Glencore's Elk Valley stake boosts shares by 3%

Glencore shares (LSE: GLEN) jumped 3% after clinching a $6.93 billion deal for a 77% stake in Teck Resources’ Elk Valley coal unit. The acquisition, set to close in Q3 next year, bolsters Glencore’s position in the steelmaking coal sector.

Nippon Steel’s conversion of its 2.5% Elkview Operations interest to Elk Valley equity, and Posco Holdings’ exchange of Elkview and Greenhills stakes for a 3% Elk Valley equity, further solidify Glencore’s strategic move.

Post-transaction, Glencore will acquire shareholder loans from Nippon Steel and Posco, totalling an estimated $250-300 million, to be repaid from Elk Valley’s cash flows.

CEO Gary Nagle emphasized Elk Valley’s value in complementing Glencore’s global coal production. This development follows a protracted negotiation period with Teck, culminating in a revised offer.

Glencore, aiming to position itself as a cash-generating bulk commodity entity, plans to demerge its coal and carbon steel businesses post-debt reduction, expected within 24 months post-closure.

Glencore shares are down 18.5% year-to-date and 13% year-over-year,