Teck Resources' Highland Valley Copper Mine near Logan Lake, B.C., on Sept. 11.DARRYL DYCK/The Canadian Press
Industry Minister Mélanie Joly says that promises made by Anglo American PLC NGLOY as part of its attempt to buy Teck Resources Ltd. TECK-B-T don’t go far enough.
London-based Anglo has made a slew of commitments to win approval from Ottawa for the US$20-billion deal, including moving its global headquarters to Canada and changing its name to Anglo Teck.
The deal can’t proceed unless Ms. Joly deems it to be of net economic benefit to Canada and determines that there are no national security concerns.
Speaking to reporters on Tuesday in Ottawa, Ms. Joly said Anglo must go further to prove the deal is of benefit to Canada.
Industry Minister Mélanie Joly at a Hamilton steel plant in June. Ms. Joly must approve the mining deal between Anglo American and Teck, and she says she will talk to both CEOs in the coming days.Carlos Osorio/Reuters
“I think right now that it’s not enough, and also we need to think about longer term, and how can we make sure that ultimately we create jobs, but we have a strong headquarters, not only now, but also for the next decades,” she said.
“We need to have further conversations with the companies.”
Ms. Joly said that she will be meeting with the CEOs of both Anglo and Teck next week.
Discussions have already taken place between the government and the companies about the deal.
The Globe and Mail on Monday reported that Prime Minister Mark Carney has been directly involved and told Anglo that deal approval would not be possible unless it committed to moving its headquarters to Canada.
Mr. Carney also made it clear that any other potential bidders for Teck would also have to commit to moving to Canada, a stipulation that dampens the prospect for a bidding war for the Canadian miner.
Anglo must curry favour with Ottawa in the face of an extremely high bar set by the government for allowing takeovers in the critical minerals sector.
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Last year, after Ottawa approved Glencore PLC’s acquisition of a majority stake in Teck’s coal business, then-industry minister François-Philippe Champagne said Canada would approve foreign acquisitions of big Canadian critical minerals companies only “in the most exceptional of circumstances.”
Ottawa changed the rules at a time when Canada was slipping behind its global rivals in the production of critical minerals such as copper, lithium, and cobalt.
After Teck sold its coal business it had ambitions to be a global player in copper, one of several critical minerals used in low-carbon energy. But its plans have been derailed by massive cost overruns and engineering problems at its biggest copper mine in Chile.
Anglo is making its play for Teck during a time when the Canadian miner’s stock was badly beaten-up owing to challenges at the mine.
Among Anglo’s other commitments to try to get the deal approved is a promise to relocate many of its high-ranking personnel to Canada. Its chief executive officer, deputy CEO, chief financial officer and “a significant majority” of the executive management team would be based in Canada, the company said. In addition, “a substantial proportion” of the board would be Canadian.
In what's shaping up to be the world's biggest mining deal of the past decade, Vancouver-based Teck Resources Ltd. and London-headquartered Anglo American PLC have agreed to join together, creating a copper-focused giant worth about $70-billion.
The Canadian Press
Anglo also said it plans to invest at least $4.5-billion over five years in Canada on projects including extending the life of the Highland Valley mine in British Columbia, and improving critical-minerals processing capacity at the Trail plant in B.C. Many of Anglo’s investment commitments had already been announced by Teck before the deal was announced.
Teck is one of the last remaining big critical minerals companies left in Canada. Over the decades, many former Canadian mining champions, including Alcan Inc., Falconbridge Ltd., and Inco Ltd. have been sold to foreign mining companies.
Bay street veteran Tom Caldwell, chairman of Caldwell Securities Ltd., said that losing Teck would be painful for the already hollowed-out Canadian mining sector, and the framing of the deal by the companies as a “merger of equals” is a fallacy.
“Mergers do not exist. There’s only takeovers,” he said.
“I’ve been through kazillions of them in my career, and there’s always a dominant player. And we know who that is.”
If the deal with Anglo closes, Teck shareholders will own 37.6 per cent of Anglo Teck, while Anglo shareholders will own 62.4 per cent.
Anglo Teck will remain domiciled in Britain and the primary stock listing will be the London Stock Exchange.