Glencore is still pursuing its $23-billion proposal to buy Teck Resources and seeking talks with the Canadian company’s management, undeterred by firm rejections from both Teck’s board and controlling shareholder.

Glencore has proposed an ambitious multi-stage deal to acquire Teck for shares and then spin off both firms’ coal businesses into a new company. The plan would give Glencore control of Teck’s lucrative copper mines at a time when the world is bracing for a shortage, and allow it to get out of thermal coal — the most polluting fuel. It would be Glencore’s biggest deal since its 2013 acquisition of Xstrata, and the strongest sign yet that the world’s biggest miners are wading back into mega deals.

Teck has rejected the proposal and said its board isn’t interested in a sale. Norman Keevil, the patriarch of the family that controls Teck through a dual-class share structure, issued a separate statement, reiterating his opposition. Instead, Teck said it will continue to focus on a plan announced in February to split its own coal assets off separately.

But Glencore appears undeterred. Three hours after Teck announced its rejection, Glencore CEO Gary Nagle and his team were extolling the virtues of the deal to investors and analysts on a conference call, and suggesting that the story isn’t over yet, with Nagle describing Teck’s objections as “not real issues.”

“The next steps are being worked on,” he told investors. “We would like to engage with Teck further.”

HIGHER OFFER?
Analysts at RBC Capital Markets and Jefferies suggested that Glencore could come back with a higher offer, and Nagle didn’t answer directly when pressed on the possibility on Monday. The current all-share proposal represented a 20% premium to Teck shares when it was submitted on March 26, and Glencore is flush with cash after reaping record earnings last year — particularly thanks to its hugely profitable coal business.

Glencore’s plan reflects a revived appetite for mega deals among the largest miners, which have largely held back after a series of disastrous transactions at the height of the last commodity boom.

But it also shows how large producers of coal like Teck and Glencore are grappling with the future of their businesses: mining companies are seeking to focus more on metals like copper and nickel that will benefit from the clean-energy transition, and yet coal still remains a big profit driver.

For Glencore, the proposal represents the first concrete indication that it could be looking to get out of thermal coal. The company has continued to reap massive profits from the most-polluting fuel, even as rivals retreated. Until now it had simply said it would keep running its mines until they are empty, by 2050.

Meanwhile, Teck announced in February it plans to split its own business into coal and base metals companies, in a move that spurred speculation that it could become be a target — that is, if the Keevils were willing to sell.

Shareholders are set to vote on that plan on April 26, which will require approval by two-thirds of both share classes, and could provide an opportunity for any investors who prefer the Glencore plan to show their objection. However, Glencore will walk away if the Teck split is approved, Nagle said.

Teck jumped as much as 18% in Toronto on Monday, while Glencore traded 2.6% lower.

The Glencore proposal “is compelling on paper, but a higher price (and/or cash kicker) is clearly needed,” Jeffries analyst Christopher LaFemina wrote in a note. “Based on Glencore’s response (press release, slide deck, planned conf call), we believe a higher offer is likely.”

The proposal from Glencore envisaged creating a new publicly traded company to own Glencore’s vast thermal coal operations and Teck’s coking coal mines. The remaining company, to be named “GlenTeck,” would include Glencore’s and Teck’s base metals operations as well as Glencore’s oil and other commodity trading business, other than coal trading and marketing.

Both Teck and Glencore published the letters sent by their respective boards, in which they disclosed the two companies had held previous discussions about a similar transaction. In his letter of proposal, Nagle said the deal had the backing of key former and current employee shareholders — meaning it has support from former boss and top investor Ivan Glasenberg — and said Glencore would be willing to proceed without any due diligence.

However, both Teck and the Keevil family were clear in their rejection on Monday. CEO Jonathan Price said that the spinoff structure proposed by Glencore would expose Teck shareholders to the other company’s large thermal coal business and oil trading business. Keevil, who holds the role of chairman emeritus, said that “now is not the time to explore a transaction of this nature.”

The Keevil family, which has been involved with the firm for six decades, has long controlled Teck through majority ownership of Class A shares, which carry more voting control than the company’s Class B shares. Sumitomo Metal Mining owns Class A shares through a vehicle with the Keevil family, while China Investment Corp. is the largest shareholder of B shares, according to data compiled by Bloomberg.

Glencore has proposed offering 7.78 Glencore shares for each Teck Class B subordinate voting share and 12.73 Glencore shares for each Teck Class A common share, a 20% premium for both on the date of the offer.

The larger company argued that the proposed merger and spinoff would create two stronger and more diversified companies, with the potential to save as much as $5.25-billion.

Glencore, under new CEO Gary Nagle, has been working to simplify its business in recent years and had talked down the prospect of major deals. Yet in an interview last month, Nagle said there were some obvious combinations in the industry, including putting together copper mines owned by Teck and Glencore in Chile.

In a nod to the need for Canadian government approval to any deal, Glencore said it would put the headquarters for the combined metals-mining business in Canada. The coal business would stick to its plans to exit thermal coal by 2050.

Glencore also noted that the proposed “CoalCo” would have no ongoing financial obligations to the remaining company. In Teck’s plan to split off its coal business, the remaining Teck Metals would continue to benefit from coal, as it would own a royalty on the coal spinoff’s revenue as well as preferred shares in the company.

Teck owns four copper mines in South America and Canada that produced 270,000 tons last year. The company expects to double copper output after the second phase of its Quebrada Blanca project in Chile ramps up to full capacity by the end of this year. It also owns coking coal mines that it plans to spin into the new company, Elk Valley Resources.

Teck is being advised by bankers Barclays and Ardea Partners, while its special committee was being advised by BMO Capital Markets, Goldman Sachs and Origin Merchant Partners.