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Teck Resources CEO Jonathan Price responds to questions from reporters after the company's special meeting of shareholders, in Vancouver, on April 26.DARRYL DYCK/The Canadian Press

Teck Resources Ltd. TECK-B-T chief executive officer Jonathan Price says he’s pleased with the progress the Canadian miner has made in talks with parties interested in buying its coal business, but he has made it clear a transaction will only be consummated under certain circumstances.

In April Vancouver-based Teck called off a planned split of the company into stand-alone metals and coal units after failing to obtain sufficient support from shareholders. Since then, the company has been entertaining M&A opportunities for the coal business. Several bidders are already known, including Glencore PLC GLNCY of Switzerland, Japan’s Nippon Steel NPSCY and a consortium led by mining veteran Pierre Lassonde.

In a conference call with analysts Thursday, after the release of the company’s second-quarter earnings, Mr. Price said there has been “a lot of interest” in the coal business – both for all or just a part of it – and that Teck is keeping an open mind. However, given the vast profitability of the coal business, he said Teck will only do a deal if the stars align.

“We will transact only if the benefits to our shareholders and other stakeholders are clear,” he said.

Teck’s share price has been consistently weighed down by its heavy exposure to environmentally unfriendly coal. Earlier in the year, the company announced its intention to spin off the coal division, but the metals business would have retained about 90 per cent of the new coal company’s cash flow for about a decade. After cancelling a shareholder vote on the initiative, Teck said it would concentrate on pursuing a simpler and more direct separation of its operations.

While the company has been actively speaking with would-be buyers, Mr. Price said it won’t be rushed into a transaction and refused to be pinned down to any timeline.

“There’s a detailed data room and due diligence process that’s working its way through, which we will run to its conclusion,” he said.

“We’re not sort of sitting on our hands here. We’re taking a very active, diligent approach that’s moving this forward as quickly as we can – but also ensuring that we take time to deliver the best outcome here for shareholders and stakeholders.”

The dollar value of a potential transaction is far from the only consideration for Teck. The company will also consider the impact on its employees and its Indigenous stakeholders, Mr. Price said.

The only known bid for the whole of Teck’s coal business is the one tabled by Glencore, which is worth as much as US$8.2-billion.

But that bid has garnered a less-than-enthusiastic reception from some stakeholders, including British Columbia Premier David Eby, who said he’s concerned about Glencore’s corporate record, referring to the company’s various regulatory offences related to bribery and corruption. While Mr. Eby doesn’t have the authority to block a Glencore bid for Teck, he has indicated he would petition Ottawa to do so.

On Thursday Teck cut its copper forecast for the year by about 15 per cent to between 330,000 and 375,000 tonnes, owing mainly to delays in construction and commissioning of its QB2 copper mine in Chile. The giant mine started commercial production in the quarter and cost US$8.1-billion to build.

Harry “Red” Conger, Teck’s chief operating officer, said in the conference call that various adjustments and modifications that led to the production cut are now in the rear-view mirror, and he expressed confidence the mine will be at its full production potential by the end of the year.

QB2 is Teck’s cornerstone asset as it attempts to shift more of its revenue mix toward copper and away from coal.

Teck also announced Thursday that a worker was killed at QB2 during the quarter. The death occurred at a part of the mine that had been decommissioned and was non-operational, wrote Teck spokesperson Chris Stannell in an e-mail to The Globe and Mail.

“Learnings from the investigation are being shared across Teck and with industry peers to prevent future incidents,” he said.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 26/02/24 3:38pm EST.

SymbolName% changeLast
TECK-B-T
Teck Resources Ltd Cl B
-1.79%52.54
GLNCY
Glencore International Plc ADR
-1.64%9.305

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