Teck Resources Drops Separation Plans, Will Seek Simpler Approach to a Split -- Update

By Robb M. Stewart

Canadian miner Teck Resources Ltd. dropped plans to separate its steelmaking coal operations from the company's base metals business hours before shareholders were due to vote on the proposal.

It will instead look at options for a simpler break up.

Teck said shareholders it heard from were overwhelmingly in favor of a split, but many would prefer a more direct approach to a separation of the company.

Chief Executive Jonathan Price said the miner will reexamine options that were considered before management pitched plans for a separation to investors and the company also would see if there were other opportunities to cut the coal assets away from the rest of the company. Speaking to investors and analysts, Mr. Price declined to put a timeline on the efforts.

Shareholders were set to vote later Wednesday at Teck's annual meeting on a proposal that would've created two standalone companies, but with ties between them that would have ensure the coal operations helped fund copper projects that underpin the base metals company. Teck had already tweaked its plans in response to shareholders' concerns about the length of time it would take to split the company, with the coal business, to be named Elk Valley Resources Ltd., paying royalties to the base-metals unit, to be named Teck Metals Corp., for at least three years rather than the original proposal of at least five-and-half years.

Mr. Price said a takeover approach by metals and mining company Glencore PLC remained a non-starter, though he added mergers and acquisitions could play a role for Teck with the "right approach, at the right time." The separation process had unearthed interest in Teck's businesses, he said.

Analysts speculated Teck may now consider a full spin-out of the coal operations or a possible sale of the assets, though Mr. Price said all options would be looked at.

Mr. Price said that Teck was focused on a three-pronged strategy that targets a separation, develops its copper projects and retains strong cash returns.

Teck continues to ramp up its flagship Quebrada Blanca Phase 2 copper project in Chile to full production while it advances a pipeline of copper projects and looks to optimize production at existing operations, it said.

The company had the support for its proposed separation from its controlling shareholders, Chairman Emeritus Norman Keevil and his family and Japan's Sumitomo Metal Mining Co., which collectively account for 48% of the total voting power over Teck via the company's A shares.

Teck rejected a takeover bid from Glencore, which has said it remains prepared to engage with Teck's board but is also considering going directly to shareholders with its roughly $23 billion offer.

In afternoon trading, Teck's shares were up 4.2% on the Toronto Stock Exchange, widening the advance so far this year to 20%. Teck Class B shares gained 4.6% in New York.

Write to Robb M. Stewart at [e-mail]

(END) Dow Jones Newswires

April 26, 2023 13:00 ET (17:00 GMT)

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