Teck Resources (TSX: TECK.B) has finally secured regulatory approval for the sale of its steelmaking coal unit. The firm late last night indicated that it has received regulatory approval for the sale of the unit to Glencore plc.
The transaction will see Glencore pay US$6.9 billion for Teck’s 77% interest in Elk Valley Resources, the steelmaking coal business unit of Teck. The announcement followed Teck revealing earlier in the evening that the steelmaking coal unit saw sales of 6.4 million tonnes of coal in the second quarter, which was at the top end of guidance. The average realized price meanwhile was US$237 per tonne.
A negative provisional pricing adjustment to the tune of $50 million is expected to be taken by the firm in the second quarter related to the unit.
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With regulatory approval in hand, the sale is expected to close on July 11. Proceeds from the sale are expected to be used to reduce debt, with the firm already announcing debt repurchases to the tune of US$1.25 billion, and to fund near-term growth in its metals segment.
“Moving forward as a pure-play energy transition metals company, we will build on our core portfolio of strong, cash-generating assets through development of our near-term copper growth projects. Completion of this transaction will provide substantial funding for our projects, giving Teck a pathway to increase copper production by a further 30% as early as 2028,” commented Jonathan Price, CEO of Teck.
Teck Resources Class B stock last traded at $68.95 on the TSX.
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