Anglo American and Teck Resources have announced an agreement to combine the two companies in a merger of equals.
The newly-formed Anglo Teck group cements itself as a “global critical minerals champion” and top five producer of copper, with more than 70 per cent copper exposure offered through the merger.
Anglo Teck’s copper production is approximately 1.2 million tonnes (Mt) and is expected to grow around 10 per cent to 1.35Mt in 2027.
The merger has been described as “highly attractive” for both companies’ shareholders and stakeholders with Anglo Teck able to leverage “proven capabilities in operational and technical excellence, sustainability and product marketing”.
With a strong balance sheet underpinned by a larger, more diversified asset and cash flow base – including premium iron ore and zinc – both parties said the merger is expected to deliver annual pre-tax profit of around $US800 million by the end of the fourth year.
Both boards of Anglo American and Teck unanimously support and recommend the transaction.
“We are unlocking outstanding value both in the near and longer term – forming a global critical minerals champion with the focus, agility, capabilities and culture that have characterised both companies for so long,” Anglo American chief executive officer (CEO) Duncan Wanblad said.
Teck CEO Jonathan Price said the deal was a natural progression of the company’s strategy and portfolio simplification.
“Bringing together our world-class copper assets, premium iron ore and zinc operations and an outstanding pipeline of high-quality growth projects provides enormous resiliency and optionality,” he said.
The merger is subject to both customary completion and regulatory conditions, which are expected to be completed within the next 18 months.