Anglo American nears deal to acquire Teck Resources

Anglo American Plc is nearing a deal to acquire Canada’s Teck Resources Ltd. in what could be the biggest mining deal in more than a decade — and just over a year since Anglo was subject to a takeover bid itself.

London-listed Anglo American is in advanced talks on a potential purchase of Teck Resources and could announce a transaction as early as this week, according to people familiar with the matter, who asked not to be identified because the information is private. Teck shares jumped more than 20% in post-market trading in New York.

A combination of the two companies would rank among the biggest ever in the mining industry, and mark the culmination of several years of revived dealmaking activity among the largest players. Shares of Teck Resources had fallen roughly 20% in Toronto trading over the past 12 months, giving the company a market value of about C$23.7 billion ($17.1 billion). Anglo American shares have risen 15% in London trading over the same period, giving it a market value of £26.9 billion ($36.4 billion).

Anglo American is considering paying mostly in stock, some of the people said. The timing and structure of any deal might change and negotiations could still end without an agreement, the people said.

A representative for Anglo American declined to comment, while Teck Resources didn’t immediately respond to requests for comment.

Both companies have been pursued by bigger miners in recent years: Anglo fought off a $49 billion approach from BHP Group last year, while Glencore Plc unsuccessfully tried to buy Teck in 2023.

Those failed bids kicked off a dealmaking frenzy, with executives across the industry spending much of the past two years running the numbers on their rivals to assess potential transactions. The increased activity has largely been driven by the desire to expand production of copper — a metal essential to the global energy transition — as well as a fear of missing out after BHP’s bid for Anglo sent shockwaves through the sector.

Yet a transaction between Anglo and Teck would mark the first successful mega deal in recent years. Boards and executives have been wary of overpaying, as the industry is still haunted by the memory of a series of disastrous takeovers during the China-fueled commodity super cycle.

A Teck-Anglo combination has long been discussed behind the scenes. Both companies have recently been seeking to simplify their businesses — Teck sold a majority stake in its coal business to Glencore, while Anglo has exited platinum mining and is in the process of trying to sell its own coal mines and offload its De Beers diamond unit.

For Anglo, the move to bulk up with an acquisition of Teck could help make it less vulnerable to another potential takeover bid itself.

The news could also spur other rivals into action. Teck, which is controlled by the founding Keevil family, has been a focus for several of the industry’s biggest players because of its attractive copper assets, Bloomberg reported previously.

The family controls Teck through “supervoting” Class A shares, while its largest shareholder is China Investment Corp.

Any deal would also need the approval of the Canadian government, at a time when copper and other critical minerals have become viewed as increasingly strategic by governments around the world. Canada said last year that it would only approve foreign takeovers of large Canadian mining companies involved in critical minerals production “in the most exceptional of circumstances.”

A combination of the two companies could bring efficiencies. Teck’s flagship mine is the Quebrada Blanca 2 copper project in Chile. Anglo owns a stake in the neighboring Collahuasi mine, which could offer opportunities to increase production and profits by combining the two operations.

Still, both companies have recently suffered setbacks. Teck began a review of the QB2 operation last week after being dogged by setbacks for years. Anglo, meanwhile, recently saw its plans to sell its coal mines collapse and now faces the challenge of finding a new buyer. It is also trying to sell De Beers during one of the diamond industry’s deepest-ever crises.

(By Crystal Tse, Dinesh Nair, Thomas Biesheuvel and Thomas Seal)