The planned merger of Anglo American and Teck Resources to form a copper-focused major faces its biggest hurdle in Canada, where the government will weigh the transaction under the Investment Canada Act, analysts have cautioned.

“Regulatory scrutiny under Canada's Investment Canada Act represents the most material risk, with the Minister of Industry required to confirm alignment with national economic and security interests,” said James Whiteside, research director at consultancy Wood Mackenzie.

The warning comes after the Canadian government in 2023 rebuffed Glencore’s $23-billion approach for Teck, citing national interest concerns. Glencore later received the green light to acquire Teck's steelmaking coal operations, Elk Valley Resources, but Innovation, Science and Economic Development Minister François-Philippe Champagne published a policy statement that introduced a net benefits review. The Minister advised that foreign investments relating to Canadian mining companies engaged in significant critical minerals operations "will only be found of net benefit in the most exceptional of circumstances".

"This high bar is reflective of the strategic importance of Canada’s critical minerals sector and how important it is that we take decisive action to protect it," Champagne stated at the time.

To win political backing, Anglo has pledged to establish a head office in Vancouver, maintain a TSX listing alongside its London, Johannesburg and New York presence, appoint Canadian directors to its board and base senior management roles in the country. The group has also highlighted the economic opportunities the deal could unlock, including through investment in Teck’s Canadian operations such as Highland Valley Copper.

Whiteside further noted that while the merger accelerated Anglo’s pivot to high-margin commodities and offered Teck exposure to a larger copper portfolio with limited dilution, the real upside for investors may come from a market “re-rating".

“Management expects that increased copper exposure, a streamlined portfolio, and strong growth potential will drive a higher valuation multiple. If Anglo Teck positions itself as a pure-play copper growth story, the re-rating could far exceed synergy gains,” he said.

Under the deal, Anglo shareholders would own 62.4% of the combined entity, with Teck shareholders holding the remainder. Anglo will also declare a $4.5-billion special dividend to optimise the balance sheet at closing.