Teck Resources Ltd., a prominent Canadian mining company, experienced a significant surge in its share price, marking the largest increase since April. This rise followed the company’s announcement of its plans to utilize the proceeds from selling its steelmaking coal business to Glencore Plc for major financial improvements including debt reduction and shareholder returns.
The company outlined a robust plan to buy back up to $2 billion of its B class shares and to distribute approximately $182 million to its shareholders via a special dividend coming this September. Additionally, Teck Resources is set to initiate a debt reduction strategy, proposing to repurchase up to $2 billion in public notes, which includes a cash tender offer to buy back $1.25 billion worth of these notes.
Shares of Teck Resources soared, recording intraday gains exceeding 5%. The company made these announcements subsequent to the clearance from Canada’s federal government for Glencore’s acquisition of Teck’s coal assets, a deal valued at $6.9 billion.
Jonathan Price, the CEO of Teck, emphasized that this transaction signifies an important moment for the company, as it shifts focus towards metals essential for the energy transition, such as copper. The sale proceeds are earmarked to fund various copper-related projects across North America and South America. Specifically, the company plans to extend operations at its Highland Valley copper mine in Canada and to push forward early-stage projects in Mexico and Peru. A significant expansion at its flagship Quebrada Blanca mine in Chile is also nearing completion, expected to double the company’s copper production capabilities.
According to company comments, the estimated total capital cost for these ambitious copper projects is $3.3 billion to $3.6 billion. Price added that the agreement enables the business to keep a strong balance sheet in addition to facilitating a significant debt reduction. It also guarantees significant cash returns to stockholders and provides the financial stability needed for future metal expansion projects. As early as 2028, he predicted that these actions may increase the company’s copper production by an extra 30%.
