I post this to neither agree nor disagree with AC but it’s of direct interest to Teck shareholders and more than peripheral interest to Copper Fox shareholders, so...

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Who owns Teck – its shareholders, or the government?
Andrew Coyne

It’s unclear what the next step in the Glencore-Teck takeover saga will be. Teck’s shareholders having lately rejected the company’s plan to split itself in two – a plan designed to stave off the Swiss-based Glencore’s advances – Glencore has vowed to come back with another offer, even richer than the US$23-billion bid the board has twice rejected. Only this time it says it will take its pitch directly to the shareholders.

That’s nice. Only the company appears to be under the mistaken impression that Teck’s shareholders are in fact the company’s owners. Whatever it may say on their share certificates, they are not. The government of Canada is.

That’s funny, you may be saying, I don’t recall Teck being nationalized. Well, no, not as the term is understood in other countries, that is, of a lawful process wherein shareholders are paid just compensation for the value of their shares.

But this is Canada, where governments do not need to pass legislation or pay compensation to take effective ownership of a company. They need only invoke the magic words “critical minerals value chain,” and that is that: Teck’s nominal shareholders can be summarily deprived of one of the core benefits of ownership, the right to sell your shares to the highest bidder.

Of course, it may never come to that. Teck’s ordinary shares may be widely held, but voting control rests with Norman Keevil, the company’s former chairman, who has vowed not to sell – though he has also vowed not to override the board, should it change its mind. At some price, it might.

But so what. The Liberal government has strongly hinted it would veto the sale. A letter signed by three cabinet ministers last week noted “Teck is Canada’s largest diversified mining company, with assets of central importance to our country as we expand our critical minerals value chain … We need companies like Teck here in Canada.”

Still, that was Hayekian laissez-faire itself compared to the response of the opposition Conservatives. A statement from the party demanded the government block the sale, claiming “thousands of Canadian jobs would be at risk, our local supply chains would be threatened, and Teck’s commitment to producing environmentally responsible steelmaking coal and zinc would be lost.”

Not that it seems to matter to anyone in federal politics, but it’s worth noting exactly how much this cavalier suspension of property rights is likely to cost Teck’s shareholders. As it is, Glencore’s offer represented a 22-per-cent premium on the pre-bid price of Teck’s shares, a cool US$4-billion. A revised offer will likely improve substantially on that.

Well, boohoohoo. Who cares about shareholders, right – even if these days they are mostly the beneficiaries of employee pension funds? But we might care a little more about who else would be losing out along with them. The money (in this case, cash and shares) doesn’t just go into a mattress, after all. The proceeds of a Teck sale would be available to be reinvested, to the benefit of other companies and other workers.

That might still be worth sacrificing, if there were some good reason to do so. But as in previous economic-nationalist meltdowns, these are scarce on the ground. The “critical minerals” argument – Teck mines copper and copper goes into batteries and therefore Teck must be Canadian-owned because the government has decided Canada should be in the batteries business – amounts to using one weak assumption (Canada must be in batteries) to justify another (the copper must be sourced domestically).

It also suffers from certain factual inconsistencies. Of the four copper mines in which Teck has a stake, three are not in Canada but in South America. Indeed, the simple dichotomy between “Canadian” Teck and “foreign” Glencore is hard to sustain. Teck’s largest shareholder is Chinese; its next largest shareholders are American and British. A Japanese company owns 46 per cent of its voting stock.

For its part, Glencore already employs 9,000 people across Canada in a variety of industries. Like Teck, it plans to split off its thermal coal business – the “dirty” kind – from its metals and metallurgical coal business, and to headquarter the latter business in Canada.

More to the point: no matter who owns the rights to them, the minerals are on Canadian land. The business of extracting them would employ Canadian workers either way, under the same environmental regulations, with the same obligations to Indigenous peoples.

The “national” in “national champions” has no economic, social or even logical meaning. It’s a buzzword, a slogan, designed to short-circuit thought and exploit insecurities. I had thought we had grown out of that in this country, but it seems there’s always a new generation of suckers.