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'Easier deal to swallow' — B.C. politicians soften their stance as Glencore buys Teck's coal mines

teck-resources-coal2-1121-ph
teck-resources-coal2-1121-ph

The mayors of two towns in British Columbia’s southeastern Kootenay region weren’t too happy when Glencore PLC first tried to buy Teck Resources Ltd. and its four steelmaking coal mines.

Six months on, however, both mayors seem to have changed their point of view now that Glencore is set to take over most of Teck’s coal mines for about US$7 billion. One of them even hopes the Swiss mining giant can help build more homes to address the region’s housing shortage.

The change in tone can be attributed to the two dozen commitments Glencore has agreed to make if the federal government approves the deal.

For example, if the deal goes through, Glencore will be legally bound to maintain “significant employment levels in Canada” and not have a net reduction in the number of employees, spend 50 per cent more than what Teck has currently allotted on water quality treatment technologies, implement a climate transition strategy and honour existing relationships with Indigenous communities. It will also have to continue operating through the Vancouver head office and regional offices in Calgary and Sparwood, B.C.

“I think the commitments that Glencore has made makes this a much easier deal to swallow,” said David Wilks, the mayor of Sparwood, a town where almost all 4,500 people depend upon Teck’s coal mines.

Wilks said he wasn’t sure what was going to happen in the long run, but the commitments made to protect local workers and the environment were significant.

Steve Fairbairn, the mayor of Elkford — another town located close to Teck’s mines — said it was “pleasing to see” that Glencore said it would increase the amount it will put into community and non-profit funds.

“The fact that they are keeping head offices in the valley certainly feels like another intention to maintain local input and consider local situations in their larger-scale mine operation,” he said.

 Steve Fairbairn, the mayor of Elkford, a town located close to Teck’s mines, is hopeful Glencore will improve the town’s infrastructure, including housing.
Steve Fairbairn, the mayor of Elkford, a town located close to Teck’s mines, is hopeful Glencore will improve the town’s infrastructure, including housing.

The mayors were initially worried that it would be harder for them to communicate with the mines’ management since they expected Glencore to set up an office outside Vancouver. They also assumed the region would be of lesser importance since the company has several other big projects globally.

Back then, Fairbairn said he didn’t expect someone sitting in Switzerland to care much about donations or building infrastructure in a small B.C. town.

Now, though, he said the commitments in the deal give him more comfort and he is hopeful Glencore will take more steps than Teck to improve the town’s infrastructure, including housing.

“We have a vacancy rate that is zero per cent,” he said. “We can’t get developers or builders out here to build homes … hopefully, the new owners will be more interested to help us build homes for people who work at the mines.

Fairbairn said hundreds of people come from out of town and live in rentals to work their weekly shifts at the coal mines.

“I do hope Glencore will up that angle of the game and we will see some homes,” he said.

It’s not just the mayors who have softened their stance. The B.C. government also seems to be taking a more relaxed point of view compared to the statements made in April by Premier David Eby, who said Glencore would struggle to meet the province’s high environmental, social and governance (ESG) standards. He also said companies working in B.C. need to tackle sensitive discussions and have a sophisticated ability to work with First Nations to bring new projects online.

In response at the time, Glencore said it would honour all of Teck’s commitments to Canadian communities, including Indigenous ones, and the company’s social, labour and environmental programs.

Eby wasn’t available for comments, but Energy Minister Josie Osborne said in a statement that he expects Glencore to meet the province’s “high standards on environmental regulations and collaboration with First Nations,” and retain existing commitments linked to water quality.

The key to the deal, however, is whether the federal government will approve it under the Investment Canada Act (ICA), which monitors investments made by non-Canadians to assess the net benefit to this country’s economy.

Finance Minister Chrystia Freeland told reporters last week that Ottawa will “carefully” follow Canada’s regulatory process in reviewing the takeover. B.C. will also be consulted during the regulatory review of what she called “a serious transaction.”

Last year, Ottawa used the ICA to prevent three Chinese miners from investing in Canadian lithium companies in an effort to increase Canada’s foothold in critical minerals such as lithium, copper and nickel, which are expected to be in high demand during the energy transition away from fossil fuels.

Teck is only selling its coal assets that are near the towns of Sparwood and Elkford. Coal isn’t a top priority for the federal government, but with more than two dozen commitments mentioned in the deal, both Teck and Glencore seem to be taking the ICA review seriously.

As Sparwood mayor Wilks put it when asked if he was concerned about a foreign company taking over the coal mines.

“Only as much as the federal government is,” he said. “If they don’t think that this is something that they want to go down, they can kill it. They can kill it with a stroke of a pen.”

• Email: nkarim@postmedia.com

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