Why Canada wants Anglo for itself

Anglo American is facing mounting political pressure from Ottawa to shift its primary listing from London to Toronto as part of its proposed merger with Teck Resources – but major shareholders are unlikely to force such a move, and Anglo itself appears resistant.  

Several Canadian newspapers have reported that the government is urging Anglo to formally redomicile to Canada as it continues its review of the mining giant’s proposed takeover of Teck Resources Ltd.  

Government sources quoted by The Globe and Mail suggest that the new administration under Prime Minister Mark Carney is keen to score some victories – and deflect criticism that Canadian mining groups are being gobbled up by foreign players. 

That’s despite the fact that Anglo has already pledged to relocate its global headquarters from London to Vancouver, adopt the new corporate name Anglo Teck, and relocate several senior executives, including CEO Duncan Wanblad and CFO John Heasley, to Canada. 

Billed as a “merger of equals” and shorn of diamonds, platinum and coal, the plan is to create the world’s fifth-largest copper company worth R875bn ($50bn), with one of the most promising Chilean copper ore bodies at the centre. The merger – the second-largest in mining, ever – would combine Anglo’s big copper mine Collahuasi, which it runs in a joint venture with Glencore, with Teck’s Quebrada Blanca, barely 20km away. 

Anglo has not publicly responded to the pressure, but its shareholders will be voting on December 9 on the basis of a deal as already announced, which includes the HQ in Vancouver, the domicile in the UK and the primary listing in London, with the JSE listing continuing too. Any material changes to that construct would likely be a problem.  

So, would a primary listing in Canada be such a terrible outcome? The Toronto exchange doesn’t have the big players with which Anglo might be competing for capital, like Rio Tinto and Glencore. And it boasts an extremely active mining sector, much larger numerically than London. In some ways, Toronto is more in competition with the Australian Stock Exchange in Sydney for the crown of being the world-leading mining exchange.   

Dance partners

Ninety One analyst Dawid Heyl tells Currency that he would be “quite surprised” if Anglo concedes to a demand to redomicile in Canada. 

“There’s obviously a dance under way, but their view has been consistent: they are remaining with a UK primary listing and domicile,” he says.  

Heyl argues that, structurally, the UK remains the more logical base for Anglo, and there would be limited financial or strategic benefit for Anglo in shifting its main listing to Canada. “You might get slightly better government relations, but index inclusion wouldn’t be a net positive; you’d risk losing your place in FTSE and other benchmarks.” 

While Toronto is one of the world’s major mining finance hubs – especially for gold miners and junior explorers – Heyl says this is not the peer group Anglo wants to be benchmarked against. “Anglo’s capital competition is really with BHP, Rio Tinto and Glencore. Those peers are London or Australia based. Anglo doesn’t want to be competing with juniors.” 

And, as it turns out, Anglo’s share price performance has trounced those of its major rivals: the stock is up 30%, year to date, versus a flat performance from BHP and a 5% drop for Glencore.  

The merger requires 75% approval from Teck’s class B shareholders. Some commentators have suggested they might vote against the deal if Anglo refuses to shift its primary listing, but Heyl disagrees. 

“Teck shareholders don’t have many alternatives. Unless another bidder appears – which is unlikely – they’ll vote in favour. Teck is in a vulnerable position without this deal.” 

He points to the challenges at Teck’s flagship Quebrada Blanca 2 copper project, which has struggled to ramp up and is limiting cash flow. “In a combined portfolio, QB2 is smaller and Teck gets time to fix it. On its own, Teck is under pressure.” 

There is also the other side of the coin: if Anglo did accede to the request to relocate, would its own shareholders turn down the deal? Heyl suspects Anglo’s investors would tolerate it, but “they’ve already committed to moving the CEO, CFO and key roles to Vancouver. That should be enough.” 

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