Anglo American and Canada's Teck Resources announce merger to form global mining powerhouse

The Money Show's Stephen Grootes is joined by David McKay, editor of Miningmx, and Dawid Heyl, co-portfolio manager for the Global Natural Resources strategy at Ninety One. 

Anglo American and Canada's Teck Resources Limited have announced an agreement to combine the two companies in 'a merger of equals' to form the Anglo Teck group.

The two miners say in a statement that the merger will create a global critical minerals champion and top five global copper producer, expected to offer investors more than 70% exposure to copper.

Their portfolio will also include high-quality premium iron ore and zinc businesses.

The global group will be headquartered in Vancouver, Canada, with corporate offices as well in London and Johannesburg.

While the announcement caught even him by surprise, Miningmx editor David McKay says the merger does seem to make sense, with the two companies stating that they mine in the same way, with the same values.

McKay highlights the logic of an asset level strategy driving the deal.

'I think it starts with asset level common sense and logic... One of the major points that comes out from this is that there are continuous assets in Chile, that when put together make a very sizable operation, with good synergies and good growth."

David McKay, Editor - Miningmx

"I think that's where Duncan Wanblad and his opposite number Jonathan Price at Teck would have started and did start in fact - they were discussing cross-border cooperation on the Chile copper assets."

David McKay, Editor - Miningmx

At the same time, there was also the question of whether Anglo is vulnerable to M&A (mergers and acquisitions) as it is becoming a smaller company as it restructures. There was also an offer for Teck made a few years ago, made by Glencore.

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Both McKay and Ninety One's Dawid Heyl make the point that copper is broadly seen as the metal of the future, in view of the trends around electrification and decarbonisation.

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