Glencore In Talks to Buy Teck Resources’ Coal Business
Glencore In Talks to Buy Teck Resources’ Coal Business | OilPrice.com
Glencore In Talks to Buy Teck Resources’ Coal Business
The EU is preparing to…
The news of a major…
Glencore is in advanced talks to acquire the coal operations of Teck Resources, the Wall Street Journal reported, citing unnamed sources close to the talks.
A deal could be announced by the end of the week. The business could be valued at $10 billion, the report said.
Earlier this year, Glencore offered to acquire the whole company but Teck shareholders rebuffed the offer that valued the company at $22.5 billion. Per the proposal, the merged entity would be split into two, one focusing on coal and the other on metals.
Instead, the Canadian miner opted to restructure its business, separating its copper and zinc operations from its coal operations.
A few hours after the Wall Street Journal, the Globe and Mail reported that the deal being discussed also involved Nippon Steel and South Korea’s POSCO. Per that report, which also cited unnamed sources, the three would buy the majority of Teck’s coal business, paying a combined $8.9 billion.
Of this total, Glencore would pay $6.9 billion and receive in exchange a 77% stake in the coal business. Japan’s Nippon Steel, for its part, would swap its current stake in a Teck coal project for a 20% stake in the coal operations, paying an additional $1.7 billion. POSCO would also swap its stakes in two Teck coal projects for a 3% stake in the coal business of the company.
The development suggests that despite the massive pressure on companies operating in the coal space, interest in the commodity remains, as does demand. The deal negotiations come ahead of COP28, where coal will be discussed at length, judging by a recent intensification of calls to phase out the most polluting hydrocarbon.
As a result of that growing pressure, most commodity traders have shrunk their coal operations but Glencore has bucked that trend. The Swiss major has remained active in coal although it has announced plans to wind down that business by 2050 in case its shareholders want that.
ADVERTISEMENT
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Join the discussion| Back to homepage
ADVERTISEMENT
Related Knowledge Center: ENERGY BASICS: coal
The use of coal, a staple of heating and electricity-generation for decades, is in decline in the United States — supplanted by newly abundant production of natural gas — but is still dominant in some parts of the world. While economical, coal use is particularly problematic as international attention focuses increasingly on climate change.