As Canadians will know, the Government of Canada expressed strong objections to the attempt last year by Glencore plc to exercise a hostile takeover of Teck Resources Ltd. That proposed transaction raised very serious concerns and was rejected by shareholders.
Today, I approved - under strict conditions - a much narrower transaction whereby Glencore will acquire Teck Resources' metallurgical coal business, BC-based Elk Valley Resources (EVR).
This approval comes after an extensive net benefit review under the Investment Canada Act, and is the result of months of discussions with both Glencore and Teck as well as information sought from the BC provincial government, and federal departments including Environment and Climate Change Canada, and Natural Resources Canada.
As part of the review process, Glencore has provided a significant package of legally binding commitments in support of the transaction. In particular, Glencore has made a number of core commitments to ensuring a strong and well-capitalized Canadian operation of EVR. This includes:
- For a period of no less than 10 (ten) years, Glencore will establish and maintain a Canadian head office for EVR in Vancouver, BC.
- For a period of no less than 10 (ten) years, Glencore will maintain regional offices for EVR in Calgary, AB and Sparwood, BC.
- For a period of no less than 10 (ten) years, Glencore will ensure that the majority of EVR's Directors are Canadians
- For a period of no less than 10 (ten) years, Glencore will ensure that at least 66% of all executive and senior management roles at EVR are filled by Canadians
- For a period of no less than 5 (five) years, Glencore will maintain significant employment levels at EVR.
Glencore has also made binding undertakings that will ensure commitment to environmental preservation and stewardship of liabilities. This includes:
- Glencore will obviously be required to maintain its obligations under the bond required by the BC Government regulator. Notwithstanding these commitments, however, Glencore will, in addition, maintain responsibility for payment of any environmental obligations under Canadian law beyond those covered by the existing bond through 2050. This obligation would remain in place even in a scenario in which Glencore seeks to sell, demerge or otherwise dispose of EVR, unless the Minister is satisfied that the terms of sale suitably provided for environmental stewardship of the liabilities. In effect, Glencore's commitment will result in generational assurance of sound environmental stewardship of the asset, regardless of its future ownership, out to 2050.
- Glencore commits to an additional $350 million investment in rehabilitation and closure activities over 5 (five) years.
Glencore has also agreed to maintain Teck's leading commitments to First Nations. This includes:
- Glencore will maintain and honour commitments made to First Nations by EVR
- Glencore will work in good faith with First Nations to identify and implement opportunities to increase First Nations' participation in benefits from the activities of EVR, including increased employment and procurement opportunities
The Government has also secured a commitment from Teck to reinvest a significant amount of the proceeds of this transaction into its copper growth portfolio, which will position Teck for leadership in the pivotal area of critical minerals. Today's decision will result in a well-capitalized Teck that is better able to pursue its ambitions as a major Canadian mining player in critical minerals.
Canada welcomes foreign investment and acknowledges its importance to the mining sector. The most significant of these transactions are reviewed on their merits based on the overall net benefit to Canada. The Government will not hesitate to act when it is of the view that a transaction would be harmful to Canada's economic interests or the environment.
In light of the circumstances that led to this transaction, I am also providing additional guidance to the market on how net benefit reviews will be conducted when it comes to large Canadian mining companies engaged in significant critical minerals operations.
