Written By Teck Resources has just announced an $11.5bn spin-off of its copper and coal assets into two separate companies: Teck Copper Inc. and Teck Coal Inc. This move is the largest ever in the mining industry, with the new firms expected to begin trading on the London Stock Exchange later this year. The move is being seen as a major shift in Teck’s strategic direction, with its focus now firmly set on gold and silver mining as opposed to its more traditional operations in copper and coal. In this article we’ll explore what this spin-off could mean for Teck’s future and how it may impact their operations in both the long and short term. Read on to find out more about what this massive restructuring could do for one of Canada’s leading mining companies.
Teck Resources announces spin-off of copper and coal assets
Teck Resources, one of Canada’s largest mining companies, has announced plans to spin-off its copper and coal assets into a new publicly-traded company. The move will help Teck focus on its core businesses of steelmaking coal and zinc, while the new company will be better positioned to take advantage of rising copper prices.
The spin-off is expected to be completed by the end of 2017, and shareholders will receive one share of the new company for every four shares of Teck they own. The new company will be headquartered in Vancouver and listed on the Toronto Stock Exchange.
Teck’s decision to spin-off its copper and coal assets comes as commodity prices have begun to rebound from multi-year lows. Copper prices have surged nearly 20% since hitting a low in early 2016, while coal prices have risen by more than 50% over the same period.
The move will also help Teck reduce its debt burden, which stood at $8.5 billion at the end of 2016. The spin-off is expected to raise around $2 billion for Teck, which will be used to pay down debt and fund future growth projects.
What this means for Teck Resources and its shareholders
Teck Resources Ltd. (Teck) announced today that it intends to spin-off its copper and coal assets into a new publicly traded company, to be called Teck Resources Limited Partnership (TRLP). TRLP will own and operate Teck’s portfolio of copper and coal assets, including the Antamina, Carmen de Andacollo, Quebrada Blanca and Chaparral mines in Chile; the Elkview, Greenhills, Fording River and Cardinal River mines in Canada; and the Quebrada Blanca Phase 2 project in Chile.
Teck’s current shareholders will receive one common share of TRLP for each common share of Teck they own. The transaction is expected to be completed by the end of 2017, subject to customary conditions including shareholder and regulatory approvals.
“This transaction will create two strong, focused companies with distinct competitive strengths,” said Don Lindsay, President and CEO of Teck. “TRLP will have a leading position in both the global copper market and the seaborne thermal coal market, with a high quality asset base and significant growth potential. Teck will continue to be a diversified mining company with a premier position in steelmaking coal, zinc and lead, and exposure to gold through our ownership interest in Goldcorp.”
What this means for the Canadian mining industry
The spin-off of Teck Resources’ copper and coal assets is good news for the Canadian mining industry. This move will allow Teck to focus on its core competencies in steelmaking and energy, while the new company will be able to grow its business without the distraction of these other businesses.
This is a positive development for the Canadian mining industry as a whole, as it will create a more focused and streamlined Teck that is better equipped to compete in the global marketplace. Additionally, the new company will add much-needed competition in the Canadian mining sector.
The impact on global commodity markets
As part of Teck Resources’ strategy to focus on its core businesses, the company has announced a $.bn spin-off of its copper and coal assets. This move will have a significant impact on global commodity markets, as Teck is one of the world’s largest producers of these commodities.
Copper prices are likely to rise in the short term as supply tightens and demand increases. This will benefit producers of copper, such as Teck, but may put pressure on consumers who use the metal in manufacturing. Coal prices are also expected to increase as Teck’s coal assets are absorbed by other companies. This will benefit coal producers and consumers alike, as higher prices will incentivize production and consumption.
In the long term, the spin-off of Teck’s assets is likely to lead to increased competition in both the copper and coal markets. This could lead to lower prices for both commodities, which would benefit consumers but put pressure on producers.
Conclusion
Teck Resources has announced the spin-off of its copper and coal assets into a new entity, with an estimated value of $11.5 billion. This move could prove to be beneficial for Teck as it seeks to focus on its core activities, while also unlocking additional value from these assets that had been sitting idle. Investors should keep a close watch on this development and how it evolves in the near future, as it presents an exciting opportunity for further growth within Teck’s portfolio.
