Teck Resources Is Said to Plan Coal Spinoff to Focus on Metals

(Bloomberg) — Teck Resources Ltd. is planning to separate its multibillion-dollar steelmaking coal business to focus more on industrial metals, according to people familiar with the matter.

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The Canadian miner is expected to make an announcement on the spinoff as early as next week, the people said, asking not to be identified as the matter is private. Deliberations are ongoing and no final decision has been made, the people said.

Shares rose 8.4% to C$60.98 at 9:36 a.m. in Toronto, the biggest intraday jump since Nov. 29.

Teck has been weighing options for its coal division for over a year in a strategic shift toward mining more of the metals such as copper that are crucial to the global energy transition. Metallurgical coal is used in steelmaking, which is among the most polluting industries and faces significant pressure from policymakers.

The company declined to comment.

Teck, which is scheduled to report earnings next week, is one of the world’s largest exporters of metallurgical coal. The company produced more than 24 million metric tons in 2021 from four different operations in western Canada, according to its filings. The business accounted for 55% of the company’s gross profit.

Teck has been exploring options for the business since at least September 2021, when people familiar with the matter said the business could be worth about $8 billion.

A coal spinoff would leave Teck with a suite of copper and zinc mines across the Americas, including its Quebrada Blanca 2 copper project in Chile which has long been admired by some of its biggest rivals. It also owns a stake in the Antamina copper and zinc operation with BHP Group and Glencore Plc.

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Separating the coal business would likely make Teck an attractive target for large miners such as BHP and Rio Tinto Group that have been hunting for takeovers to expand in industrial metals, providing the family that controls the shares would be willing to sell. Bloomberg reported last month that the world’s biggest producers have rediscovered an appetite for mega deals, after years of staying on the sidelines.

(Updates shares in third paragraph.)

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