By Divya Rajagopal, Surbhi Misra and Mrinmay Dey
(Reuters) -The Canadian government has approved Glencore (OTC:GLNCY)'s $6.93 billion acquisition of miner Teck Resources (NYSE:TECK)' steelmaking coal unit with strict conditions to preserve jobs, the country's industry minister said on Thursday.
To secure the approval, Glencore has agreed to maintain Canadian headquarters for Elk Valley Resources (EVR) for at least 10 years, ensure a majority of the directors of EVR are Canadians, and maintain significant employment levels at EVR for no less than five years, the ministry said.
In a separate statement, Teck said it would use the deal proceeds to buy back up to C$2.75 billion ($2 billion) of its Class B subordinate voting shares, reduce its debt by up to $2 billion and fund near-term copper growth.
The miner said it expects the deal to close by July 11.
"Today I approved under strict conditions a much narrower transaction whereby Glencore will acquire Teck Resources metallurgical coal business," Industry Minister Francois-Philippe Champagne said in a statement.
He flagged that going forward Canada will set a high bar on net-benefit reviews when assessing mergers and acquisitions of important Canadian companies in the critical minerals space.
"Henceforth, such transactions will only be found of net benefit in the most exceptional of circumstances," Champagne said.
Glencore CEO Gary Nagle said in a statement the company has made significant commitments to the Canadian government to ensure the transaction benefits Canada and British Columbia in the long term.
In November, a Glencore-led consortium sealed one of the mining sector's biggest deals, agreeing to acquire Teck Resources steelmaking coal unit for $9 billion.
Swiss miner Glencore will get 77% of the business in a $6.9 billion cash deal, while 20% will go to Japan's Nippon Steel, which already holds a 2.5% stake.
South Korea's POSCO (NYSE:PKX) will swap a stake in two of Teck's coal operations for 3% in the steelmaking coal business Elk Valley Resources.
($1 = 1.3610 Canadian dollars)