How a Major Copper Prize Brought Together Mining's Underdogs -

For years, a potential merger lingered in the global mining industry, yet it remained out of reach. In mid-2024, executives from Teck Resources and Anglo American Plc initiated talks about merging their extensive copper mines in the Atacama Desert.

These discussions led to a major announcement on Tuesday: the companies unveiled plans to merge not just their Chilean copper mines but all of their operations. This merger is poised to become one of the largest in the industry, forming a new mining giant valued at over $50 billion.

Read: Anglo American agrees to acquire Teck in a transformative mining deal

The rationale for merging Teck’s Quebrada Blanca mine with Anglo’s 44%-owned Collahuasi mine was evident. Teck’s CEO Jonathan Price noted on Tuesday that this merger could create one of the world’s largest copper mines, especially given the increasing demand for the metal—a deal described as one of the “most compelling industrial synergies available in the industry today.”

The journey to this announcement involved navigating a complex array of challenges, including managing diverse personalities, political factors, and discussions about the new company’s headquarters, according to several insiders familiar with the negotiations, who chose to remain anonymous.

Initial discussions commenced in 2023 when Teck was fending off a hostile takeover attempt from Glencore Plc. However, talks accelerated in mid-2024 after Teck divested its coal assets.

The firms first considered merging their Chilean copper interests, located just a few kilometers from one another. Processing high-grade ore from Collahuasi at Quebrada Blanca could produce an additional 175,000 tons of copper annually with an estimated investment of $1.9 billion, according to company estimates.

Read: Anglo American bids farewell to platinum

Recently, momentum has surged. Anglo, engaged in a struggle against a hostile bid from BHP Group, initially prioritized its own restructuring.

As time went on, discussions evolved from focusing solely on Chilean assets to a more holistic view encompassing all of Teck. After Anglo successfully completed a spin-off of its platinum division in June, talks intensified significantly, insiders revealed.

Price and Anglo CEO Duncan Wanblad fostered a friendly relationship through various industry conferences, complemented by interactions between their respective chairs and dedicated internal teams.

Anglo American CEO Duncan Wanblad. Image: Ian Waldie/Bloomberg

Numerous negotiations unfolded within the offices of boutique investment banks advising both companies, with Ardea representing Teck and Centerview assisting Anglo.

Wanblad commented on Tuesday that there had been “sporadic discussions over the last year” regarding asset integration. “However, in recent months, it became apparent that merging the two businesses held considerable value, along with the benefits stemming from asset synergies.”

Despite moments when it seemed negotiations could stall, including the days leading up to the announcement, both parties persisted—navigating operational issues like the collapse of Anglo’s planned coal sale to Peabody Energy Corp. and challenges at a key Teck project.

Read: Anglo faces setback as Peabody withdraws from $3.8 billion coal deal

Both companies remained cautious to steer clear of obstacles that had previously impeded major players from successfully acquiring valuable Chilean copper assets, insiders noted.

For example, Glencore Plc—an investor in Collahuasi—made a $23 billion bid for Teck in 2023, which failed due to opposition from Norman Keevil, whose family has a long-standing connection with Teck and holds controlling stakes through supervoting class A shares.

In contrast, during discussions with Teck, Anglo prioritized securing Keevil’s approval. Initially, the companies disagreed on the future headquarters of the merged entity, but they ultimately settled on Vancouver after Keevil expressed concerns about Teck relocating from Canada. Preserving the company’s Canadian roots was crucial for the 87-year-old, who aims to solidify his legacy.

The Teck team also stressed that the agreement should be viewed as a “merger of equals” rather than a takeover. Although Anglo shareholders will have a majority stake in the combined entity, and Wanblad will lead it, half of the board will be nominated by Teck, and Sheila Murray, Teck’s chair, will retain her position in the new organization.

Keevil endorsed the agreement, describing it as “the merger of two respected, century-old firms into a world-class mining operation based in Canada.”

Read: Anglo cuts dividend in response to unit sales

Anglo and Teck also learned lessons from BHP Group’s unsuccessful $49 billion bid for Anglo last year. The South African government’s dissatisfaction over not being consulted contributed to BHP’s withdrawal from that arrangement.

To mitigate similar issues, Anglo and Teck kept key governmental stakeholders informed throughout their discussions, including Prime Ministers Mark Carney of Canada and Keir Starmer of the UK. The merged company will continue to have its primary stock listing in London, even if its headquarters are located elsewhere.

“The industrial rationale has been evident from the beginning,” stated George Cheveley, a portfolio manager at Ninety One UK, which holds shares in both companies. “The more intricate aspect of this deal has been coordinating a seamless integration of both management teams and the companies themselves.”

Challenges may still be on the horizon. Shareholder approval is necessary for the merger, and many analysts predict that other companies may enter the bidding for Teck, Anglo, or both.

“Anglo and Teck have made the initial move,” claimed Tony White, a partner at MKP Advisors, a merger arbitrage expert. “Yet, the competition for control over these copper assets may not be settled just yet.”

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