Line Creek mines in Southeast British Columbia, and 46% of Neptune Terminals in North Vancouver.

Commenting on the transaction, Gary Nagle, CEO of Glencore, said:

“We are pleased to have reached agreement to acquire Teck’s steelmaking coal operations in the Elk Valley. These world-class assets and the experienced people that operate them are expected to meaningfully complement our existing thermal and steelmaking coal production located in Australia, Colombia and South Africa.

“Glencore has high regard for the business that has been developed over many decades in British Columbia and looks forward to maintaining and enhancing its operational performance, environmental stewardship and social contribution.

“We are dedicated to working with all governing bodies and stakeholders to ensure that the transaction is of benefit to Canada, which includes a commitment from Glencore regarding employment, engaging in further reclamation efforts and to engage constructively and meaningfully with the Indigenous Nations in the Elk Valley.

“This transaction also deepens our longstanding commitment to Canada, supporting our position as one of the largest diversified miners and suppliers of critical minerals in Canada, in one of the world’s leading mining jurisdictions.

We have a longstanding relationship with NSC and POSCO and we look forward to working closely with them as our future partners in EVR.”

Glencore has a history and track record of acquiring, developing, operating and rehabilitating coal mines, for the benefit of stakeholders, including employees, local communities, and host governments.

Glencore’s Canadian assets form a significant part of their global business with c. 9,000 people in Canada including contractors and have a history that dates back more than 100 years. Glencore is one of the largest diversified miners and suppliers of critical minerals in Canada. Their current operations span seven industrial assets producing and recycling mainly nickel, copper, zinc and cobalt.

Glencore has a track record of investment in the country and states that they are committed to building on EVR’s continuing success as a world-class Canadian steelmaking coal producer with a focus on social and environmental responsibility. In their commitment to Canada, under the terms of the agreement with Teck, Glencore has offered to enter into commitments with the Canadian government under the Investment Canada Act that will ensure, among other things, that:

• EVR will continue to operate in Canada through both a Vancouver head office and regional offices in Calgary, Alberta, and Sparwood, British Columbia, including completing the construction of a new Sparwood office.
• EVR will maintain significant employment levels in Canada with no net reduction in the number of employees in the business in Canada as a result of the transaction.
• EVR will increase capital expenditures in Canada such that they will amount to over C$2 billion (excluding deferred stripping) over three years.
• EVR will increase research and development activities in Canada to at least C$150 million over three years, including on innovation in relation to water quality treatment technologies – a 50% increase over current levels.
• EVR will increase its contributions to Canadian sponsorship, community and charitable programs.
• EVR will participate as a major funding partner with up to C$15 million for the proposed renal/oncology addition to the East Kootenay Regional Hospital in Cranbrook.
• EVR will have a goal to become a nature positive business by conserving or rehabilitating at least three hectares for every one hectare affected by its mining activities going forward.
• EVR will develop and implement a climate transition strategy which will include medium term scope 1 and 2 emissions reduction targets, a long-term goal of net zero in respect of scope 1 and 2 emissions by 2050 as well as a commitment to work with partners towards an ambition to achieve net-zero Scope 3 emissions by 2050.
• EVR will honour the existing agreements between EVR and Indigenous Nations and will work with local Indigenous Nations to identify opportunities to increase participation in benefits from the activities of EVR.

The above comments and Benefits to Canada are directly from Glencore’s website.