Teck Resources cancels shareholder vote on separation plan ahead of annual meeting

VANCOUVER –

Teck Resources Ltd. will not go ahead with a key shareholder vote on its plan to separate its metals and steelmaking coal businesses into two companies and instead will pursue what it called a simpler and more direct approach.

The announcement came just hours ahead of the company’s annual meeting on Wednesday.

Teck chief executive Jonathan Price said the company received strong support from shareholders for the goal of separation.

“We have also listened and heard the feedback that some shareholders would prefer a more direct approach to separation,” Price said in a statement.

“Our plan going forward is to pursue a simpler and more direct separation, which is the best path to unlock the full value of Teck for our shareholders.”

Teck is facing an unsolicited takeover offer from Swiss commodities trader Glencore, which had urged shareholders to reject the company’s proposal in favour of its offer to acquire the company.

Glencore had said it would be unable to pursue its own bid if Teck’s plan to separate its businesses went ahead.

Teck is controlled by the Keevil family, which owns the company’s class A shares together with Japanese company Sumitomo Metal Mining Co. Ltd.

Teck chairman emeritus Norman Keevil has said Glencore’s proposal is the wrong one, at the wrong time, but that he is open to talking about other possible deals once the company completes its own plan to split its business.

The unsolicited pursuit of what is Canada’s largest diversified mining company by an international giant has triggered sentiments of economic nationalism.

B.C. Premier David Eby, the Mining Association of B.C., as well as the Greater Vancouver Board of Trade have expressed concern over the potential for job losses and cast doubt upon Glencore’s ESG record.

In a letter to the Greater Vancouver Board of Trade dated April 24, three senior federal cabinet ministers said Ottawa is watching the situation “very closely.”

“We need companies like Teck here in Canada,” stated the letter, which was signed by Deputy Prime Minister Chrystia Freeland, Industry Minister Francois-Philippe Champagne and Natural Resources Minister Jonathan Wilkinson.

It remains unclear whether Ottawa would go so far as to block a potential acquisition of Teck by Glencore. But some observers have pointed out Glencore’s pursuit of the Canadian company comes at the same time that the government has committed to a national critical minerals strategy as part of its overall climate plan.

Teck is keen to expand its copper and zinc production to meet growing global demand for these metals, both of which are used in the production of electric vehicles and are considered to be key resources for the coming energy transition.

Teck had proposed splitting up its metals and steelmaking coal businesses into two companies, Teck Metals and Elk Valley Resources. The change required approval by a two-thirds majority vote by the class A shareholders as well as approval by a two-thirds majority vote by the class B shareholders.

This report by The Canadian Press was first published April 26, 2023