Anglo, Teck pushed by Canada to give head-office job guarantees

Canada is putting pressure on Anglo American Plc to make stronger commitments to executive and management jobs at its proposed Vancouver headquarters as a condition of taking over Teck Resources Ltd., according to people familiar with the matter.

Industry Minister Melanie Joly is reviewing the tie-up between the two mining companies and has the power to block it. Anglo has promised to relocate its global headquarters from London to the largest city on Canada’s west coast, an unusual move meant to boost the chances of winning government approval in Ottawa.

But Joly’s office wants guarantees it would be more than just a paper move. The minister is arguing the Vancouver office should be the home of a significant number of executives and employees — and that Anglo should go further than what was outlined in its initial deal proposal, according to people with knowledge of matter, speaking on condition they not be identified.

The government isn’t asking Anglo to change its legal domicile to Canada from the UK, the people said.

The government also wants to ensure the new entity, to be called Anglo Teck, would support the critical minerals strategy of Canada and the Group of Seven, the people said. The G-7 recently announced a production alliance to counter what they describe as China’s manipulation of the market.

Teck’s smelter in British Columbia produces refined zinc and lead, which can be used in military hardware, and Joly wants to ensure the merged company fits into Canada’s efforts to build up a larger defense industrial sector.

Government officials have also discussed options for stockpiling strategic commodities produced by Teck such as copper, the people said. The talks between the companies and the government are still active and it’s unclear whether that would end up in the final agreement. Joly’s office declined to comment, referring Bloomberg News back to her previous statements.

A spokesperson for Anglo American referred to the company’s previous statements in which it said it will maintain at least current levels of employment. A “significant majority” of the executive team — including the chief executive officer, the deputy CEO and the chief financial officer — will be based in Canada, the company said. Anglo Teck also promised to invest at least C$4.5 billion ($3.2 billion) in projects over five years, including the extension of a major copper mine.

Shareholders of both companies are set to vote on the transaction on Dec. 9.

Speaking to reporters this week, Joly declined to get into specifics about what she’s looking for from Anglo and Teck. But she said the government wants to see greater economic benefits for Canada in order to approve the deal.

“We’re having many conversations with both companies,” she said, adding that she has a broader goal of ensuring Canada has more “national champions” and homegrown companies that become major players.

“That’s what I want to do with our new industrial policy, that’s what I want to do also through our new defense industrial strategy, and that’s certainly something I have in mind when looking at Anglo Teck,” she said.

Previous Canadian governments have been criticized for approving foreign takeovers of major resource and manufacturing companies without securing solid guarantees over employment, executive jobs and production.

In 2009, Canada sued United States Steel Corp. for breaking pledges to keep jobs and production after it took over steelmaker Stelco Inc. That experience may have factored into the government’s decision the following year to block BHP Group’s attempt to buy Potash Corp. of Saskatchewan.

In 2019, Barrick Mining Corp. merged with Randgold Resources Ltd. and still technically maintains its headquarters in Toronto’s financial district, but that office is much smaller than it used to be.

Prime Minister Mark Carney’s government has unveiled a series of measures to shore up access to critical minerals, including pledges to fund domestic projects and secure supply of key metals. Energy Minister Tim Hodgson said this month Canada has begun stockpiling scandium and graphite after reaching deals with domestic miners.

Anglo has said it expects secondary stock listings for the new entity in Toronto and New York, but it’s not looking to move its primary listing from London.

(By Jacob Lorinc and Brian Platt)