On Tuesday, the firms announced that Glencore (GLEN.L) had agreed to purchase a 77% share in Teck Resources’ (TECKb.TO) steelmaking coal business in Canada for $6.93 billion in cash. This move cleared the path for the commodity giant to spin off its coal division.
Additionally, Teck is selling 20% of the company to Nippon Steel Corporation (5401.T), a Japanese company with a 2.5% share.
POSCO of South Korea will exchange a share in two of Teck’s coal operations for a 3% investment in Elk Valley Resources, a coal-making company (EVR).
The deal is anticipated to be finalized in 2024’s third quarter. After Glencore’s abortive attempt to purchase the entire firm in April, Teck Resources was forced to revise a proposal to separate coal from its copper and zinc subsidiary that did not receive enough approval from shareholders.
“This is a very different transaction. We’ve spent the months between then and now engaging with a whole range of counterparties, and it’s important that we take that time to deliver the best outcome,” Jonathan Price, the chief executive officer of Teck, told Reuters on
Within 24 months of the deal’s completion, Glencore, a mining and trading company, announced that it would demerge the coal businesses of both firms. Thermal coal creates power, whereas lesser amounts of coking coal are used to make steel.
According to Glencore CEO Gary Nagle, the combined coal business would eventually be listed in New York, with secondary listings in Toronto and Johannesburg. They indicated that the head office of the coal company for steelmaking will be in Vancouver.
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