Rio Tinto (NYSE: RIO), the world’s second-largest mining company, is reportedly considering potential takeover bids for smaller rivals, including Teck Resources (TSX: TECK.B), according to sources familiar with the matter. This move comes in the wake of recent industry consolidation attempts, such as BHP’s unsuccessful $49 billion bid for Anglo American.
Sky News reports that Rio Tinto has held discussions with bankers regarding a possible offer for Teck Resources, although no immediate bid is planned. Teck, Canada’s largest diversified miner, recently concluded the sale of its steelmaking coal unit to Glencore for approximately $6.9 billion, refocusing its operations on copper and zinc production.
The potential acquisition faces significant regulatory hurdles, particularly from the Canadian government. Last week, François-Philippe Champagne, Minister of Innovation, Science and Industry, stated that foreign takeovers of major Canadian mining companies would only be approved “in the most exceptional of circumstances”.
READ: Teck Resources Granted Approval For US$6.9 Billion Sale Of Steelmaking Coal Unit
Industry experts anticipate a wave of mergers and acquisitions in the mining sector, driven by the need for critical minerals and supply chain security. However, large-scale deals involving top miners are expected to face increased scrutiny from Western governments, particularly concerning critical mineral supply chains.
Teck Resources, valued at nearly C$35 billion ($25.71 billion), is viewed as an attractive takeover target in the industry. Any potential deal would require the support of Teck’s controlling shareholder, Norman Keevil, who strongly rejected Glencore’s $23 billion takeover attempt last year.
As of now, both Rio Tinto and Teck Resources have not responded to requests for comment on the matter.
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