Say goodbye to South Africa’s most iconic company as you know it

Anglo American and Teck Resources announced that they have reached an agreement to combine the two companies in a merger to form Anglo Teck.

This will form a global critical minerals champion and top five global copper producer, headquartered in Canada and expected to offer investors more than 70% exposure to copper.

Both Anglo American and Teck believe the merger will be highly attractive for both companies’ shareholders and stakeholders, enhancing portfolio quality, resilience and strategic positioning.

Bringing together the strengths of both companies, Anglo Teck will leverage proven capabilities in technical and operational excellence, sustainability, product marketing and project execution to deliver significant, value-accretive growth through the cycle.

Anglo Teck will hold an industry-leading portfolio of producing operations, including six world-class copper assets, alongside high-quality premium iron ore and zinc businesses.

Anglo Teck will be one of the world’s largest copper producers and will benefit from some of the world’s highest-quality copper endowments, with major brownfield and greenfield copper development projects located in attractive and well-established mining jurisdictions to further grow the business.

Anglo Teck will also retain growth optionality across its wider product portfolio, including in premium iron ore, zinc and crop nutrients.

The Merger is expected to deliver annual pre-tax synergies of approximately US$800 million by the end of the fourth year following completion of the transaction, with approximately 80% expected to be realised on a run rate basis by the end of the second year following completion, driven by economies of scale, operational efficiencies, and commercial and functional excellence.

Anglo Teck will also work with key stakeholders and partners in Collahuasi and Quebrada Blanca to optimise the value of these adjacent assets to realise US$1.4 billion (100% basis) of underlying EBITDA revenue synergies on an average pre-tax annual basis from 2030-20493, primarily through operational integration and optimisation of Collahuasi and Quebrada Blanca.

This will build on Anglo American’s success with similar adjacency partnerships in Brazil and elsewhere in Chile.

Both companies have been pursued by bigger miners in recent years: Anglo fought off a $49 billion approach from BHP last year, while Glencore unsuccessfully tried to buy Teck in 2023. 

Those failed bids kicked off a dealmaking frenzy, with executives across the industry spending much of the past two years running the numbers on their rivals to assess potential transactions.

The increased activity has largely been driven by the desire to expand production of copper — a metal essential to the global energy transition — as well as a fear of missing out after BHP’s bid for Anglo sent shockwaves through the sector. 

A transaction between Anglo and Teck would mark the first successful mega deal in recent years. Boards and executives have been wary of overpaying, as the industry is still haunted by the memory of a series of disastrous takeovers during the China-fueled commodity super cycle. 

A Teck-Anglo combination has long been discussed behind the scenes. Both companies have recently been seeking to simplify their businesses — Teck sold a majority stake in its coal business to Glencore, while Anglo has exited platinum mining and is in the process of trying to sell its own coal mines and offload its De Beers diamond unit.

For Anglo, the move to bulk up with an acquisition of Teck could help make it less vulnerable to another potential takeover bid itself.