Swiss mining giant Glencore Plc and Ontario Teachers’ Pension Plan formed a joint venture for Glencore’s portfolio of royalty assets, the firms said on Tuesday.
Glencore Canada Corp and Ontario Teachers’, Canada’s third largest pension fund, will have a 50-50 ownership in the venture, BaseCore Metals LP. It will be independently operated and have its own board of directors.
Glencore said it contributed a portfolio of royalties to BaseCore valued at about US$300 million.
Royalty deals give the owner the right to receive a percentage of revenue or profits from a mining operation, often in exchange for financing.
Reuters reported in July that Glencore was in talks to form the joint venture with Ontario Teachers’. The pension fund, with more than $180 billion in net assets, has investments in natural resources and royalty interests in oil and gas.
Scotiabank was Glencore’s financial adviser, while Morgan Stanley advised Ontario Teachers’.
Update: In a release, Andrew Claerhout, senior managing director, infrastructure and natural resources at Ontario Teachers’, said the pension fund’s investment in the venture will “ensure attractive relative returns through exposure to commodities that are well-positioned to benefit as the world transitions to a low-carbon economy.”
(Reporting by Ahmed Farhatha in Bengaluru; editing by Sai Sachin Ravikumar)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Ontario Teachers’ Pension Plan