Teck says it won’t necessarily sell coal assets to highest bid

Teck is weighing multiple potential deals for its steelmaking coal unit, as the company seeks to rebrand as a standalone metals producer. The sales process caps a dramatic year for the Canadian miner, after it publicly rejected a takeover attempt by Glencore Plc, and then was forced back to the drawing board on its coal strategy when an earlier split proposal didn’t muster enough shareholder support.

Glencore has since offered about $8.2 billion to buy only the coal business, which had also drawn interest from Nippon Steel Corp., JSW Steel Ltd. and Canadian mining financier Pierre Lassonde, Bloomberg has previously reported. The company could either sell the entire unit entirely or offload a stake before spinning out the remainder to its own shareholders, Price said in an interview at Bloomberg’s London office on Tuesday.

Teck will consider a range of factors beyond valuation, including execution risk and the environmental track record of prospective buyers for the four coal mines in British Columbia, Price said. He declined to comment on specific bids or the potential outcome of the process, which he hopes to conclude by year end.

Any deal will need to be approved by the Canadian government, which has been adamant that the operator of the coal mines must have a strong environmental track record and a commitment to maintaining the local workforce.

“Yes, shareholder value has primacy here, but a function of that is going to be execution risk and responsible separation,” Price said. “We need to make sure that the coal mines in the Elk Valley continue to be run in a very responsible and sustainable manner, as they have been under Teck’s stewardship.”

Teck’s coal mines are under heightened scrutiny in Canada as pollution crossing the border with Idaho and Montana has become a sore spot in regional relations with the US, enough so that President Joe Biden and Prime Minister Justin Trudeau issued a joint statement this year committing to “reduce and mitigate” the impacts of local water contamination.

Teck attacked Glencore’s track record earlier this year as it sought to fend off the other company’s takeover bid, which also caught the attention of federal and regional government officials over the potential impact to the local and national economies.