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The head of Teck Resources Ltd. said he would only accept an offer for the company’s coal steel business if he was sure Canadian regulators would approve the deal.
Jonathan Price, chief executive of Canada’s largest diversified mining company, made the comments Tuesday in an update on Teck’s ongoing efforts to separate its base metals business from its steelmaking coal production unit.
Price said the Vancouver-based company continues to compare offers from investors in its coal business in hopes of making a decision before the end of the year.
While expressing satisfaction with the external festival point generated through the process, Price said regulatory approval would be a factor.
“One focus will be the certainty of achieving separation, in addition to getting the required regulatory approval,” Price told analysts on a conference call to discuss the company’s third-quarter results.
“We want to take into account the certainty of execution and the risks associated with any transaction. . . And at the end of the day, we will do whatever is in the most productive interest of our shareholders, taking into account regulatory standards and approval requirements. “
Teck is bidding to spin off its coal assets in hopes of expanding its production of copper and zinc to meet growing demand for those metals, which are used in the production of electric cars and are seen as key resources for the future. .
But that plan was threatened earlier this year when Swiss commodity giant Glencore announced a $25 billion hostile takeover bid for Teck.
Teck’s board rejected Glencore’s initial offer, but Glencore scored its own victory when Teck canceled a shareholder vote on its plan to spin off its coal steel production business into a separate company. It had become apparent that Teck did not have the qualifications for his proposal. against which Glencore had lobbied.
Glencore has since made a new offer to Teck’s board, proposing to get the metal portion of the company’s business for an undisclosed amount of money and also said it remains willing to continue its bid for all of Teck.
A number of foreign companies are also said to be interested.
But Glencore’s initial lawsuit earlier this year has inflamed feelings of economic nationalism as B. C. He embarks on a movement toward economic nationalism. Prime Minister David Ethrough has spoken out against the proposed deal, and federal conservative leader Pierre Poilievre has suggested the government block any takeover of Teck through Glencore.
The federal government itself said at the time that it was closely monitoring the situation and that any takeover bid for Teck would be subject to a rigorous approval process.
There is precedent for federal government intervention in a foreign acquisition of a major Canadian mining company. In 2010, Prime Minister Stephen Harper’s Conservative government blocked the acquisition of Potash Corp. of Saskatchewan through global giant BHP, on the basis that the transaction would result in a “net benefit” in Canada.
Teck’s negotiations with investors are brewing just as the company celebrates the official opening of its QB2 copper mine in Chile. The project, which is expected to double Teck’s total copper production, is recently ramping up and is expected to be operating at full capacity. until the end of the year.
But on Tuesday, Teck raised the allocation’s charge estimates, saying that due to unforeseen structural issues, it now expects the QB2 allocation to charge between $8. 6 billion and $8. 8 billion, up from $8. 0 billion to $8. 2 billion in the previous forecast.
The update comes as Teck said it reported earnings attributable to shareholders of C$276 million, or 52 cents consistent with diluted stock, for the quarter ended Sept. 30, with a loss of C$195 million, or 37 cents consistent with stock, per year. earlier.
Revenue totaled C$3. 6 billion, up from C$4. 26 billion in the year-to-year quarter.
The drop came as Teck faced lower metallic coal and zinc costs, as well as lower sales volumes of metallic coal and Highland Valley Copper, partially offset by higher copper prices and a weaker Canadian dollar than last year.
On an adjusted basis, Teck said it earned 76 cents consistent with diluted percentage, down from adjusted earnings of C$1. 74 consistent with diluted percentage a year earlier.
In its forecast, Teck lowered its annual copper production forecast from 320,000 to 365,000 tonnes, from 330,000 to 375,000 tonnes this year, and its annual molybdenum production forecast from 3. 0 million to 3. 8 million pounds, from 4. 5 million to 6. 8 million pounds.
It said it expects coal production this year to be between 23. 0 million and 23. 5 million tonnes, down from the previous forecast of 24. 0 million to 26. 0 million tonnes.
Teck’s shares on the Toronto Stock Exchange closed down nearly nine percent at $48. 49.
This report by The Canadian Press was first published on October 24, 2023.
Companies in this story: (TSX:TECK. B)
Amanda Stephenson, The Canadian Press