London (AFP) – British mining group Anglo American and Canadian peer Teck Resources announced Tuesday plans for a multi-billion-dollar merger, with copper in strong demand as the world transitions to cleaner energy and artificial intelligence. A new combined group producing a range of critical minerals is worth more than US$50 billion according to the companies’ current market values. The sector’s biggest tie-up in years will create a company named Anglo Teck, with headquarters in Vancouver and a primary listing in London. An agreed deal is expected to complete in 12-18 months, subject to regulatory hurdles, said a joint statement. Shareholders of Anglo American — the bigger of the two firms with revenue of more than $27 billion in 2024 — will own 62.4 percent of the new group and Teck shareholders the remainder.
– Strategic copper – Copper demand has exploded in recent years, with the metal needed for solar panels, wind turbines, electric-vehicle batteries, and consumer electronics. “This merger of two highly complementary portfolios will create a leading global critical minerals champion headquartered in Canada,” Teck chief executive Jonathan Price said in the statement. Alongside copper assets, the new group would operate premium iron ore, zinc, and crop nutrients businesses. Price added that the new company would be “a top five global copper producer with exceptional mining and processing assets located across Canada, the United States, Latin America, and Southern Africa.” Copper is used also in military hardware, including aircraft, while there is growing demand linked to the boom in artificial intelligence and data centres. Anglo Teck expects recurring annual pre-tax cost savings of $800 million, beginning four years after the merger completes. Job losses are likely among the tens of thousands of employees across the two companies to avoid duplicating roles. “We are all committed to preserving and building on the proud heritage of both companies, both in Canada, as Anglo Teck’s natural headquarters, and in South Africa where our commitment to investment and national priorities endure,” said Anglo American chief executive Duncan Wanblad. He will become CEO of Anglo Teck, with Price his deputy.
– Shares soar – Shares in Anglo American surged almost 10 percent in afternoon London trades, propelling it to the top of the capital’s benchmark FTSE 100 index. Teck shares surged in after-hours trading awaiting the reopening of Canadian stock indices, while rival miners jumped on the pair’s coattails. “Anglo American’s merger with Teck is its latest strategic pivot that cements copper at the heart of its portfolio,” noted Matt Britzman, senior equity analyst at Hargreaves Lansdown. “With over 70 percent copper exposure…the combined group is positioned to ride the structural demand story tied to electrification and energy transition.”
Anglo American in 2024 rejected a multi-billion-dollar takeover bid from Australian rival BHP, one year after Swiss commodities giant Glencore failed with an offer for Teck. “Anglo American has turned from prey to predator,” said Russ Mould, investment director at AJ Bell. “The deal to buy Teck Resources…sends a message to mining peers that it is not a pushover.” Last month, US group Peabody Energy walked away from a $3.8-billion deal to buy Anglo American’s steelmaking coal business. German-born industrialist Ernest Oppenheimer founded Anglo American in South Africa more than 100 years ago.
© 2024 AFP
