- Teck Resources Ltd. (TSX:TECK.A and TECK.B; NYSE:TECK) sold its remaining 77 per cent interest steelmaking coal business, Elk Valley Resources, to Glencore (OTC:GLCNF)
- The miner stated that the transaction is expected to close on July 11 and the company expects to receive total cash proceeds of C$9.5 billion
- A leading producer of steelmaking coal, Teck stated it was shifting its strategy towards building its copper business, anticipating a doubling of its copper production to about 600,000 tonnes per year
- Teck Resources last traded at C$69.00 per share
Teck Resources’ (TSX:TECK.A and TECK.B; NYSE:TECK) sale of the remaining 77 per cent interest in its steelmaking coal business, Elk Valley Resources, has received regulatory approval.
The miner stated that the Canadian government has given its stamp of approval on the transaction to Glencore (OTC:GLCNF), which is expected to close on July 11. The company expects to receive total cash proceeds of C$9.5 billion.
“This transaction marks a new era for Teck as a company focused entirely on providing metals that are essential to global development and the energy transition,” Jonathan Price, Teck’s president and CEO said in a news release. “Moving forward as a pure-play energy transition metals company, we will build on our core portfolio of strong, cash-generating assets through development of our near-term copper growth projects. Completion of this transaction will provide substantial funding for our projects, giving Teck a pathway to increase copper production by a further 30% as early as 2028.”
He added that the transaction would also enable the company to reduce debt and retain significant cash to fund its near-term metals growth. Its unaudited Q2 2024 steelmaking coal sales were 6.4 million tonnes, at the top end of its guidance of 6.0 million to 6.4 million tonnes.
The realized steelmaking coal price in Q2 averaged US$237 per tonne. Management expects to report a negative provisional pricing adjustment of US$50 million in Q2. Financial results for the quarter are scheduled for release on July 24, 2024.
Teck intends to allocate proceeds from the sale of the steelmaking coal business to repurchase up to C$2.75 billion of Class B subordinate voting shares and distribute C$250 million by declaring an eligible dividend of $0.50.
The total announced cash return to shareholders from the sale of Elk Valley is C$3.5 billion. The team also intends to start a debt reduction program of up to C$2.75 billion.
A leading producer of steelmaking coal, Teck announced the sale of that business to Swiss miner Glencore late last year, and stated it was shifting its strategy towards building its copper business. Teck anticipates doubling its copper production to about 600,000 tonnes per year.
Teck is advancing its near-term copper projects, such as QB debottlenecking (getting more production out of an existing plant), the Highland Valley Copper Mine Life Extension, the Zafranal Project and the San Nicolas Project. These projects are relatively straightforward, with competitive capital intensities and are situated in well-established mining regions, potentially receiving approval as early as 2025. In the longer term, Teck plans to develop a range of significant brownfield and greenfield projects, including the Galore Creek project in B.C. and the possible expansion of Trail Operations to incorporate an electric vehicle battery recycling facility.
Vancouver-based Teck Resources is one of Canada’s leading mining companies with major business units focused on copper, zinc and steelmaking coal.
Teck Resources Ltd. (TSX:TECK.A) last traded at C$69.00 per share and its stock has risen 3.75 per cent this week, up 23 per cent since this time last year.
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(Top photo: Teck Resources Ltd.)