Teck Completes Minority Interest Sale
- Jan
- 03
Teck Resources Limited today announced the closing of the sale of a minority interest in its steelmaking coal business, Elk Valley Resources (“EVR”), to Nippon Steel Corporation (“NSC”) and POSCO.
NSC has acquired a 20% interest in EVR in exchange for its prior 2.5% interest in Elkview Operations plus US$1.3 billion in cash paid at closing to Teck and US$0.4 billion paid subsequently to Teck out of cash flows from EVR. POSCO has exchanged its 2.5% interest in Elkview Operations and its 20% interest in the Greenhills joint venture, for a 3% interest in EVR.
Nippon Steel Corporation is Japan’s largest steelmaker, headquartered in Chiyoda-ku, Tokyo. The company has four business segments, including steelmaking, engineering, chemicals, and system solutions. It is the largest producer of crude steel in Japan and the third largest in the world.
POSCO is a South Korean steel-making company headquartered in Pohang, South Korea. It had an output of 42,000,000 metric tons of crude steel in 2015, making it the world’s sixth-largest steelmaker by this measure. In 2010, it was the world’s largest steel manufacturing company by market value.
Closing of the sale of the remaining interest (77%) in EVR to Glencore PLC is expected to occur in the third quarter of 2024, subject to the satisfaction of customary conditions, including receipt of approvals under the Investment Canada Act and competition approvals in several jurisdictions. Glencore is one of the world’s largest globally diversified natural resource companies.
Elk Valley Resources Sale Overview:
• Sale of majority stake to Glencore at implied enterprise value of US$9.0 billion on a 100% basis
• Proceeds will be used to strengthen Teck’s balance sheet, return cash to shareholders and ensure Teck is well positioned to realize value from its copper growth portfolio
• Teck to retain all steelmaking coal cash flows until expected closing in third quarter of 2024
• Glencore to establish Canadian head office for the steelmaking coal business in Vancouver, maintain jobs and increase investment in the business and local communities