Top federal ministers say they're watching Teck-Glencore saga 'very closely'


‘We need companies like Teck here in Canada, companies with a strong commitment to Canada,’ ministers write in letter

Get the latest from Gabriel Friedman straight to your inbox

Article content

Three top federal cabinet ministers — Deputy Prime Minister Chrystia Freeland, Industry Minister François-Philippe Champagne and Natural Resources Minister Jonathan Wilkinson — said they are watching “closely” as Switzerland’s Glencore PLC attempts a takeover of Teck Resources Ltd., despite a flat rejection by the Vancouver-based company’s board of directors.

Advertisement 2

Story continues below

Article content

“We need companies like Teck here in Canada, companies with a strong commitment to Canada,” the ministers wrote in an April 24 letter to Bridgitte Anderson, chief executive of the Greater Vancouver Board of Trade, and obtained by the Financial Post.

Article content

Teck, the largest diversified miner in Canada, has refused two offers from Glencore, a dominant player in global commodities thanks to large mining and trading businesses, calling a deal with the Swiss giant a “non-starter.”

But Glencore continues to push, attracted by the prospect of adding Teck’s copper, zinc and metallurgical coal assets to its expansive portfolio. Chief executive Gary Nagle visited Toronto earlier this month to lobby investors to his side.

Advertisement 3

Story continues below

Article content

Champagne, as industry minister, would be the cabinet member responsible for reviewing foreign takeovers under the Investment Canada Act and deciding whether they advance the interests of the country.

The letter, dated April 24, marks Champagne’s most extensive comments on the subject to date. Although the letter did not signal that he would definitively block a Glencore transaction, the emphasis that companies’ ESG track record matters appears to echo part of the rationale put forward by Teck’s management for rejecting Glencore’s as a merger partner, citing its large thermal coal and oil trading businesses.

The minister’s missive came in reply to Anderson’s April 20 letter, also obtained by the Financial Post. Anderson urged “the federal government to take a proactive approach and scrutinize the (Glencore) proposed takeover bid closely.”

Article content

Advertisement 4

Story continues below

Article content

Anderson also wrote: “We are concerned that the potential acquisition of Teck Resources by Glencore could lead to the loss of a significant driver of Vancouver and Canada’s economy and deal a severe blow to local innovation and Canada’s drive towards net zero.” She described Teck as “integral to developing domestic and global value chains for the green and digital economies,” calling it a leader in “sustainability, ESG, and the energy transition as we collectively work to meet our emission reduction goals.”

We are concerned that the potential acquisition of Teck Resources by Glencore could lead to the loss of a significant driver of Vancouver and Canada’s economy

Bridgitte Anderson, chief executive, Greater Vancouver Board of Trade

None of the ministers provided comment, but a federal government official confirmed the authenticity of the correspondence.

On April 3, Glencore proposed a merger with Teck that would split the company’s combined assets on a 76-24 basis.

Advertisement 5

Story continues below

Article content

It came as Teck’s shareholders prepare to vote April 26 on whether to split off the company’s metallurgical coal — which is used to make steel — into a separate entity from its copper and other metal assets.

Copper is expected to see massive growth as the energy transition accelerates and Teck has said separating its copper assets from its coal assets would create value for shareholders.

Glencore produces about one per cent of the world’s thermal coal and said it expects to continue to produce coal until 2050. It also produces metallurgical coal and trades oil futures, but said it would split these assets into a separate company from its metals portfolio if it acquired Teck’s assets.

Teck’s management has said that it does not want to expose its shareholders to thermal coal production, which it said is incompatible with the energy transition.

Advertisement 6

Story continues below

Article content

That position is more in line with the federal government’s stance. At the 2017 United Nations Climate Change Conference, Canada helped found the Powering Past Coal Alliance dedicated to phasing out thermal coal.

Key shareholders, including Teck chairman emeritus Norman Keevil, whose family holding company controls the largest share of class A shares, which carry 100 votes apiece, have come out in support of that plan and against Glencore’s merger proposal.

The Teck exhibit during PDAC in March.
The Teck exhibit during PDAC in March. Photo by Christopher Katsarov Luna/Bloomberg

But two-thirds of both class A and class B shareholders must approve the plan, and Glencore’s chief executive Gary Nagle is aggressively courting class B shareholders, hence his trip to Toronto earlier this month.

In an open letter last week, Nagle threatened to take a new merger proposal directly to Teck’s class B shareholders and urged them to reject Teck’s separation plan.

Advertisement 7

Story continues below

Article content

As that matter intensified in the days before Teck shareholders vote, with both Teck and Glencore continuing to talk with Teck’s class B shareholders, a broader debate has emerged about Teck’s role in the economy.

Sean Boyd, executive chairman of Toronto-based Agnico Eagle Mines Ltd., said in an interview last week that if Glencore were successful in persuading Teck to accept a merger offer, the federal government may still review the transaction — a process that could take months or years.

“No one’s really talking about this, but at some point, a transaction of this size, the Canadian government gets involved with foreign ownership,” said Boyd. “That’s going to take some considered thought from the government’s perspective and that’s going to take some time. So this is a thing that will play out over time.”

Advertisement 8

Story continues below

Article content

Of course, the ministers’ letter to Anderson acknowledged that “Canada welcomes and depends on international trade and investment,” and that the mining sector has several large multinational companies.

But they framed Teck’s assets as being of “central importance to our country” as the energy transition unfolds, noting that a shifting geopolitical landscape has accentuated the importance of Teck in Canada.

“The mining of critical minerals is key to the future and only companies that make serious commitments to ESG (environment, social licence and governance) and strong partnerships with Indigenous Peoples will succeed,” the ministers wrote.

  1. Teck signage at the Prospectors & Developers Association of Canada conference in Toronto, in March 2023.

    Teck-Glencore saga has mining execs bemoaning foreign takeovers

  2. B.C. Premier David Eby.

    B.C. premier David Eby concerned about Glencore’s bid for Teck

  3. A Teck Resources copper mine in British Columbia.

    Teck versus Glencore: What you need to know

They closed the letter by noting that “the federal government is following this very closely.”

• Email: | Twitter:


Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Join the Conversation

Leave A Reply

Your email address will not be published.