Rio Tinto (NYSE: RIO), the world’s second-largest mining company, is reportedly considering potential takeover bids for smaller rivals, including Teck Resources (TSX: TECK.B), according to sources familiar with the matter. This move comes in the wake of recent industry consolidation attempts, such as BHP’s unsuccessful $49 billion bid for Anglo American.
Sky News reports that Rio Tinto has held discussions with bankers regarding a possible offer for Teck Resources, although no immediate bid is planned. Teck, Canada’s largest diversified miner, recently concluded the sale of its steelmaking coal unit to Glencore for approximately $6.9 billion, refocusing its operations on copper and zinc production.
The potential acquisition faces significant regulatory hurdles, particularly from the Canadian government. Last week, François-Philippe Champagne, Minister of Innovation, Science and Industry, stated that foreign takeovers of major Canadian mining companies would only be approved “in the most exceptional of circumstances”.
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READ: Teck Resources Granted Approval For US$6.9 Billion Sale Of Steelmaking Coal Unit
Industry experts anticipate a wave of mergers and acquisitions in the mining sector, driven by the need for critical minerals and supply chain security. However, large-scale deals involving top miners are expected to face increased scrutiny from Western governments, particularly concerning critical mineral supply chains.
Teck Resources, valued at nearly C$35 billion ($25.71 billion), is viewed as an attractive takeover target in the industry. Any potential deal would require the support of Teck’s controlling shareholder, Norman Keevil, who strongly rejected Glencore’s $23 billion takeover attempt last year.
As of now, both Rio Tinto and Teck Resources have not responded to requests for comment on the matter.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
One Response
I do not see benefits if a major miner takes over another major miner. Most probably the internal beaucrazy will increase. The bigger company is further away from the market and focus on ESG and other political targets rather than optimizing production and costs to maximize the cash-flow.
Why not buying developers or smaller company`s with low production high reserves and ressources?