Swiss commodities giant Glencore has received the green light from Canada for the acquisition of Teck Resources’ coal assets, allowing it to finalize the transaction.
Transaction Closure Expected Soon
The Canadian approval was “the last regulatory authorization” needed to close the deal, which is expected to be finalized on “July 11th,” the Swiss commodities trading giant said in a statement.
Previous Attempts and Agreement
Glencore had engaged in a fierce battle last year to acquire the metallurgical coal assets of Canadian group Teck Resources through a complex and controversial offer that caused a stir among both shareholders and politicians in Canada.
After two rejections and eight months of struggle, Teck Resources finally agreed to sell Glencore a 77% stake in its metallurgical coal subsidiary, called Elk Valley Resources (EVR), for $6.93 billion (6.4 billion euros at current rates) in cash.
Japanese and South Korean Participation
Japanese steel producer Nippon Steel Corporation is set to acquire a 20% stake, while South Korean steel company Posco is to obtain a 3% stake in EVR, according to the terms of the agreement.
In the statement, Glencore specifies that a consultation process will be launched with its shareholders regarding a spin-off of the coal activities. With this acquisition, Glencore had said it wanted to combine its own coal activities with those of EVR and then potentially separate them from the rest of the group.
Coal: A Controversial Asset
Coal is an activity that has drawn strong criticism towards Glencore, including from shareholders. They argue that some investors cannot hold shares in the group, active in copper, nickel, and cobalt, due to its presence in coal.
Unlike several competitors who are divesting from coal, Glencore continues to defend this raw material, stating its intention to manage its mines responsibly until they are depleted.
Norwegian Sovereign Wealth Fund’s Exclusion
Since 2020, the Norwegian sovereign wealth fund, the world’s largest investor, has placed Glencore on its exclusion list due to its involvement in coal.