Glencore bid for Teck faces stiff Canuck rules, pride as mining M&A activity triples

BY COLIN MCCLELLAND

New York, NY — Glencore (LSE: GLEN) faces an uphill battle to buy Teck Resources (TSX: TECK.A/TECK.B; NYSE: TECK) because of Canadian nationalism despite surging mergers and acquisitions in the critical minerals space.

The mining industry’s M&A activity is up 283% to US$66 billion so far this year compared with the same period last year while dealmaking across all industries is down 38% to US$1.2 trillion, according to Bloomberg data presented on May 10 at the Society for Mining, Metallurgy & Exploration’s eighth annual Trends in Mining Finance Conference in New York.

The sector is led by Glencore’s US$27.1-billion bid in April for Teck and Newmont’s (NYSE: NEM, TSX: NGT) US$20.1-billion offer for Newcrest Mining (TSX: NCM; ASX: NCM), which the companies came to an agreement on in May. The values, reflecting updated Bloomberg data compared with previously reported amounts, help nearly quadruple the value of M&A activity among miners yearto-date versus the same period in 2022 as companies seek gold near record prices and battery metals for the green energy transition. Action in the diversified mining sub-sector that includes Teck is up 700%.

However, London-based Glencore’s proposed acquisition — rejected so far by Teck — faces tough scrutiny in Canada. The country would suffer a ding to national pride by losing one of its last large international mining companies. Federal authorities last year introduced tough new guidelines in the name of national security for investments in virtually all mining except iron.

“We can’t comment on this particular transaction just because of our professional responsibilities, but we can say that it’s clear from the rhetoric around this transaction in Canada that there’s intense political scrutiny attached to it,” Steven McKoen, a partner with law firm Blake, Cassels & Graydon, which is doing work for Teck, told the conference.

The session heard that other trends in M&A activity include earlier investments by majors doing longer due diligence on projects, automakers such as GM with its US$650-million investment in Lithium Americas (TSX: LAC; NYSE: LAC) and Tesla shoring up battery metal supplies, the growth of deals based on environmental, social and governance standards, and more private equity and pension funds involved who’ll need mining expertise.

Timing for Teck

Panelist George Karafotias, a partner in the M&A unit of law firm Shearman & Sterling in New York, said Glencore timed its approach to See MERGER / 10

BY CECILIA JAMASMIE

Adecision by Chile, the world’s no. 2 lithium producer, to tighten control over the key battery metal sector has triggered speculation on details of the announced state-led public-private model and how it may affect the global industry.

To address market rumours and clarify aspects of the strategy described by some as “vague,” The Northern Miner’s sister publication MINING.COM spoke with Chile’s mining minister Marcela Hernando, who noted the country had announced a strategy, rather than a policy.

“It will become a public policy when it has legitimacy and it is supported by all the political forces of the country,” Hernando said.

Reaching the point of public policy, which includes the creation of a national lithium company (Enal), could take years.

Boric has, in the interim, enlisted two other state-owned companies — Codelco, the world’s largest copper producer, and state miner Enami — to determine how the private-public partnerships will operate.

Codelco will be initially in charge of negotiating for the state a stake in Albemarle’s (NYSE: ALB) and SQM’s (NYSE: SQM) operations. Enami, in turn, will sign up partners for new contracts. Their roles will eventually be undertaken by a national lithium company.

The government also launched a “Lithium and Salt Flats” committee on May 16 to coordinate the various ministries and other public entities as well as regional governments taking part in the lithium development process. The group will act as a technical advisory body, the Corfo development office said in the statement.

The Chilean state has always played a major role in the mining industry. A 1979 law declared lithium to be a strategic resource, stipulating that its development was the exclusive prerogative of the nation.

Only SQM and Albemarle are currently licensed to produce lithium in the country, and in only one salt flat — the Atacama. The government wants to expand production both in Atacama and in any or all of the other 18 salt flats that have been identified.

See CHILE / 11