The new company will have over 70% exposure to copper, with more than half of its production located in Chile. The most significant transaction in the mining sector in the last decade must still be reviewed by several authorities, including Chile’s National Economic Prosecutor’s Office (FNE).
By V. Ibarra y P. Marchetti
Besieged by hostile buyers and seeking to strengthen their operations, multinational Anglo American and Canada’s Teck Resources have agreed to a “merger of equals” on “market terms,” creating a new copper giant: Anglo Teck. The merged company will have a market capitalization of more than US$53 billion and will place Chile at the center of its global strategy.
The resulting company will have more than half of its output in Chile, where Anglo operates Los Bronces, El Soldado, and the Chagres smelter, in addition to its 44% stake in Collahuasi. Teck, for its part, owns Quebrada Blanca and Carmen de Andacollo. “In 2024 these operations reached a combined production of nearly 1,040,000 tonnes of copper,” noted Álvaro Merino, executive director of Núcleo Minero.
According to the companies, the merger will create “a leading champion in critical minerals and one of the world’s five largest copper producers.” However, analysis by Plusmining qualifies this assumption, pointing out that based on attributable 2024 production, the combined group would rank sixth globally.
Even so, Plusmining senior analyst Juan Cristóbal Ciudad underlined that there is “organic potential to climb in the ranking through ongoing projects, new developments, and recovery in existing operations.”
Copper at the Core
What is indisputable is that the new company will have more than 70% of its exposure in copper. According to market disclosures, the combined annual production will reach 1.2 million tonnes in 2024, with growth of approximately 10% expected to 1.35 million tonnes by 2027.
Beyond copper, following Teck’s sale of its coal unit to Glencore and Anglo’s spin-off of its diamond, platinum, and coal businesses, the merged entity will also be a relevant producer of iron ore, with operations in South Africa and Brazil, as well as one of the largest global players in zinc through the Red Dog mine in Alaska.
“This transaction marks a turning point in mining mergers and acquisitions after more than a decade of caution due to the poor results of deals concluded over 10 years ago. Today, some companies are in a position of significant solvency and liquidity to undertake operations of this scale,” said Merino.
If completed, it would be the second largest M&A deal in the history of the mining industry, surpassed only by Glencore’s merger with Xstrata in 2013, valued at US$90 billion.
A Unique Opportunity
Anglo American CEO Duncan Wanblad commented that “we have a unique opportunity to bring together two highly respected mining companies whose portfolios and capabilities are deeply complementary,” describing the timing of the merger as “optimal.”
Teck CEO Jonathan Price stressed that the deal “is a natural progression of our strategy and portfolio simplification” and that it will generate significant economic opportunities.
Chile’s Minister of Mining, Aurora Williams, remarked that Anglo Teck “redefines the global copper mining map and grants Chile an even more central role in the strategy of the industry’s largest producers.” She indicated that the new firm will become the third-largest producer in the country and that its success will depend on the ability to manage “complex relationships with partners and authorities.”
Transaction Details
To close the deal, Anglo will pay 1.3301 shares for each Teck share, in an agreement that represents a 17% premium over Teck’s closing share price on Monday, according to Bloomberg calculations. However, Anglo will also distribute a special dividend of US$4.5 billion to its investors prior to the merger, leaving the effective premium at just 1%.
If completed, Anglo American shareholders will own 62.4% of the new company and Teck shareholders 37.6%. The companies highlight an expected annual value creation of US$800 million through synergies, plus an additional US$1.4 billion in annual EBITDA between 2030 and 2049, driven by a combined production increase of 175,000 tonnes per year from Quebrada Blanca and Collahuasi.
Anglo Teck will be headquartered in Vancouver, and its shares will be listed on four exchanges: London, Johannesburg, Toronto, and New York, “subject to approval by each exchange.” The deal must be cleared by the Competition Bureau in Canada, the U.S. Department of Justice and the Federal Trade Commission (FTC), and China’s State Administration for Market Regulation
Source: Diario Financiero