Partial sale of Teck’s coal business ‘more probable,’ says Scotiabank analyst – by Naimul Karim (Financial Post – August 29, 2023)

Canada’s largest diversified miner could announce a ‘simpler and more direct’ plan to split company within months

Canada’s largest diversified miner Teck Resources Ltd. may announce a “simpler and more direct” plan to separate its coal assets from its metals’ unit by the end of the third quarter this year, according to an analyst at the Bank of Nova Scotia.

The Vancouver-based miner has been trying to separate its assets since February, when it announced it was going to divide itself into two publicly-listed companies to unlock shareholder value. One of the companies would focus solely on the metals needed for the energy transition, such as copper and zinc, while the other would run its steelmaking coal operations.

But the company in April decided to come up with a new separation plan as it predicted its original proposal wasn’t going to get the required shareholder support that it needed to go ahead. The new plan, according to Bank of Nova Scotia analyst Orest Wowkodaw, might be a partial sale of its coal assets.

“Although the probability that Teck can divest the entire (coal) business at fair value has markedly improved over the past six months, we believe this scenario remains challenged by the large size of the transaction and the limited debt capacity of the standalone business,” he said in a note to clients on Aug. 29.

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