Teck Resources to become Teck Metals as it spins off coal unit

Teck rejects Glencore's sweetened bid, pushes for restructuring

Elkview is one of Teck’s main steelmaking coal operations. (Image courtesy of Teck Resources.)

Teck Resources (TSX: TECK.A, TECK.B) (NYSE: TECK), Canada’s largest diversified miner, announced major changes on Tuesday, switching its name to Teck Metals Corp. and spinning off its multibillion-dollar steelmaking coal unit into a new company — Elk Valley Resources Ltd.

The Vancouver-based miner said the business separation will allow it to focus on industrial metals such as copper, which is crucial to the global energy transition.

The firms expects a copper supply gap of 13.2 million tonnes, which is expected to peak in 2025 due to declining grades, protracted permitting timelines and underinvestment.

As part of the restructuring, Teck will distribute common shares in Elk Valley Resources to its current shareholders, retaining a considerable interest in the steelmaking coal cash flows in a transition period, equivalent to an 87.5% interest in gross revenue royalty.

It also noted it had reached an agreement with its steelmaking coal joint-venture partners Nippon Steel Corp. and POSCO to exchange their minority interests in two of their operations for interest in the new business.

Teck has been weighing options for its metallurgical coal division for over a year, as the commodity is used in steelmaking, one of the most polluting industries.

The unit, made up of four mines in Elk Valley, British Columbia, has been hit by several issues in the past three years, including supply-chain disruptions, adverse weather events, labour shortages and an outage at Elkview plant.

This month, the government of British Columbia fined Teck Coal Limited C$15.4 million ($11.3m) for exceeding pollution thresholds and failing to build an active water treatment facility on time at its Fording River Operations in southeastern BC.

Chief executive officer Jonathan Price said the transaction simplified the portfolio of each company, allowing for strategic and financial focus and the ability to pursue tailored capital allocation strategies.

Teck will seek shareholder approval of the separation at its annual and special shareholders meeting scheduled for April 26.

Class shares

Separately, Teck unveiled plans to wind down the dual-class share structure through which Canada’s Keevil family controls the company.

The proposed change in share structure consists of a six-year sunset for the multiple voting rights attached to the Class A common shares

“The sunset on the multiple voting rights will modernize Teck’s governance and provide a simplified and competitive capital structure, following an appropriate continuity period, which we believe will benefit Teck and all of its shareholders,” Sheila Murray, chair of the board, said in the statement.