Glencore has agreed to buy a 77 per cent stake in Canadian miner Teck Resources’ steelmaking coal business for a whopping £5.64bn ($6.93bn).
Canada’s Teck Resources is planning to sell a majority stake to Glencore, while Asian steelmakers Nippon Steel and POSCO will buy the rest in an overall £7.24bn ($8.9 bn) deal, the Globe & Mail reported.
Japan’s Nippon Steel will pay $1.7 billion and swap its interest in one of Teck’s coal operations for 20 per cent of the coal business, the report said, citing sources.
South Korea’s POSCO will swap its interests in two of Teck’s coal operations for 3 per cent of the business, the report said, adding that the deal could be announced as soon as Tuesday.
Following the news, in early trading, Glencore’s shares topped the FTSE 100 up more than 3.15 per cent to 444.45 pence per share.
Commenting on the transaction, Gary Nagle, chief executive of Glencore, said: “These world-class assets and the experienced people that operate them are expected to meaningfully complement our existing thermal and steelmaking coal production located in Australia, Colombia and South Africa.
“Glencore has high regard for the business that has been developed over many decades in British Columbia and looks forward to maintaining and enhancing its operational performance, environmental stewardship and social contribution.
He said he’d work “to ensure that the transaction is of benefit to Canada, which includes a commitment from Glencore regarding employment, engaging in further reclamation efforts and to engage constructively and meaningfully with the Indigenous Nations in the Elk Valley.