Anglo American Nears Teck Resources Acquisition, Boosting Scale and Synergies

Mining giant Anglo American is nearing an acquisition of Canadian miner Teck Resources, with the deal potentially being announced this week. This merger could become one of the largest in mining history. The acquisition is seen as a strategic move to enhance Anglo American's scale and create a stronger defensive barrier, making it less vulnerable to future takeover attempts. Both companies have adjacent mines in Chile, and the merger is expected to yield significant synergies.

This potential acquisition comes at a time when global mining companies are seeking to consolidate high-quality assets to meet the surging demand for metals driven by the energy transition. Last year, Anglo American successfully fended off a takeover bid from BHP Group. Similarly, Swiss commodities giant Glencore attempted to acquire Teck Resources in 2023 but was unsuccessful.

Analysts believe that by proactively acquiring Teck Resources, Anglo American will not only gain valuable assets but also significantly increase its scale, thereby establishing a more robust defensive barrier. This move will make it less likely for Anglo American to become a takeover target in the future. Both companies have been actively divesting non-core businesses to simplify their structures. Teck Resources has sold most of its coal business to Glencore, while Anglo American has exited the platinum mining business and is seeking to sell its coal assets and divest its De Beers diamond business.

The most notable aspect of this merger is the significant potential for business synergies, particularly in Chile's copper mining projects. Teck Resources' flagship asset is the Quebrada Blanca 2 copper mine in Chile, while Anglo American holds a stake in the adjacent Collahuasi copper mine. Integrating these geographically proximate large mines could significantly enhance production efficiency, reduce costs, and ultimately boost profitability.

Despite the negotiations being in the advanced stages, the final structure and timing of the deal could still change, and there is a possibility that the talks could fall through. Insiders reveal that Anglo American is considering using stock as the primary payment method for this acquisition. Both companies have remained cautious about the market's highly anticipated rumors, with Anglo American declining to comment and Teck Resources not immediately responding to requests for comment.