Next month shareholders in London-based mining giant Anglo-American will gather at City lawyers Linklaters' 1980's office in the shadow of the Barbican to vote on the firms' $50 billion powerhouse copper merger with Canada's Teck Resources.
The proposed deal - the second biggest mining merger ever - would consolidate two vast copper fields in Chile, Collahuasi, operated by Anglo American, and Quebrada Blanca, operated by Teck.
Called Anglo Teck, the firm would be headquartered in Vancouver - a further blow to the UK mining sector after BHP left the City in 2022 - though it will remain primarily listed in the London.
Yet issues over the deal keep emerging, not least Chile’s environmental authorities voicing longstanding concerns over air pollution and damage to glaciers in the central Andes.
Glaciers are vital water sources for Chilean capital Santiago and have significantly retreated over 60 years. Anglo-Teck plan to mine underneath the protected Yerba Loca nature reserve and Anglo has already built an exploratory five mile tunnel underneath three glaciers. They also plan to transport 48m tonnes of toxic waste through a 25-mile pipeline which Anglo say has governmental and environmental approval in Chile.
But, as Prince William's recent intervention at the Cop 30 summit shows, environmental concerns are becoming a huge worldwide issue not localised ones. And Chilean campaigners are quick to point out that: “Moving thousands of tonnes of toxic waste through the mountains to a dam not far from the capital could lead to an environmental disaster.”
Anglo have already warned that its 2026 copper output will be lower than expected. Their plans to expand copper production in Chile have been hit by a number of setbacks at Collahuasi.
Neither are the Canadian Government falling over themselves with excitement at the deal either, despite the mooted Vancouver headquarters.
The federal government is pressuring Anglo American to become legally Canadian and is forensically examining the British miner’s $20-billion bid. Ottowa wants it listed in Canada, under Canadian regulatory authority, which is unsurprising given the industry's criticisms of the deal.
Indeed Anglo have already admitted increased Governmental scrutiny may have an adverse affect on business operations in countries they operate in.
In a published circular they concede:"“While the Directors believe that the Merger is in the best interests of Anglo American and Shareholders, it may not be viewed favourably by governments in certain jurisdictions and Anglo Teck may be subject to heightened regulatory scrutiny by Governmental Entities, which could disrupt business operations in countries in which Anglo Teck will operate or result in the imposition of increased restrictions or conditions on Anglo Teck’s business and operations, the nature and extent of which are uncertain and unpredictable.”
Critics of the deal also point out Anglo American is struggling to sell $9.3 billion of its other assets as it looks to strengthen their balance sheet to enable the merger and concentrate on copper production. A not entirely positive third quarter production report raised questions over delivery of merger synergies.
These include its current failure to sell off its 85% stake in diamond company De Beers, a guilty plea to environmental breaches in their Northern Ontario operations, failure to sell its steelmaking coal business, a regulatory impasse in the sale of its Brazilian nickel assets and a $1.6 billion write down at Anglo’s flagship Woodsmith fertiliser mine in North Yorkshire following a $1.7 billion write down in 2024. Around 1,000 workers at the mine have been laid off.
The UK Government is unlikely to be impressed by the merger either, with job reductions likely in Britain rather than Canada as a result of $60 million synergy cost reductions proposed by Anglo and the subsequent loss of tax contributions to HMRC.
Now despite caution over Canada's desire to retain control over Teck and fears that Chile's environmental backlash may hinder expansion plans, rival bidders in this most macho of resource sectors are licking their lips at the thought of dramatic last minute interventions that could see off Anglo's chances.
Rio Tinto is being urged by investors to make a bid for Teck; and Glencore continue to hold a keen interest in the merger with the Collahuasi site - a joint venture with Glencore and Anglo each owning 44% of the mine.
In contrast to Anglo, Glencore recently published its own Q3 production report which showed its copper production is up 36% quarter-on-quarter - giving Glencore the potential to pull the rug from under Anglo’s feet, especially considering the firm's past attempts to acquire Teck.
Rio shareholder Palliser Capital has called on Rio Tinto to make a “now or never” bid to acquire Teck, stating it would unlock $800 million in cost synergies.
By adding Teck’s copper to its own portfolio and the result is beyond iron ore and into major league copper production. By unifying the two companies, it could ultimately see Rio divide into two parts, one concentrating on copper, aluminium and zinc based in Canada, and one in Australia focused on iron ore.
Already Rio Tinto's stock increased by 0.3% on the Australian stock market earlier this month, aligning stronger underlying prices and a recent uptick in copper prices with speculation of intervention in the Teck merger.
So with a perfect storm of Canada's regulatory demands, UK Government disapproval, howling environmental protests, Anglo's asset sale woes and pressure on Rio Tinto and possibly Glencore to counter bid, its shareholders might now be questioning whether Anglo can make good on the promised synergies and improved financial performance that form the rationale for the merger.
Nigel Rosser is an international mining consultant. He is currently involved with a major documentary film on Brazil’s gold and mineral trade.
