Teck CEO Jonathan Price at his office in London, Eng., on Sept. 4.JIM ROSS/The Globe and Mail
On a warm afternoon in early September in London, Bernard Looney, the boss of BP, one of the world’s top oil companies, and a colleague sat down on wooden bench in St. James’s Square park, a patch of green Georgian loveliness near Buckingham Palace. They were enjoying the sunshine.
Moments later, another chief executive, Jonathan Price of Teck Resources Ltd. TECK-B-T, Canada’s biggest diversified mining company, strolled into the small park, where a Globe and Mail photographer was waiting to take photos of him, and found himself next to Mr. Looney. The two men, who both have offices overlooking the park, greeted each other and shook hands for the first time.
Mr. Looney noted Mr. Price’s robust defence of Teck, which has been the object of desire of aggressive Swiss commodities giant Glencore PLC since April, when it launched a US$23-billion takeover bid for the Canadian copper, zinc and coal producer. “Carry on,” he told Mr. Price, who nodded and smiled.
Mr. Price will carry on, though his quest to make Teck a big-name player in the global supply chain of “critical” metals – notably copper, a key material used in electric-vehicle (EV) batteries and electricity transmission systems – is in its early stages, fraught with risks, and will require one of the industry’s costliest series of mine openings, most of them in far-flung countries.
And Glencore still covets Teck, even though its takeover offer for the whole company was twice rejected in the spring. It returned with a consolation-prize lunge in the form of an US$8.2-billion offer for Teck’s enormous metallurgical (steelmaking) coal business in British Columbia.
Some time between now and December, Teck is expected to announce the winning bidder for its coal assets, likely Glencore or a rival, which could include a consortium of Asian steelmakers that are thought to be worried about Glencore’s efforts to emerge as a global powerhouse in metallurgical coal. The consortium could be joined by a resources fund or two. Teck would use the billions in proceeds to recreate the company as a high-growth energy-transition juggernaut. “Separating our base metals from our coal would support our desire to become a true Canadian critical minerals champion,” Mr. Price said in an interview with The Globe.
Mr. Looney is not the only one urging him to carry on. The Canadian government is supplying many billions of dollars in taxpayer-funded subsidies to support the construction of two enormous EV battery factories in Southwestern Ontario and desperately wants a homegrown metals supply chain to feed those operations and others. Earlier this year, when Glencore seemed intent on owning Teck, Industry Minister François-Philippe Champagne, Natural Resources Minister Jonathan Wilkinson and Deputy Prime Minister Chrystia Freeland said in an open letter to the Greater Vancouver Board of Trade: “We need companies like Teck here in Canada – companies with a strong commitment to Canada.”
But Glencore, whose operations in Canada include the nickel miner once known as Falconbridge Ltd. and Viterra Inc., the country’s biggest grain handler, may not be out of the picture. It stands a good chance of landing Teck’s coal business and, in time, could end up with the rest of Teck, too. Glencore, known as the great white shark of the metals world, did not become the world’s biggest commodities trader and one of the world’s biggest mining companies by taking no for an answer.
Teck’s copper pipeline is filling up
CEO Price says he wants to double production
in three years over last year.
Capacity
(in kilotonnes per annum)
Project
Ownership
Capex
(USD m)
San Nicolás
JV
Teck: 50%
1st 5 yrs (100% basis) copper equiv.
$1,000-
1,100
Agnico Eagle :
50%
127
1st 5 yrs (100% basis) copper
QB Mill
Expansion
Teck: 60%
SMM/SC: 30%
ENAMI: 10%
$3bn+
136
1st 5 yrs (100% basis) copper equiv.
Zafranal
copper-gold
project
Teck: 80%
1,200
MMC: 20%
133
n/a
1st 5 yrs (100% basis) copper equiv.
NorthMet
Teck: 50%
PolyMet: 50%
248 (expansion)
82
Potential (100% basis) copper equiv.
Galore Creek
Teck: 50%
n/a
Newmont:
50%
215
n/a
n/a
QB Future
Expansions
Teck: 60%
SMM/SC: 30%
ENAMI: 10%
the globe and mail, Source: DEUTSCHE BANK AG
Teck’s copper pipeline is filling up
CEO Price says he wants to double production
in three years over last year.
Capacity
(in kilotonnes per annum)
Project
Ownership
Capex
(USD m)
San Nicolás
JV
Teck: 50%
1st 5 yrs (100% basis) copper equiv.
$1,000-
1,100
Agnico Eagle :
50%
127
QB Mill
Expansion
1st 5 yrs (100% basis) copper
Teck: 60%
SMM/SC: 30%
ENAMI: 10%
$3bn+
136
Teck: 80%
Zafranal
copper-gold
project
1st 5 yrs (100% basis) copper equiv.
1,200
MMC: 20%
133
n/a
NorthMet
Teck: 50%
PolyMet: 50%
1st 5 yrs (100% basis) copper equiv.
248 (expansion)
82
Galore Creek
Teck: 50%
Potential (100% basis) copper equiv.
n/a
Newmont:
50%
215
QB Future
Expansions
Teck: 60%
SMM/SC: 30%
ENAMI: 10%
n/a
n/a
the globe and mail, Source: DEUTSCHE BANK AG
Teck’s copper pipeline is filling up
CEO Price says he wants to double production in three years over last year.
Capacity
(in kilotonnes per annum)
Project
Metal
Ownership
Capex
(USD m)
San Nicolás
JV
Copper, Zinc,
Teck: 50%
First five years (100% basis) copper equivalent
$1,000-
1,100
Gold, Silver
Agnico Eagle :
50%
127
First 5 years incremental production, copper
QB Mill
Expansion
Copper
Molybdenum,
Silver
Teck: 60%
SMM/SC: 30%
ENAMI: 10%
$3bn+
136
First five years (100% basis) copper equivalent
Zafranal
copper-gold
project
Copper, Gold
Teck: 80%
1,200
MMC: 20%
133
n/a
Copper, Nickel,
PGM
(platinum)
Teck: 50%
PolyMet: 50%
First five years (100% basis) copper equivalent
NorthMet
248 (expansion)
82
Galore Creek
Copper, Gold,
Teck: 50%
Potential (100% basis) copper equivalent
n/a
Newmont:
50%
Silver
215
n/a
n/a
Copper,
Molybdenum,
Silver
QB Future
Expansions
Teck: 60%
SMM/SC: 30%
ENAMI: 10%
the globe and mail, Source: DEUTSCHE BANK AG
Jonathan Price almost never gives interviews, is unknown outside the global mining business and, until recently, not well known within it. The Welshman is 47, looks younger, is fit and has the quietly intent air of a young, newbie boss who has yet to climb the cynicism curve. “I would not consider myself an extrovert, but I do like to know what makes people tick,” he said.
Teck is his baptism of fire as a corporate boss. Within months of becoming CEO almost exactly a year ago, the company’s plans to shed it coal division, Elk Valley Resources Ltd. (EVR), and reinvent itself as a copper giant, with dollops of zinc on the side, were rudely interrupted by the takeover attempt from Glencore. Since then, Mr. Price has devoted his energies to fending off Glencore while repairing a convoluted coal spinoff that went awry.
He spoke to The Globe from Teck’s small London investor relations outpost, which he uses when he is in town. The smart office is decorated with contemporary art, including paintings by Vietnamese-Canadian abstract artist KV Duong. Mr. Price and his Welsh wife, Natalie, own a house in Surrey, the wealthy rural county south of London. Their three daughters live in the United Kingdom. The Prices rent a house in Vancouver, where Teck is based, and want to buy but have been overwhelmed by the sticker prices.
He grew up an only child near Swansea, on the south coast of Wales. His father was a land surveyor who made maps; his mother a clerk in the local government. They died within months of each other when Jonathan was 17. He found solace playing for the South Gower Rugby Club, surfing and being a math and sciences nerd. He had a minor obsession with advanced materials, such as the then-novel use of carbon in the bikes raced by British champion Chris Boardman in the early 1990s. He studied metallurgy and materials science at Oxford and later picked up an MBA from Cardiff University.
His first job was at a Canadian company, Inco, which operated the Clydach nickel refinery in Wales (Brazil’s Vale bought Inco in 2006). Eager to escape his boyhood confines – Mr. Price delights in the Welsh poet Dylan Thomas’s quip that Swansea was the “graveyard of man’s ambitions” – he fled to London, where he became a metals and mining dealmaker for Dutch bank ABN Amro. “I realized that I did not want to be an investment banker,” he said. “I wanted to work in actual mining.”
He escaped to BHP (then BHP Billiton) of Australia, the world’s biggest mining company, where he rose through the ranks, working in senior positions in business development, marketing and investor relations before ending up as vice-president of finance and chief transformation officer, which saw him lead an efficiency drive that would save the company billions of dollars – but resulted in thousands of layoffs. He lived primarily in Singapore with stints in London and Perth.
Canada’s Teck came knocking in 2020. By then it was an open secret that chairman emeritus Norman Keevil, the son of the founder and biggest owner of the supervoting Class A shares, was looking for candidates to eventually replace Don Lindsay as CEO. Mr. Price leapt at the opportunity to join the company. “I was attracted to it because the company was gearing itself up for growth, punched above its weight and had a great pipeline of copper projects,” he said.
He was appointed chief financial officer that year and was CEO two years later, suggesting that Mr. Keevil and the Teck board had him in mind for the top job when they hired him. Mr. Price’s executive honeymoon would not last long.
Jonathan Price almost never gives interviews, is unknown outside the global mining business and, until recently, not well known within it.JIM ROSS/The Globe and Mail
Few of the top executives at Teck were surprised when Glencore launched a formal takeover bid for Teck in early April – the two companies had been circling one another since 2020. Back then, Glencore, led by Ivan Glasenberg, wanted to merge with Teck to create a global metals and coal superpower. Details of the talks were never disclosed, though Mr. Price confirmed that they did take place. It is not known why the merger attempt ultimately went nowhere. Insiders at both companies say Teck, which is a third of the size of Glencore, may have feared getting buried in the deal; others think Mr. Lindsay, Teck’s CEO at the time, wanted to run the enlarged business – an idea Glencore did not like.
Whatever the case, Teck went to Plan B: expediting the transition into a pure metals company by shedding EVR. The plan, devised under Mr. Lindsay’s watch and inherited by Mr. Price, would see Teck spin out EVR to shareholders – but continue to pay 90 per cent of its cash flow for about a decade to the slimmed-down, coal-free Teck, making EVR look more like a subsidiary than a standalone company and starving it of funds. Gary Nagle, who replaced Mr. Glasenberg in 2021, said the deal would leave EVR a “zombie” operation.
In a humiliating climbdown, Teck cancelled the shareholders’ vote in April, knowing it could not be won. “Investors wanted to see the separation happen but in a simpler, more direct fashion,” said Mr. Price, who takes the blame for the fiasco, even though he did not come up with the muddled spinout structure. “As the CEO, I am accountable for anything on my watch.”
The new plan will see Teck unload EVR in a way that will eliminate continuing financial ties between the two companies. Two routes are contemplated. The first is a direct sale of 100 per cent of EVR; the second is a hybrid approach that would sell a significant minority stake in the coal business, likely to a consortium of Asian steelmakers that may include India’s JSW Steel or Nippon Steel, followed by a spinout of the rest of EVR’s equity to Teck shareholders.
Some analysts think a direct sale – Glencore is the only known bidder for all of EVR – is the way to go. “A sale of 100 per cent of EVR for cash would be the cleanest and most positive outcome, in our view, leaving Teck as a pure metals company with a very strong balance sheet,” Deutsche Bank Research said in a note published this week.
The sale-and-spinout approach, which a few analysts think is emerging as the preferred option, is already facing criticism, since assembling a consortium could be fraught with difficulties. “The hard part of a spinout would be knitting together everyone’s needs into a commercial agreement that would guide EVR and prepare for its eventual closure,” said Jeffrey Franzen, a retired Vancouver mining industry engineer and consultant. “An outright sale to a single company such as Glencore offers a much simpler and quicker option with little or no execution risk.”
Some observers of this scenario also question the need for a spinout if, as Mr. Price has said, “many of our shareholders would like to have continued exposure to EVR.” If that’s the case, why not just keep the coal assets in-house, milk them for their hefty cash flows to fund Teck’s copper expansions and run down the reserves over a decade or two?
While a direct sale no doubt would be simpler, Glencore or another foreign buyer could get tripped up in any review by Investment Canada, which would determine whether the purchase of the coal assets provides a net benefit to Canada and comes with no security concerns. “Proposed amendments to the Investment Canada Act could complicate Glencore’s purchase due to recent bribery convictions,” Deutsche Bank pointed out. “That said, it is important to note that Glencore already has a large and long-standing presence in Canada through its nickel, copper and Viterra assets.”
Either way, Teck is getting rid of EVR and will pocket billions that it can devote to finishing existing copper projects, such as the enormous QB2 mine in northern Chile, and launching others, including the San Nicolás mine in Mexico, a joint venture with Canadian gold miner Agnico Eagle, and the Zafranal copper-gold project in Peru, a partnership with Japan’s Mitsubishi. Spending on the latter two mines alone could exceed US$2.2-billion.
Mr. Price’s goal in the next three years or so? “I want to see us double copper production over last year, to about 650,000 tonnes, through the ramp-up of our flagship QB2 project in Chile,” he said. “We are positively surprised by the number of credible proposals we have received for EVR. We are well on our way. I think we have great opportunities ahead of us in critical metals.”
That is, if the coal sale does not get bogged down once more and Glencore, which has pinned its own reinvention hopes on owning Teck to create a metals superpower, does not come back now, or a year or two from now, with a hostile offer so rich that shareholders blow up Mr. Price’s dream.
Eric Reguly