CRU: Teck To Spin Off Coking Coal Business as it Splits Into Two

“Both Teck Metals and EVR have high-quality operating assets and strong financial foundations…. The transaction simplifies the portfolio of each company, allowing for strategic and financial focus and the ability to pursue tailored capital allocation strategies.”

He added the change establishes a pathway to full financial separation of the companies over time.

For now, their creation will provide investors with a choice for allocating investment between two businesses with different commodity fundamentals and value propositions, Vancouver-headquartered Teck Resources said, adding they will both remain committed to strong environmental and social performances.

Subject to shareholder approval, the separation will be structured by spinning off Teck Resources’ metallurgical coal business by distributing EVR’s shares to Teck’s shareholders. Teck Metals will retain a substantial interest in coking coal cash flows for a transition period via an 87.5% interest in royalties and EVR preference shares.

Steelmakers Nippon Steel of Japan and Posco of South Korea have agreed to exchange their minority interests in Teck’s coking coal business’s Elkview and Greenhills operations for interests in EVR. Nippon will also invest CAD $1.025 billion ($761 million USD) ) to give it a 10% stake in EVR; Posco will hold 2.5% of EVR.

“This significant participation by two of the world’s largest steelmakers highlights the long-term, critical importance of high-quality steelmaking coal in order to reduce emissions and build essential infrastructure globally,” Price said.