Glencore has offered to buy Teck Resources’ steelmaking coal business as a standalone unit, after the Canadian miner twice rebuffed its $22.5 billIon (R419bn) offer to combine the two companies.
Teck Resources said on June 6 that it had received several proposals for its coal business, as it reworks a plan to split it from its copper and zinc unit that failed to secure enough shareholder support in late April.
On Monday, Teck confirmed it was engaging with Glencore on its coal proposal.
Glencore, which mines and trades thermal coal, the fossil fuel used to produce electricity, as well as smaller amounts of coking coal to make steel, said it would demerge the coal units of both companies.
“If Teck is unwilling to consider a sale of Teck Metals at this juncture, an attractive ‘middle ground’ could be the sale of the coking coal assets to Glencore,” Deutsche Bank analysts said in a note.
“It would provide Teck with a cleaner exit from coal and allow Glencore to split its own business into CoalCo and MetalsCo.”
In May, Glencore CEO Gary Nagle said that buying Teck’s coal business as a standalone unit was a “distant second” for the Swiss mining company as it pursued its merger plans.
Teck’s steelmaking coal mines are among few left in the world, making them attractive to Glencore, as global efforts to phase out coal-fired power generation gather momentum.
Other parties are interested, including Canadian mining entrepreneur Pierre Lassonde and Japanese steel maker Nippon Steel Corporation.
As part of its original proposal, Glencore offered up to $8.2bn in cash to Teck shareholders who might not want exposure to thermal coal.
REUTERS