On July 3, Canadian Vancouver-headquartered mining company Teck Resources Limited (Teck) announced that it agreed to sell a 17.2 percent equity stake to Chinese state-owned sovereign wealth fund China Investment Corporation (CIC) for C$1.74 billion (about US$1.5 billion).
According to a statement released by Teck, the Canadian miner is selling 101.3 million Class B subordinate-voting shares to CIC.
Under the terms of the deal, CIC will receive a 17.2 percent equity interest and a 6.7 percent voting interest in Teck.
The Canadian company plans to use the money to pay off outstanding bank debts. In 2008, Teck obtained US$9.8 billion in loans to pay for the acquisition of Canadian coking coal producer Fording. Last year, Teck sold more than half of its coking coal production to Japan and South Korea and recently started selling to China. The company expects its total coal sales in 2009 to be around 18-20 million mt, of which 90 percent is hard coking coal
Commenting on the transaction, Teck president and CEO Don Lindsay said, "This transaction will have an immediate and very positive effect on Teck's balance sheet, and represents an attractive opportunity for Teck to establish a relationship with a major Chinese financial investor, with a deep understanding of China, the world's largest consumer of our principal products."
CIC expects the deal to close by July 14, and has agreed to hold the shares for at least one year afterwards.
Teck is one of the largest resource companies in Canada with interests in copper, metallurgical coal, zinc, gold and energy.