Industry Minister Mélanie Joly says that promises made by Anglo American PLC NGLOY +0.68%increase as part of its attempt to buy Teck Resources Ltd. TECK-B-T -3.32%decrease don’t go far enough.
London-based Anglo has made a slew of commitments to win approval from Ottawa for the US$20-billion deal, including moving its global headquarters to Canada and changing its name to Anglo Teck.
The deal can’t proceed unless Ms. Joly deems it to be of net economic benefit to Canada and determines that there are no national security concerns.
Speaking to reporters on Tuesday in Ottawa, Ms. Joly said Anglo must go further to prove the deal is of benefit to Canada.
“I think right now that it’s not enough, and also we need to think about longer term, and how can we make sure that ultimately we create jobs, but we have a strong headquarters, not only now, but also for the next decades,” she said.
“We need to have further conversations with the companies.”
Ms. Joly said that she will be meeting with the CEOs of both Anglo and Teck next week.
Discussions have already taken place between the government and the companies about the deal.
The Globe and Mail on Monday reported that Prime Minister Mark Carney has been directly involved and told Anglo that deal approval would not be possible unless it committed to moving its headquarters to Canada.
Mr. Carney also made it clear that any other potential bidders for Teck would also have to commit to moving to Canada, a stipulation that dampens the prospect for a bidding war for the Canadian miner.
Anglo must curry favour with Ottawa in the face of an extremely high bar set by the government for allowing takeovers in the critical minerals sector.
Last year, Ottawa after approving Glencore PLC’s acquisition of a majority stake in Teck’s coal business, then-industry minister François-Philippe Champagne said Canada would approve foreign acquisitions of big Canadian critical minerals companies only “in the most exceptional of circumstances.”
Ottawa changed the rules in a climate of extreme anxiety that Canada was slipping behind its global rivals in critical minerals such as copper, lithium, and cobalt.
After Teck sold its coal business it had ambitions to be a global player in copper, one of several critical minerals used in low carbon energy. But its plans have been derailed by massive cost overruns and engineering problems at its biggest copper mine in Chile.
Anglo is making its play for Teck during a time when the Canadian miner’s stock was badly beaten up owing to challenges at the mine.
One of Anglo’s other commitments is moving many of its high-ranking personnel to Canada. Its chief executive officer, deputy CEO, chief financial officer and “a significant majority” of the executive management team will be based in Canada, the company said. In addition, “a substantial proportion” of the board will be Canadian.
Anglo also said it plans to invest at least $4.5-billion over five years in Canada, including putting some of that toward an extension of the Highland Valley mine, improving critical-minerals processing capacity at the Trail plant in British Columbia, and potentially building new mines. Many of those investments had already been announced by Teck before the deal was announced.
Given that Mr. Carney won election on a pledge to protect the domestic economy in the face of a U.S. trade war, allowing the sale of a Canadian mining giant to a foreign multinational could be seen as an abdication of that promise.
Teck is one of the last remaining big Canadian critical minerals companies left in Canada. Over the decades, many former Canadian mining champions, including Alcan Inc., Falconbridge Ltd., and Inco Ltd. have been sold to foreign mining companies.
Bay street veteran Tom Caldwell, chairman of Caldwell Securities Ltd. said that potentially losing Teck is painful for the already hollowed out Canadian mining sector and the framing of the deal by the companies as a “merger of equals” is a fallacy.
“Mergers do not exist. There’s only takeovers,” he said.
“I’ve been through kazillions of them in my career, and there’s always a dominant player. And we know who that is.”
If the deal with Anglo closes, Teck shareholders will own 37.6 per cent of Anglo Teck, while Anglo shareholders will own 62.4 per cent.
Anglo Teck will remain domiciled in Britain and the primary stock listing will be the London Stock Exchange.
Leave a Reply
You must be logged in to post a comment.