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‘We want firms like Teck right here in Canada, firms with a powerful dedication to Canada,’ ministers write in letter
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Three prime federal cupboard ministers — Deputy Prime Minister Chrystia Freeland, Trade Minister François-Philippe Champagne and Pure Sources Minister Jonathan Wilkinson — mentioned they’re watching “intently” as Switzerland’s Glencore PLC makes an attempt a takeover of Teck Sources Ltd., regardless of a flat rejection by the Vancouver-based firm’s board of administrators.
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“We want firms like Teck right here in Canada, firms with a powerful dedication to Canada,” the ministers wrote in an April 24 letter to Bridgitte Anderson, chief govt of the Better Vancouver Board of Commerce, and obtained by the Monetary Publish.
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Teck, the biggest diversified miner in Canada, has refused two affords from Glencore, a dominant participant in international commodities because of massive mining and buying and selling companies, calling a cope with the Swiss big a “non-starter.”
However Glencore continues to push, attracted by the prospect of including Teck’s copper, zinc and metallurgical coal property to its expansive portfolio. Chief govt Gary Nagle visited Toronto earlier this month to foyer buyers to his aspect.
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Champagne, as business minister, could be the cupboard member accountable for reviewing overseas takeovers below the Funding Canada Act and deciding whether or not they advance the pursuits of the nation.
The letter, dated April 24, marks Champagne’s most in depth feedback on the topic thus far. Though the letter didn’t sign that he would definitively block a Glencore transaction, the emphasis that firms’ ESG observe document issues seems to echo a part of the rationale put ahead by Teck’s administration for rejecting Glencore’s as a merger associate, citing its massive thermal coal and oil buying and selling companies.
The minister’s missive got here in reply to Anderson’s April 20 letter, additionally obtained by the Monetary Publish. Anderson urged “the federal authorities to take a proactive method and scrutinize the (Glencore) proposed takeover bid intently.”
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Anderson additionally wrote: “We’re involved that the potential acquisition of Teck Sources by Glencore may result in the lack of a major driver of Vancouver and Canada’s financial system and deal a extreme blow to native innovation and Canada’s drive in the direction of web zero.” She described Teck as “integral to creating home and international worth chains for the inexperienced and digital economies,” calling it a frontrunner in “sustainability, ESG, and the power transition as we collectively work to satisfy our emission discount targets.”
We’re involved that the potential acquisition of Teck Sources by Glencore may result in the lack of a major driver of Vancouver and Canada’s financial system
Bridgitte Anderson, chief govt, Better Vancouver Board of Commerce
Not one of the ministers offered remark, however a federal authorities official confirmed the authenticity of the correspondence.
On April 3, Glencore proposed a merger with Teck that will break up the corporate’s mixed property on a 76-24 foundation.
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It got here as Teck’s shareholders put together to vote April 26 on whether or not to separate off the corporate’s metallurgical coal — which is used to make metal — right into a separate entity from its copper and different steel property.
Copper is anticipated to see large progress because the power transition accelerates and Teck has mentioned separating its copper property from its coal property would create worth for shareholders.
Glencore produces about one per cent of the world’s thermal coal and mentioned it expects to proceed to provide coal till 2050. It additionally produces metallurgical coal and trades oil futures, however mentioned it will break up these property right into a separate firm from its metals portfolio if it acquired Teck’s property.
Teck’s administration has mentioned that it doesn’t wish to expose its shareholders to thermal coal manufacturing, which it mentioned is incompatible with the power transition.
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That place is extra in step with the federal authorities’s stance. On the 2017 United Nations Local weather Change Convention, Canada helped discovered the Powering Previous Coal Alliance devoted to phasing out thermal coal.
Key shareholders, together with Teck chairman emeritus Norman Keevil, whose household holding firm controls the biggest share of sophistication A shares, which carry 100 votes apiece, have come out in help of that plan and towards Glencore’s merger proposal.
However two-thirds of each class A and sophistication B shareholders should approve the plan, and Glencore’s chief govt Gary Nagle is aggressively courting class B shareholders, therefore his journey to Toronto earlier this month.
In an open letter final week, Nagle threatened to take a brand new merger proposal on to Teck’s class B shareholders and urged them to reject Teck’s separation plan.
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As that matter intensified within the days earlier than Teck shareholders vote, with each Teck and Glencore persevering with to speak with Teck’s class B shareholders, a broader debate has emerged about Teck’s function within the financial system.
Sean Boyd, govt chairman of Toronto-based Agnico Eagle Mines Ltd., mentioned in an interview final week that if Glencore have been profitable in persuading Teck to simply accept a merger provide, the federal authorities should still evaluate the transaction — a course of that might take months or years.
“Nobody’s actually speaking about this, however in some unspecified time in the future, a transaction of this dimension, the Canadian authorities will get concerned with overseas possession,” mentioned Boyd. “That’s going to take some thought of thought from the federal government’s perspective and that’s going to take a while. So it is a factor that can play out over time.”
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After all, the ministers’ letter to Anderson acknowledged that “Canada welcomes and is dependent upon worldwide commerce and funding,” and that the mining sector has a number of massive multinational firms.
However they framed Teck’s property as being of “central significance to our nation” because the power transition unfolds, noting {that a} shifting geopolitical panorama has accentuated the significance of Teck in Canada.
“The mining of vital minerals is essential to the longer term and solely firms that make severe commitments to ESG (surroundings, social licence and governance) and powerful partnerships with Indigenous Peoples will succeed,” the ministers wrote.
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They closed the letter by noting that “the federal authorities is following this very intently.”
• E mail: gfriedman@postmedia.com | Twitter: GabeFriedz
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