Two sources familiar with the situation said that Glencore did not deliver a formal offer; one source described it as an “indication of interest” that could lead to a bid. The Globe and Mail is not naming them because they are not authorized to speak publicly on the matter.
Glencore’s approach was reported on Sunday by The Wall Street Journal. Teck has opened a data room to provide information on the assets to potential bidders.
But Teck has yet to receive a formal offer from any potential bidders, suggesting that no deal is imminent.
Neither company responded to The Globe’s requests for comment.
So far, only a group led by Pierre Lassonde, co-founder of gold royalty company Franco-Nevada Corp., has publicly confirmed an interest in buying a stake in Teck’s coal business. But at a mining conference in Spain last month, Glencore chief executive Gary Nagle did not rule out making an offering for Teck’s coal assets, though he made it clear that a merger of the two companies remained his primary goal. “Buying their coal business stand-alone is a distant second in terms of potential benefits,” he said at the time.
Glencore is the world’s biggest exporter of thermal coal, which is burned to generate electricity.
In April, Teck tried to win shareholder approval to spin off its coal business. When it realized that it could not convince two-thirds of them to support the deal, it withdrew the proposal. Shareholders considered the spin-off proposal messy and complicated, noting that the coal company, to be called Elk Valley Resources, would have paid most of its cash flow to Teck for a decade.
After the spin-off proposal was killed off, Teck CEO Jonathan Price said Teck’s new plan “is to pursue a simple and more direct separation.” He did not give details, though analysts and investors assumed that Teck would consider direct offers for all of the coal business or a substantial piece of it.
The proceeds would be used to fund the company’s new copper projects.
On June 6, Mr. Price said in a press release that, “Our high-margin, long-life steelmaking coal assets [have] generated considerable interest from various parties. Our focus on separation is to unlock the full potential of our unparalleled copper growth business.”
Teck wants to sell its coal so it can emerge as a pure metals business, with a focus on copper, and zinc, to a lesser extent. It has five copper projects, including the QB2 mine in northern Chile, which produced its first bulk copper concentrate in March. QB2 is one of the world’s largest undeveloped copper resources.
Copper is considered a critical energy transition metal and is used in substantial quantities in electric vehicles and wind turbines.