Rachel Reeves has been warned that the decision by a corporate mining giant to close its London HQ and head to Canada should be a “wake up call” on the impact of her economic policies.
London-listed mining giant Anglo American has agreed a deal to merge with Canadian rival Teck Resources to create one of the world’s largest copper producers with a combined value of close to £40 billion.
But the deal will see Anglo American move its headquarters away from London, with the combined group to be led out of Vancouver in Canada, although it will retain corporate offices in the UK and Johannesburg, South Africa.
The move comes as businessman Sir Jim Ratcliffe has also announced he is shifting billions out of the UK, in a further blow to the chancellor.
Tory shadow chancellor Mel Stride warned that the departure of major businesses, wealth and capital from the UK should be “a wake up call” for Ms Reeves.
He told The Independent: “This should be a wake up call for the Labour government. Companies and investors are leaving the UK, meaning fewer jobs and lower growth.
“You cannot tax and regulate your way to growth. Businesses need certainty and a government which backs wealth creation and investment. We should be making the UK the best place in the world to do business, but Labour are taking us in the opposite direction.”
The row comes amid speculation that Sir Keir Starmer may try to water down workers rights legislation or delay its implementation in a bid to calm business concerns about the direction of economic policy.
The Treasury has been contacted for comment but last week, Ms Reeves conceded many people still feel “stuck” and the “economy isn’t working well enough.”
It comes as she prepares for a Budget on 26 November with experts warning she needs to fill a £40bn black hole in her spending plans with a range of wealth taxes on the table to raise extra revenue.
The one source of hope is that the newly merged firm – to be called Anglo Teck – will keep its primary listing on the London Stock Exchange (LSE), with secondary listings in Toronto, South Africa and New York.
The deal was billed as a “merger of equals”, however, Anglo American shareholders will own about 62.4% of the merged company and Teck the remaining 37.6%.
Cost savings of about $800 million (£589 million) a year will be delivered after the tie-up, according to the firms.
The bulk of the cost savings will come from buying and procurement, marketing-related opportunities and corporate business and other overheads.
The firms said some jobs will be stripped out as they look to remove duplicated roles, although they said it was too early to give numbers of impacted roles.
Anglo added that its London office, where up to 700 staff are employed, will be cut back after the HQ moves to Canada.
Anglo chief executive Duncan Wanblad will head up the merged group, with his counterpart at Teck, Jonathan Price, as deputy chief executive.
Mr Wanblad said: “We are unlocking outstanding value both in the near and longer term – forming a global critical minerals champion with the focus, agility, capabilities and culture that have characterised both companies for so long.
“Having made such significant progress with Anglo American’s portfolio transformation, which has already added substantial value for our shareholders over the past year, now is the optimal time to take this next strategic step to accelerate our growth.
“We have a unique opportunity to bring together two highly-regarded, mining companies whose portfolios and capabilities are deeply complementary, while also sharing a common set of values.”
The deal is expected to complete in 12 to 18 months.
Anglo’s shares jumped 7% higher in early morning trading on Tuesday after the deal was announced.
It brings together Teck, with a market valuation of around 23.69 billion Canadian dollars (£12.65 billion), and Anglo American which is valued at about £26.82 billion to form a company jointly worth around £39.5 billion.
The firms said the decision to shift Anglo’s global HQ to Canada comes as part of commitments made to appease the Canadian government under the Investment Canada Act.
It has also pledged that top management will live and be based in the country and that a significant proportion of the board will be Canadian directors.
Mr Price, chief executive of Teck, said: “This transaction will create significant economic opportunity in Canada, while positioning Anglo Teck to deliver sustainable, long-term value for shareholders and all stakeholders.”
The move to retain its LSE listing and position in the FTSE 100 will come as a relief to the London market, which has suffered an exodus of firms in recent years as many have shifted to the US or been taken private.
Both Anglo and Teck have fended off bid interest from larger rivals recently, with Anglo seeing off a £39 billion takeover proposal from BHP Group last year, while Teck rebuffed a buyout offer from Glencore in 2023 for £16.6 billion.
Chris Beauchamp, chief market analyst at IG, said: “It’s interesting to see two companies who have been bid targets find refuge in each others’ arms, snubbing their suitors and going their own way.
“It looks like the two boards decided they could preserve their own identity by merging rather than letting themselves be absorbed by bigger rivals.
“As miners grapple with rising costs and uncertain demand, it’s perhaps not surprising that these two have sought to bolster economies of scale.
“It will also set off a further wave of M&A activity, as the rebuffed suitors look elsewhere for their own expansion.”
The Treasury has been contacted for comment.
