Teck Resources CEO Jonathan Price responds to questions from reporters after the company's special meeting of shareholders, in Vancouver, B.C., Wednesday, April 26, 2023. THE CANADIAN PRESS/Darryl Dyck

Teck Resources Ltd.'s move to cancel a key shareholder vote on its plan to separate its businesses may be seen as a win for Glencore in its ongoing campaign to acquire the Vancouver-based mining company.

But Teck is standing by its assertion that the offer by the Swiss commodities giant remains a "non-starter," and Teck CEO Jonathan Price indicated Wednesday the company may be receptive to other suitors.

"We have premium businesses. And when it comes to M&A, we firmly believe that competition for assets drives value," Price said on a conference call with analysts.

Teck announced just hours before its annual meeting Wednesday that it will not go ahead with the vote on its plan to split its metals and steelmaking coal businesses into two companies.

The company made the move when it became apparent it did not have the two-thirds approval from shareholders required for its proposal, which would have split the company into Teck Metals and Elk Valley Resources (EVR), Price said.

Glencore, which declined to comment Wednesday, had been urging Teck shareholders to reject the company's separation proposal. The Swiss company has said all along it would be unable to pursue its own US$23-billionhostile takeover bid if Teck's plan to separate its businesses went ahead.

Cole Smead, of Smead Capital Management, said it's clear that at this point, Glencore has the upper hand.

"I think everyone should have expected this. Frankly, Glencore knows more about the commodity markets than anyone else out there, in my opinion," Smead said in an interview.

"They’re the kind of people that if you’re gambling, and they’re on the other side of the table from you, you should probably go play a different game.”

Teck is keen to expand its copper and zinc production to meet growing global demand for these metals, both of which are used in the production of electric vehicles and are considered to be key resources for the coming energy transition.

By separating its steelmaking coal assets from its metals business, the company hoped to entice investors who are keen on the copper and zinc opportunity, but don't want to invest in coal for ESG (environmental, social, governance) reasons.

Price said shareholders have made it clear that they still like the idea of a separation, but it needs to be a "simpler and more direct approach." He declined to elaborate on options the company may be considering.

He also declined to say whether Teck has been approached by any other prospective buyers.

"I won't speculate in any detail on that," Price said. "But suffice to say that the process we've been through over the last two months, which of course has been a very public one, has seen a significant interest in both businesses, EVR and Teck Metals. And it's very clear that the value of those businesses is well-recognized."

Price suggested that additional buyers could come forward once Teck splits its coal assets from its metals business.

"We expect there would be significantly more interest in the businesses on a stand-alone basis," he said. "And that is one of the reasons we continue to believe that separation is the right path forward here."

But Smead said he believes that Glencore will ultimately triumph, chiefly because other prospective bidders may only be interested in the ESG-friendly metals component of Teck's business.

"You’re back to that conundrum, of what’s going to happen to the coal assets. And Glencore is providing that 'out' – they’re saying ‘no, we want the coal assets,'" Smead said.

“Glencore wants to be involved in these businesses – Teck doesn’t. And that’s the distinction, and that’s why I think the family will lose control. Because they don’t want to be in the business they’ve built, they only want to be in part of it.”

Teck is controlled by the Keevil family, which owns the company's class A shares together with Japanese company Sumitomo Metal Mining Co. Ltd.

Teck chairman emeritus Norman Keevil has said Glencore's proposal is the wrong one, at the wrong time, but that he is open to talking about other possible deals once the company completes its own plan to split its business.

Teck shareholders voted overwhelmingly in favour Wednesday of the company's earlier announced plan to wind down its dual class share structure over the next six years.

Teck is keen to expand its copper and zinc production to meet growing global demand for these metals, both of which are used in the production of electric vehicles and are considered to be key resources for the coming energy transition.

The unsolicited pursuit of what is Canada's largest diversified mining company by an international giant has triggered sentiments of economic nationalism.

B.C. Premier David Eby, the Mining Association of B.C., as well as the Greater Vancouver Board of Trade have expressed concern over the potential for job losses and cast doubt upon Glencore's ESG record.

In a letter to the Greater Vancouver Board of Trade dated April 24, three senior federal cabinet ministers said Ottawa is watching the situation "very closely."

"We need companies like Teck here in Canada," stated the letter, which was signed by Deputy Prime Minister Chrystia Freeland, Industry Minister François-Philippe Champagne and Natural Resources Minister Jonathan Wilkinson.

"You've seen the comments the government has made. I won't comment on those — that's their business," Price told reporters after the conclusion of Teck's general meeting Wednesday.

"What's particularly encouraging is both provincial and federal government support for Teck Resources — the recognition that we are a great business, a critical part of the Canadian economy, and we have very responsible and ethical business practices that are very important to our communities and other stakeholders here in Canada."

It remains unclear whether Ottawa would go so far as to block a potential acquisition of Teck by Glencore. But some observers have pointed out Glencore's pursuit of the Canadian company comes at the same time that the government has committed to a national critical minerals strategy as part of its overall climate plan.

Teck's Class B shares jumped on the Toronto Stock Exchange Wednesday, climbing more than four per cent to close at $61.35.

- With files from Chuck Chiang in Vancouver

This report by The Canadian Press was first published April 26, 2023.

Companies in this story: (TSX:TECK.B)

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