Canadian authorities gave the go light to Glencore’s The ministry of industry said on Thursday that the steelmaking coal firm will be acquired by miner Teck Resources for $6.93 billion, subject to tough regulations meant to save jobs.
According to the government, in order to receive approval, Glencore committed to maintain Elk Valley Resources’ Canadian headquarters for at least 10 years, ensure that a majority of EVR directors are Canadians, and sustain considerable employment levels for at least five years.
According to Teck, it plans to repurchase Class B subordinate voting shares worth up to $2 billion (or C$2.75), reduce its debt by $2 billion, and use the money for copper growth in the near future.
The miner claims that July 11 is when the deal should close.
“Today I approved under strict conditions a much narrower transaction whereby Glencore will acquire Teck Resources metallurgical coal business,” said Francois-Philippe Champagne, the minister of industry.
He said that thorough net-benefit analyses will be required for any mergers or acquisitions involving critical resources companies in Canada.
“Henceforth, such transactions will only be found of net benefit in the most exceptional of circumstances,” said he.
Glencore CEO Gary Nagle said that the company has pledged to the Canadian government significant resources to ensure that the purchase would have long-term positive effects on both provinces.
The steelmaking coal facility owned by Teck Resources was purchased for $9 billion in November by a consortium headed by Glencore.
The Swiss mining company Glencore will acquire 77% of the company in a $6.9 billion cash deal, while Nippon Steel, which already owns 2.5%, will receive 20%.
Elk Valley Resources is a coal firm that makes steel, and POSCO will trade a share in two of Teck’s coal operations for three percent of that company.
