Analysis-Anglo-Teck merger to unlock Chile mine synergies, if Glencore signs off

By Daina Beth Solomon and Fabian Cambero

SANTIAGO (Reuters) -The proposed Anglo American-Teck merger has revived long-standing ambitions to share infrastructure at two major mines in northern Chile, but analysts say the plan could face hurdles to gain buy-in from Swiss miner and trader Glencore.

Glencore is an equal partner with London-listed Anglo at Collahuasi, one of the world’s largest copper deposits that sits about 10 kilometers (6.21 miles) from Canadian miner Teck’s flagship Quebrada Blanca mine.

Investors see combining operations at the two sites as a linchpin to the Anglo-Teck merger, one of the biggest deals in mining history that would catapult two medium-sized mining firms into the top tier of global copper producers just ahead of an expected boom in demand.

Yet the companies will face questions about how such a fusion would work in practice, because of issues critical to Glencore such as valuation, supply agreements, profit sharing and governance structure, as well as how to manage mining waste problems at Quebrada Blanca and find cost savings from two separate sets of infrastructure.

“The potential for synergies is tremendous, but they’re not easy at all. They’re different operating styles, different management approaches — they’re different beasts,” said Jorge Cantallopts, head of Chile’s Center for Copper and Mining Studies (CESCO).

Glencore’s support for a tie-up between the two Chilean mines hinges on the valuation of Quebrada Blanca, a source familiar with the matter said. The Keevil family, which controls Teck’s class A shares, backed the merger, believing Teck lacked the resources to invest further in the costlier-than-expected project, the source added.

The Keevil family did not immediately respond to a request for comment. Teck, when consulted by Reuters, said it is working on operational issues at Quebrada Blanca.

Quebrada Blanca has had cost overruns and serious problems with mining waste at its expansion project launched in 2023 known as QB2, forcing it to lower production guidance and defer decisions on growth plans. Some analysts cautioned output could suffer into 2026.

Glencore declined to comment. Collahuasi, which operates as an independent unit, said it would not comment because the merger announcement came from one of its shareholders.

NEW COLLABORATIONS

Anglo and Teck plan to construct a conveyor belt between the two mines to feed Collahuasi’s high-quality ore for processing at Quebrada Blanca, but have not detailed if they would merge the mines into an independent business unit.