Anglo American and Teck Resources secure Canada approval for R122bn merger deal

Anglo American and Teck Resources have detailed commitments they made to the Canadian government, including plans to spend about R121.7 billion over 15 years, as part of their receiving approval from that government for their merger under the Investment Canada Act.

The merger, announced first on September 9, is expected to provide "exceptional and enduring benefits for Canada, founded upon establishing a global critical minerals champion headquartered in Canada," a statement from the group said Wednesday.

Anglo America's share price gained 2% on the JSE Wednesday around midday to R851.71, which with a 53.6% gain in the price over 12 months, is evidence of investor support for the deal.

Anglo American and Teck committed to spend at least C$4.5bn (about R54.8bn) in Canada in 5 years, including for the Highland Valley Copper mine life extension, enhancing minerals processing at Trail, and advancing the Galore Creek and Schaft Creek copper projects in northwestern British Columbia.

"Such expenditures will enable Anglo Teck to spend…at least C$10bn in Canada over 15 years," the group directors said.

"Today's confirmation by Minister of Industry, Mélanie Joly, marks another step towards forming a major global critical minerals powerhouse, following the overwhelming endorsement of both our and Teck's shareholders last week." Anglo American CEO Duncan Wanblad said in a statement.

He said Anglo Teck represented a significant investment in Canada, its people and natural resources, underpinned by commitments designed to drive economic and wider benefits in British Columbia, and in Canada as a whole.

Teck President and CEO Jonathan Price said the Canadian government's approval was an important step forward in the formation of Anglo Teck.

"This merger will…form a business of significant scale and capability that will deliver billions in investment and drive new economic activity and job creation here in Canada and beyond," he said.

"Canada – and British Columbia – are recognised worldwide as strong mining jurisdictions with critical minerals strategies focused on creating a positive environment to attract new investment and growth in responsible mining," he said.

The merger was approved by each company's shareholders at meetings held on December 9. Completion of the deal remains subject to various conditions, including competition and regulatory approvals in various jurisdictions. The merger has already received competition approvals in Canada and Australia, and other reviews are progressing.

Other commitments to the Canada government were that the global headquarters be based in Canada, that a "significant majority" of senior management, including CEO, deputy CEO and CFO, be based in Canada, and that a "substantial proportion" of the board be Canadian.

The group also committed to continue their environmental and social practices, that an organisational culture of respecting indigenous and community rights be promoted, with at least C$200m to be spent on this, and that all existing agreements in Canada with communities, Indigenous governments and labour unions, continue.

Included in commitments to South Africa were that existing projects be continued, and that operations in South Africa continue to comply with empowerment and mining licence requirements.

Anglo Teck would continue to support the Canadian junior mining sector, including through equity participation and partnerships, and through the investment in mineral exploration projects, with a specific commitment to supporting partnerships in South Africa and southern Africa.

To further support the junior mining sector, Anglo Teck also planned to make a R600m financial contribution to South Africa's Junior Mining Exploration Fund in partnership with the Industrial Development Corporation of South Africa, and the South African Department of Mineral and Petroleum Resources.

Anglo Teck also undertook to support the Global Institute for Critical Minerals Research and Innovation, hosted and involving leading institutions in Canada, South Africa and the UK.

The Highland Valley Copper Mine Life Extension Project would require an expected capital investment of a C$2.1 to C$2.4bn. Capital investments of up to C$850m would be made on minerals processing capacity at Teck's Trail Operations, including the potential expansion of production of germanium and other strategic metals.

Development of the Galore Creek and Schaft Creek copper projects would entail capital expenditures of up to C$750m. Some C$300m would be spent on Canadian critical mineral exploration and technology.

BUSINESS REPORT