Teck's Exiguous Stake Shift: EVR Coking Coal Business Sale

Teck Resources
Teck ResourcesImage Source: Teck Resources

Synopsis

Teck Resources Limited has completed the sale of a minority interest in its steelmaking coal venture, Elk Valley Resources, to Nippon Steel Corporation and POSCO. NSC acquired a 20% stake by swapping its prior interest in Elkview Operations plus a $1.3 billion cash payment. POSCO traded its interests for a 3% stake in EVR. The remaining 77% sale to Glencore PLC is anticipated in 2024.

Article

Teck Resources Limited, a prominent player in the mining sector, finalized the sale of a partial interest in Elk Valley Resources (EVR), a segment dedicated to steelmaking coal. The transaction saw Nippon Steel Corporation (NSC) and POSCO becoming stakeholders in this venture.

NSC made a significant move by acquiring a 20% share in EVR. This acquisition was secured by relinquishing its prior 2.5% interest in Elkview Operations and a hefty cash sum of $1.3 billion, swiftly paid to Teck. Additionally, a further $0.4 billion is set to flow from EVR to Teck post-transaction.

On the other hand, POSCO, another key player in the steel industry, altered its interests in Elkview Operations and the Greenhills joint venture for a 3% stake in EVR. This tradeoff signals a strategic shift in their investment portfolio.

The completion of this transaction marks a pivotal moment for Teck, propelling the company forward while reshaping its coal business landscape. However, it's noteworthy that the sale of the remaining 77% interest in EVR to Glencore PLC is pending until the third quarter of 2024. This sale remains subject to various regulatory approvals, including those under the Investment Canada Act and competition clearances in multiple jurisdictions.

Conclusion

Teck Resources successfully sold a part of its coal business, Elk Valley Resources, to Nippon Steel Corporation and POSCO. NSC obtained a 20% share by giving up its previous stake in Elkview Operations and paying $1.3 billion. POSCO traded its interests for a 3% stake. This sale is a significant step for Teck, but the remaining 77% sale to Glencore PLC is pending regulatory approvals until the third quarter of 2024.

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