Teck Resources’ CEO says a merged company with Anglo American will make copper a strategic focus and invest $4.5 billion in Canada’s critical minerals sector over five years.
Vancouver-based Teck Resources Ltd. announced a takeover by London based Anglo American PLC. to create a corporation worth about $70 billion.
“We’ve been working on simplifying our portfolio for a number of years,” Jonathan Price told BNN Bloomberg in a Wednesday interview. “We’ve exited a number of businesses to ensure that we are almost entirely focused on copper, because we see this as a key strategic metal for the future and great fundamentals ahead of us here.”
The deal would see company headquarters, of what would be known as Anglo Teck, move to British Columbia, as proponents look to sell Canada on the benefits of the deal that will likely attract regulatory scrutiny. Price calls the move a “perpetual commitment”.
“The opportunity here with Anglo American to create Anglo Teck is a profound one in that it will create a scaled and high-quality platform comprising six world class copper assets with incredible synergies associated with the combination of the two companies,” he said.
An investment of $2.4 billion will be designated to extend the life of Teck’s Highland Valley Copper mine just south of Kamloops, from 2028 to 2046.
Demand for copper, which is the largest revenue and profit contributor for both companies, is forecast to rise sharply amid an electric-vehicle boom and artificial intelligence (AI)-powered data centres.
The move comes as Teck conducts a comprehensive review of it’s Quebrada Blanca mine in Chile in an effort to improve performance at the troubled operation. The miner has had problems ramping up production at its expansion project.
“We’re fully confident that we’ll overcome those challenges, and we believe that this will continue to be viewed as a world class asset, and that the intrinsic value of that asset is not in any way diminished,” said Price. “We very much look forward to working through that.”
Price said he will serve as deputy CEO of the joint venture focused on integration. He said there are significant synergies between the two companies, projecting $800 million in corporate savings and $1.4 billion in annual earnings before interest, taxes, depreciation, and amortization (EBITDA) uplift.
“There is material upside to be had here, and that’s before looking at the company that we will be creating here,” said Price. “We’ll be creating the fifth largest copper producer in the world, but one that comprises of entirely a very high quality, large, long-life assets in very good jurisdictions throughout the Americas. I expect this to be a must own mining company for investors.”
The deal, subject to approval by multiple countries including Canada, is structured as a merger of equals, with no premium for Teck shareholders. Price said they are focused on moving forward with the transaction taking it to a vote to shareholders later this year.
With files from Reuters and The Canadian Press
