Glencore (LON: GLEN) it had approached Teck Resources (TSX: TECK.A, TECK.B)(NYSE:TECK) with a proposal to buy the Canadian miner鈥檚 steelmaking coal business, in the latest twist in one of the mining industry鈥檚 biggest takeover battles in a decade.
The Swiss giant, which does not typically take 鈥渘o鈥� for an answer, originally wanted to buy Teck entirely. While it succeeded to thwart the Vancouver-based miner鈥檚 plan to split into two companies, Glencore did not give up on the idea. 聽
After being rejected several times, the miner and commodities firm has approached Teck with a proposal to buy its steelmaking coal business for an undisclosed valuation, as an alternative to the $23 billion takeover bid.听
Glencore said that, if successful, it would create a new company combining its own coal assets and Teck鈥檚 in one to two years after after paying down debt. The move would create a coal mammoth with few rivals in scale anywhere in the world, producing over 100 million tonnes of thermal coal and 30 million tonnes of steelmaking coal a year.
The company said it also 鈥渞emains willing to pursue鈥� its original offer to buy the whole company.
One of many
Teck that Glencore was one of a number of proposals it was considering for its coal business. It noted that talks were preliminary, conditional and non-binding.
The discussions signal a potential dialling back of tensions after the two companies have been engaged for months in a public battle over Glencore鈥檚 unsolicited bid to buy Canada鈥檚 largest diversified miner.
Analysts say Glencore鈥檚 new plan gives it an opportunity to exit the hugely profitable but polluting thermal coal business. They noted that Teck鈥檚 steelmaking coal operations, however, represented a 鈥渄isappointing鈥� second prize to the Canadian company鈥檚 copper mines.
Teck has the Highland Valley Copper mine in British Columbia, Canada, the Quebrada Blanca and Carmen de Andacollo copper mines in Chile and an interest in the Antamina copper-zinc mine in Peru.
The company is also in the midst of expanding Quebrada Blanca. The project, dubbed QB2, is one of the world鈥檚 largest undeveloped copper resources.
鈥淲e would view the sale of the coking coal assets to Glencore as an attractive 鈥榤iddle ground鈥� for both companies,鈥� Deutsche Bank analyst Liam Fitzpatrick said. 鈥淚t would provide Teck with a cleaner exit from coal and allow Glencore to split its own business into CoalCo and MetalsCo.鈥�
The experts echoes Glencore chief executive Gary Nagle鈥檚 position. He said in May that buying Teck鈥檚 coal business only would be a 鈥渄istant second鈥� in terms of benefits that could be achieved by merging.