Published first at Patreon.com/jameskwantes

By James Kwantes

Large piles of copper, zinc and coal are not all Glencore will get if the company’s hostile bid for Vancouver-based Teck Resources is successful. Glencore will also inherit a host of equity positions in junior exploration companies.

“Not material,” I know – I reached out to Teck and the company declined to provide me with a list of their junior investments. “Many of our investments are not material from Teck’s perspective.”

For decades, Teck has been an important financier, incubator and partner of choice for Canadian mineral exploration companies. Most of their junior investments are certainly material for the exploration company getting the cash – and cumulatively, for Canada’s junior exploration ecosystem.

It’s particularly relevant given the continuing lack of capital inflows into the small explorecos that do the heavy lifting on mineral discoveries.

As Robert Friedland put it in a Twitter thread last month:

Here’s a partial list of Teck’s current junior investments (from SEDI, crowd-sourced at CEO.ca and from my portfolio*). Teck is under 10% on many of these, so some information could be out of date:

  • Barksdale Resources (copper, Arizona, copper/gold, Mexico)
  • *Fireweed Metals (zinc-lead-silver/tungsten, Yukon/NWT)
  • *Kodiak Copper (copper, B.C. and Arizona)
  • American Eagle Gold Corp. (copper/gold, B.C.)
  • Perpetua Resources (formerly Midas Gold, gold-Idaho)
  • Hannan Metals (copper in Peru % Chile, base metals in Ireland)
  • Deep-South Resources (copper, Namibia)
  • Arras Minerals (copper/gold, Kazakhstan)
  • Abacus Mining (copper/gold in B.C., copper/moly in Nevada)
  • Horizonte Minerals (nickel, Brazil)
  • Erdene Resource Development (gold-copper-moly, Mongolia)
  • Euromax (gold-copper, North Macedonia)
  • Fidelity Minerals (copper-gold in Peru, potash-phosphate in Australia)
  • Hudson Resources (rare earths, Greenland)
  • Latin Metals (copper-gold, Peru, Argentina)

Teck also has valuable non-producing joint ventures, including these two in northwestern B.C.:

  • 50% of the Galore Creek copper-gold-silver deposit, a JV with Newmont. In all categories, Galore hosts 5.6 billion lbs copper, 10.6 million oz of gold and 166 million oz of silver.
  • 75% of Schaft Creek, which hosts 9 billion lbs copper, 8 million oz of gold, 600 million lbs of moly and 63M oz of silver. The other 25% is held by a junior.

The critical metal of copper stands out on the above lists, as well as for Teck’s production profile going forward with QB2 coming online. Glencore is very interested in Teck’s (cash cow) coal assets too, of course; CEO Gary Nagle previously ran Glencore’s coal division. The latest chapter in this unfolding commodity battle: Pierre Lassonde is leading a bid to purchase Teck’s coal assets.

Glencore has pledged that GlenTeck’s head office will remain in Canada. While Glencore has a significant Canadian presence, similar promises by acquisitive multinationals have been broken. Colour me skeptical.

Will Glencore continue Teck’s important work incubating and financially supporting junior exploration companies looking for the minerals the world needs? I have my doubts.

The World For Sale, Javier Blas and Jack Farchy’s excellent book about the world of commodity trading, does offer insight on other reasons Glencore would love to swallow up Teck. Proponents of Glencore’s hostile bid tend not to focus on these reasons.

Glencore has a new CEO and a newfound focus on ESG, ethics and compliance. The company also has lingering and well-deserved reputational issues, stemming from “endemic” bribery in Africa and South America. Glencore has been fined more than a billion dollars in the U.S. and U.K., with more to come. The company has set aside $1.5 billion to settle bribery and market manipulation charges.

Teck’s ESG track record is hardly spotless – the miner has been fined millions of dollars for polluting rivers near its Trail smelter operations. On governance, critics knock Teck’s Class A “super shares,” which are controlled by the Keevil family and Sumitomo (and are being phased out).

However, longtime observers of Teck know that progressive and ethical business practices have been woven into the company’s DNA for decades – not belatedly in a “come to Jesus” moment. On this front, the differences in corporate culture between Teck and Glencore could not be more pronounced.

Glencore’s bid for Teck is reminiscent of Bob Dylan’s line in It’s Alright, Ma (I’m Only Bleeding): “Money doesn’t talk, it swears.” Big money may sideline yet another Canadian major. But credibility on ethics and ESG can only be earned, not purchased.

Disclosure: No position in Teck or Glencore; I own shares of Fireweed Metals and Kodiak Copper.