The federal government has approved the sale of Teck Resources Ltd Elk Valley coal mines to Glencore, after months of reviewing the net benefits through the Canada Investment Act.
François-Philippe Champagne, the federal Minister of Innovation, Science and Industry, said Glencore and Teck Resources Ltd. made a number of significant core commitments as part of the terms of the $9.5 billion sale for 77 per cent stake in Elk Valley Resources (EVR).
"Today, I approved - under strict conditions - a much narrower transaction whereby Glencore will acquire Teck Resources’ metallurgical coal business, BC-based Elk Valley Resources (EVR)," said Champagne, in a statement.
"This approval comes after an extensive net benefit review under the Investment Canada Act, and is the result of months of discussions with both Glencore and Teck as well as information sought from the BC provincial government, and federal departments including Environment and Climate Change Canada, and Natural Resources Canada."
According to the federal government, Glencore's commitments over the next 10 years include maintaining a Canadian head office in Vancouver for EVR, along with regional offices in Calgary and Sparwood. Further, over the next 10 years, Glencore must ensure it's majority of its board are made up of Canadians and that 66 per cent of senior management and executive roles are held by Canadians, while maintaining significant employment levels at EVR over the next five years.
In terms of environmental stewardship and liabilities, Glencore will inherit all existing obligations under the reclamation bond required by the B.C. government. Further, Glencore will maintain responsibility for payment of any environmental obligations under Canadian law beyond those covered by the existing bond through 2050, even if Glencore tries to sell, demerge or spin off the coal assets.
Glencore also committed to working with First Nations, honouring existing agreements and working in partnership to identify and increase First Nation participation in EVR activities.
Additional hyper-local commitments include spending at least $50 million over five years on sponsorship and charitable causes in local communities, as well as a $15 million commitment to the renal and oncology project at the East Kootenay Regional Hospital in Cranbrook.
The federal regulatory approval was the final hurdle before the sale is expected to close on July 11.
"Glencore’s Canadian assets form a significant part of our global business, and some have a history that dates back more than 100 years," said Gary Nagle, CEO of Glencore, in a statement. "The investment in EVR will further support our position as one of the largest diversified miners and suppliers of critical minerals in Canada."
The statement also noted that the Glencore will shortly begin a consultation process to assess shareholder views on a demerger of the combined coal and carbon steel materials business.
The sale of the Elk Valley coal assets will allow Teck Resources Ltd. to focus solely on developing its metals assets.
“Moving forward as a pure-play energy transition metals company, we will build on our core portfolio of strong, cash-generating assets through development of our near-term copper growth projects," said Jonathan Price, CEO of Teck Resources Ltd, in a statement. "Completion of this transaction will provide substantial funding for our projects, giving Teck a pathway to increase copper production by a further 30% as early as 2028.”
Wildsight, a Kootenay-based conservation organization, noted it remains concerned about the post-mining activity cleanup and environmental impacts.
“While Wildsight is celebrating the government’s attention to the potential environmental ramifications of this sale, the length of Glencore’s commitment is too short to match the scale of the water pollution stemming from these mines,” said Simon Wiebe, Mining Policy and Impacts Researcher at Wildsight.
“Indigenous and local communities in this watershed will be dealing with this pollution for at least a century. Who’s going to pay for the cleanup after 2050?
“We're now looking to the government for greater transparency around the details of Glencore's commitment to see exactly how it will be legally enforced."
Wildsight, along with Ecojustice, filed a legal petition in June that poses eight questions that the appropriate federal ministers must answer within four months of the document's filing.
Wildsight has raised concerns in the past that the current reclamation bond of $1.49 billion, which is $400 million shy of the province's estimated cost for reclamation of the Elk Valley coal mine sites. Further, Wildsight recently commissioned an independent study concluding that reclamation costs could be upwards of 6.4 billion.
Water quality concerns has also been a long running concern in the Elk Valley.
In 2021, Teck pleaded guilty to two counts of dumping coal mine waste rock leachate into the upper Fording River from the Fording River Operations and Greenhills Operations coal mines.
Investigation determined that lab analysis of captured Westslope Cutthroat trout contained selenium concentrations at levels that can be linked with adverse effects in fish. Further, calcite deposits were discovered in the upper Fording River and some of its tributaries that can cause a hardening of the riverbeds and affects the quality of fish habitat.
That plea came with a $60 million fine, the largest ever environmental penalty levied in Canadian history under the Fisheries Act.
Selenium concerns in the Kootenay watershed are also being investigated by the International Joint Commission — an entity created by a century-old treaty between Canada and the United States — that investigates transboundary water issues.
That process is underway, which involves setting up a governance structure and a two-year study board to investigate the issues and recommend solutions.
