Yahoo Finance Teck Resources (TECK) in Talks With Parties for Coal Business
Teck Resources TECK has announced that it has been receiving interests from various parties involving deals regarding its steelmaking coal business. The segment is the world's second-largest seaborne exporter of steelmaking coal, with four operations in Western Canada. The business is garnering interest due to its significant high-quality steelmaking coal reserves and its stable demand outlook, which enables it to support steel production, as well as transition to a low-carbon economy.
Teck Resources stated that its board of directors and an independent Special Committee, along with financial and legal advisors, will continue to consider and evaluate these proposals. They will assess the proposals which are in the best interests of the company’s shareholders and other stakeholders. TECK however added that there is no assurance at this time that any strategic outcome or a deal will materialize from these discussions.
In February 2023, Teck Resources announced the spin-off of the steelmaking coal business and its intention to reorganize its business into two independent, publicly-listed companies which are Teck Metals Corp. and Elk Valley Resources Ltd. Teck Metals would be a premier, growth-oriented producer of energy transition metals and Elk Valley Resources was to be a responsible steelmaking coal business with top-tier margins.
A special meeting of shareholders was to be held on Apr 26, 2023, to vote on the proposal. However, Teck Resources called off the meeting and announced that it has decided not to proceed with the consideration of the proposal by its shareholders. The company stated that it plans to pursue a simpler and more direct separation, to unlock the full value for its shareholders.
Glencore Takeover Bid Rejected
In a separate development, on April 3, TECK received an unsolicited takeover offer from Glencore plc GLNCY. Glencore’s offer was for an all-share acquisition of Teck, offering 7.78 Glencore shares for each Teck Class B subordinate voting share and 12.73 Glencore shares for each Teck Class A common share. GLNCY’s plan was to acquire TECK and then split into two businesses.
Even though the offer represented a 20% premium to TECK, its board rejected it and said that it is not contemplating a sale of the company and that the deal carried a high degree of execution and timing risk. Glencore soon made a revised offer that was mainly unchanged, with the exception of a cash consideration alternative in lieu of shares in the proposed combined coal entity. However, the offer was again rejected by TECK’s Board on the premise that it was still not in the best interest of the shareholders. Per reports, Glencore intends to come back with a sweetened offer.
Focused on Growing Copper Business
Teck Resources announced that its Quebrada Blanca Phase 2 Project ("QB2") produced its first bulk copper concentrate in April 2023, which is a milestone achievement for the project toward full production in 2023. Since 2012, Teck has been interacting with the regional communities in the QB2 project area and working together to bring tangible benefits for the duration of the project. QB2 is one of the world's largest undeveloped copper resources, with an initial mine life of 27 years, utilizing only about 18% of the 2022 reserves and resource tonnage. The project has the potential for future expansion.
When fully operational, QB2 will nearly double Teck's consolidated copper production. The company expects this operation to produce 285,000-315,000 tons of copper annually in 2024-2026. Teck Resources intends to capitalize on the robust outlook for the copper market based on rising global demand driven by the transition to a low carbon economy.
Price Performance
Image Source: Zacks Investment Research
The company’s shares have gained 13% so far this year against the industry’s 6.6% decline.
Zacks Rank & Stocks to Consider
Teck Resources currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Piedmont Lithium Inc. PLL and Gold Fields Limited GFI. PLL currently sports a Zacks Rank #1 (Strong Buy) and GFI carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Piedmont Lithium’s earnings per share is pegged at $6.29 for 2023. Earnings estimates have been revised 62.9% upward in the past 60 days. PLL has gained 45% year to date.
The consensus estimate for Gold Fields’ fiscal 2023 earnings per share is pegged at $1.01. Earnings estimates have moved 6.3% north in the past 60 days. Its shares have gained 51% in the past year.
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Piedmont Lithium Inc. (PLL) : Free Stock Analysis Report
Gold Fields Limited (GFI) : Free Stock Analysis Report
Glencore PLC (GLNCY) : Free Stock Analysis Report
Teck Resources Ltd (TECK) : Free Stock Analysis Report
