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Teck Resources chief executive officer Jonathan Price said in a conference call last month that there has been 'a lot of interest' in the coal business since it was put out for tender.CHRIS HELGREN/Reuters

Teck Resources Ltd. TECK-B-T intends to completely exit its coal business, but in the event of only a partial sale, would spin off the remainder to ensure a clean break, a source familiar with the situation said.

The Vancouver-based mining company has been entertaining a variety of bids for its metallurgical coal business since late April after an earlier restructuring plan failed.

Teck chief executive officer Jonathan Price said in a conference call last month that there has been “a lot of interest” in the coal business since it was put out for tender.

Glencore PLC GLNCY of Switzerland is the only known bidder for 100 per cent of the coal segment, with an offer worth up to US$8.2-billion.

While that would appear to give Glencore a competitive advantage, the source said that Teck could also go the route of selling only a portion of the business to another party, and spinning off the remainder to its shareholders, if it deems that to be a better deal for stakeholders.

The Globe and Mail is not identifying the source because the person was not authorized to speak publicly.

Teck declined comment for this story.

Several contenders other than Glencore have emerged in recent months, submitting bids for only a portion of the coal business. Those include a consortium led by Canadian mining veteran Pierre Lassonde, as well as a bid from Japan’s Nippon Steel NPSCY. Bloomberg News also reported on Thursday that Indian conglomerate JSW Steel is mulling a bid for up to 75 per cent of the coal business.

JSW did not respond to a request for comment.

A deal with Glencore could make life easier for Teck because a sale of the entire coal business would not require a shareholder vote, the source said, while a partial sale in combination with a spinoff may require one, depending on the exact structure of the transaction.

Teck earlier in the year intended to put its original restructuring plan to spin off the full coal business to a shareholder vote. However, after failing to receive sufficient support, the company pulled the proposal, illustrating the uncertainty created by the necessity to hold such votes.

Glencore last week reaffirmed its interest in Teck, saying it has set aside about US$2-billion in cash to be put toward a potential transaction.

While Glencore is focused on acquiring Teck’s coal business, it is still open to buying all of Teck, which would include its significant portfolio of copper and zinc mines.

Several federal ministers have expressed reservations about Glencore buying Teck, including Industry Minister François-Philippe Champagne, Natural Resources Minister Jonathan Wilkinson and Deputy Prime Minister Chrystia Freeland. In a letter to the Greater Vancouver Board of Trade earlier this year, all three wrote that “We need companies like Teck here in Canada – companies with a strong commitment to Canada.”

Teck’s history goes back to 1913, when Hughes Gold Mines Ltd. started up a gold mine in Teck Township on the shores of Kirkland Lake, Ont. Three generations of the Keevil family built what is now Canada’s biggest diversified mining company.

Family patriarch Norman B. Keevil told The Globe in April that he had no interest in allowing the whole of Teck to be sold to Glencore, no matter what the price. Teck’s board also twice rejected proposals by Glencore to buy all of Teck.

Glencore’s history in Canada dates back to 2013 when it bought fellow Swiss miner Xstrata PLC, which had earlier acquired Canadian nickel miner Falconbridge Ltd. Glencore employs around 9,000 people in this country.

Glencore also owns a 49.9-per-cent stake in Canadian grain handler Viterra Ltd. However, Glencore agreed in June to sell its stake in the company to American agribusiness company Bunge Ltd. The deal isn’t expected to close until the middle of next year.

Several years ago, Teck kicked off a strategic review after concluding that even though its coal business generates billions in cash flow every year, it is weighing down the valuation of the larger company. There has been less investment demand over time for coal companies owing to the detrimental impact that burning the fossil fuel has on the environment.

Glencore was among the earliest parties interested in buying Teck’s coal business. One of the world’s biggest thermal-coal companies, it operates around 25 mines in Australia, Colombia and South Africa.

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