The arguments against a Glencore takeover of Teck Resources (TECK).

April 19, 2023

I have supported Teck Resources in this blog since I started in April 2004. The company is a Cara Core 12 based on its assets and management. I have often called it Canada’s finest mining company.

Glencore (GLEN.L) wants to take control, and the Teck management and board oppose any deal. Like Teck’s Keevil family, famous mining people Ross Beaty and Robert Friedland built their businesses and personal wealth in Vancouver, BC. They spoke passionately to the media this week against the Glencore proposals.

I, too, never want to see a foreign entity acquire Teck Resources, but if it should happen, it should be by Newmont (US). If the Keevils want to sell, I prefer Franco-Nevada (Canada) to be the buyer.

The arguments against Glencore expressed today on Bloomberg BNN TV by Ross Beaty are well known. Without mentioning that the crooked Marc Rich founded Glencore in Zug Switzerland when he was on the run from US authorities, Ross talked of its shady past and their more recent problems in Kazakhstan and Africa. But corporate governance is not the issue, nor is the financial offer.

The real argument is that Canada is a world leader in mining expertise and mine finance, and should Glencore take it over and move the headquarters to Switzerland, where its globally diversified operations are based, its management can at any time shut down Teck operations in Canada whenever they say that costs are not competitive. The slippery slope is obvious to anybody involved in mining in Canada. Soon, Canadian mining people would have to move abroad to get jobs. Toronto and Vancouver’s legal, accounting, and investment banking industries would suffer greatly as Glencore switched to its allies in London. London then becomes the world’s undisputed mining capital, and Glencore is one of the key players there. None of this should be allowed to happen.

Glencore is also a major commodity trader. They force prices and then exploit the damage. That is their corporate culture. If the regulators in London became too strict, there is nothing to say that Glencore managers would not decide to move their business dealings to Shanghai. After all, Marc Rich did not like the US Congress’s legal steps to stop him from trading Oil with the enemies of the US in the 1970s, so he quit the US. His evasive move to Zug led to the illicit wealth he used to start Glencore. To clean his illegal record, he paid Bill Clinton to expunge those misdeeds by Clinton’s final Presidential Pardon. That is the Glencore culture that Ross Beaty spoke out against today. It’s why every investor in North America should be concerned and should vote for the Teck plan.

The bottom line, however, is that I believe the Canadian government, under any party in power, will reject a Glencore deal. I’m counting on it.

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