OPINION: Teck’s inessential coal sale makes it smaller and more vulnerable to takeover – by Eric Reguly (Globe and Mail – November 24, 2023)

https://www.theglobeandmail.com/

After two decades of evisceration, the Canadian diversified mining industry had one big name standing – Teck Resources. The company was not among the half-dozen giants that dominate the global mining industry, but it was the biggest we had left. With a smart strategy, disciplined spending and more than a little luck, Teck could emerge as a homegrown champion, perhaps not among the industry’s A-team players, but near the top end of the B list.

That was the vision, at least. What happened instead was self-evisceration. On Nov. 14, Teck sold its vast coal assets, all of them in Canada, to Glencore of Switzerland, Japan’s Nippon Steel and South Korea’s POSCO, in an US$8.9-billion deal. The sale of Teck’s coal made sense on one level, perhaps, and no sense on others.

Coal is the most carbon-intensive fuel, making it an energy pariah, though still a popular one. Some disciples of ESG (environmental, social and governance) investing principles will be happy to see the grubby fuel shown the door. But Teck’s coal was not the thermal variety that is burned to generate electricity. It was metallurgical coal, which is used to make steel.

As such, it was pretty much given a free ride among much of the ESG crowd. To banish metallurgical coal from the market would be to banish steel production, and no one is calling for that.

For the rest of this article: https://www.theglobeandmail.com/business/commentary/article-tecks-inessential-coal-sale-makes-it-smaller-and-more-vulnerable-to/