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Base Metals LME Report by Natalie Scott-Gray
Natalie Scott-Gray
- Base Metals
Anglo American & Teck Resources to Merge - Quick Take
By: Natalie Scott-Gray, Senior Metals Demand Analyst, EMEA and Asia region
Anglo American & Teck Resources Jump Overnight
Source : Bloomberg, StoneX
What you need to know?
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On 9th September Anglo American and Teck Resources announced that the two companies are set to merge, in what could be the largest mining sector M&A deal in over a decade, with new company name 'Anglo Teck'.
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Transaction Value: ~$50bn.
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Ownership Split: Anglo 62.4% | Teck 37.6%.
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Dividend: $4.5bn special dividend to Anglo shareholders ahead of the deal, while Tech investors will receive 1.33 shares of Anglo for each share they hold in Teck. The miners presented it to shareholders as a zero-premium transaction.
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Headquaters: Vancouver, Canada.
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Listings: Primary London; secondary Johannesburg, Toronto, New York.
Leadership
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CEO: Duncan Wanblad (Anglo American CEO)
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Deputy CEO: Jonathan Price (Teck)
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Board split: 50/50 between Anglo and Teck
Timeline
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Regulatory approval: 12–18 months (following shareholder votes for the deal, in addition to requiring Canadian Government support).
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Note, both companies have agreed to consider unsolicited proposals for the deal to be terminated in the event of superior proposal.
Background
- Teck avoided a takeover bid from Glencore in 2023, however, subsequently struck a $7Bn deal with Glencore to offload its steelmaking and coal business. While Anglo America fought off a $49Bn approach from BHP Group in 2024. Prior to this Anglo American exited its platinum mining business, it continues to try to offload its De Beers diamond unit and is in the process of trying to sell its own coal mines.
- This increased activity among mining majors has arisen from a desire to expand copper production, which is essential for the digital and green energy transition. The merger is set to deliver a pre-tax annual cost savings of $800M.
What Would Anglo Teck Look Like – Part 1 - Copper
Anglo Teck Could be Responsible for 5% of Global Mined Copper Output
Global Copper Assets: Anglo American Versus Teck Resources
Source : Bloomberg, ICSG, Teck Resources, COCHILCO, StoneX
Global Market Share of Anglo Teck Copper Mine Supply
Source : Bloomberg, ICSG, Teck Resources, COCHILCO, StoneX
- Anglo Teck would form a top five global copper producer with combined annual copper production of 1.2 mt expected to growth by c.10% to c.1.35mt in 2027 from a portfolio of long-life assets with attractive cost profiles and outstanding resource endowment.
- Total anticipated pre-tax recurring annual synergies of US$800 million and an additional US$1.4 billion (100% basis) of underlying EBITDA revenue synergies between the adjacent Collahuasi and Quebrada Blanca operations on an average annual pre-tax annual basis from 2030-2049, which is expected to result in an increase of c.175,000 tonnes of potential additional annual copper production
Getting into the details:
- Collahuasi and Quebrada Blanca are adjacent operations that have the potential to unlock value in a capital efficient manner. Near-term opportunities to enhance cash flow and value include using Quebrada Blanca’s infrastructure to process higher-grade ore from Collahuasi. Anglo American and Teck are committed to working at pace with the other stakeholders of these assets to realize US$1.4 billion (100% basis) of underlying EBITDA revenue synergies between the adjacent Collahuasi and Quebrada Blanca operations on an average pre-tax annual basis from 2030-2049 primarily through operational integration and optimisation of Collahuasi and Quebrada Blanca.
- Combined proven project development capabilities to maximize the potential from an extensive pipeline of brownfield and greenfield copper growth options in Canada, Chile, Peru, Mexico, the United States, and Finland, with a pathway towards a significant additional uplift in copper production.
- Anglo Teck will remain committed to working with Codelco to implement a joint mine plan in respect of the two companies’ respective, adjacent copper mines of Los Bronces and Andina in Chile with the view to unlocking an additional 2.7 million tonnes of copper production during the course of that joint mine plan after 2030.
Other development prospects include:
- The Galore Creek and Schaft Creek projects in Northwestern British Columbia, Canada
- Zafranal in Peru, San Nicolas in Mexico, NuevaUnión in Chile, NewRange in the U.S. and Sakatti in Finland
- Further brownfield opportunities to deliver the full potential from outstanding resource endowments across the existing portfolio
Chilean Copper Mining Assets in Focus
Chilean Copper Assets Owned by Teck Resources & Anglo American
Source : Bloomberg, ICSG, SMM, Teck Resources, COCHILCO StoneX
Combined Anglo American & Teck Resources Market Share of Chilean Copper Output
Source : Bloomberg, ICSG, SMM, Teck Resources, COCHILCO StoneX
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Teck Resources Versus Anglo American Chilean Market Share
Source : Bloomberg, ICSG, SMM, Teck Resources, COCHILCO StoneX
Collahuasi and Quebrada Blanca to Combine Post Deal
Source : Bloomberg, ICSG, SMM, Teck Resources, COCHILCO StoneX
What Would Anglo Teck Look Like – Part
Iron Ore
- A major producer of premium iron ore (61 mt) that facilitates cleaner steelmaking from mines in South Africa and Brazil.
Getting into the details:
- Anglo Teck is also set for significant growth in premium iron ore output through the development of the high-quality, multi-billion tonne Serpentina resource in Brazil, an adjacency to Minas-Rio, and the addition of UHDMS technology at Kumba in South Africa to deliver a far greater proportion of premium quality iron ore products and thereby enhance margins.
- Opportunity to significantly increase germanium and other specialty critical minerals production from Trail Operations metallurgical facility, supporting the critical minerals priorities of Canada.
- Anglo Teck will continue to progress the development of the Woodsmith project in the UK with its ongoing potential to be a generational asset in crop nutrients. Full development remains subject to meeting stringent investment criteria for risk-adjusted value, including syndication to one or more investment / strategic partner.
Zinc
- One of the world’s largest producers of mined zinc (616,000t of zinc contained in concentrate) through the world-class Red Dog mine in Alaska, as well as operator of one of the world’s largest fully integrated zinc and lead smelting and refining facilities at Trail Operations in British Columbia (295,000t of refined zinc a year).
Other
- Anglo Teck will remain committed to Anglo American’s announced portfolio simplification, including ongoing work to separate De Beers for value alongside completion of the steelmaking coal and nickel disposals. Anglo American will continue to advance these efforts prior to completion.
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