10:57 AM EDT, 09/17/2025 (MT Newswires) -- Teck Resources ( TECK ) and Anglo American have key hurdles to clear and issues to address before they can integrate their Chilean copper mines and generate more than $1 billion in estimated annual revenue synergies as part of their merger of equals.

Teck and Anglo announced their deal on Sept. 8 to form the fifth-largest global copper producer, to be named Anglo Teck. Once the deal closes, which is expected in the next 12-18 months, the combined company will leapfrog Vale (VALE) and Glencore to become the sixth-largest mining company by market capitalization at $62.8 billion, according to Bloomberg data.

The crux of the MOE is the planned integration and optimization of the adjacent Collahuasi and Quebrada Blanca, or QB, copper mines in Chile, which the companies said is expected to generate earnings before interest, tax, depreciation and amortization revenue synergies of $1.4 billion on an average pretax annual basis from 2030-2049. Full integration of the mines is expected to result in a 175,000-tonne increase to potential additional annual copper production, they said.

Before those expectations can be realized, Anglo Teck will need to come to an agreement with other shareholders in the mines on the design of the combined operations, receive regulatory approvals and permits and then begin construction. Anglo American Chief Executive Duncan Wanblad said in an analyst call the target date to complete these tasks is around "the end of the decade," according to a transcript.

"With the synergies, the timing of all these things is one of the things people are not aware of completely," said Martin Pradier, materials analyst at Veritas Investment Research, in an interview with MT Newswires. "Nothing happens right away."

Anglo American and Glencore each own a 44% stake in Collahuasi, the second-largest copper mine in the world, according to a June 2024 report from Mining Technology, citing GlobalData. The remaining 12% is held by a Mitsui & Co.-led Japanese consortium.

The advantages of linking Collahuasi with QB are so evident that Anglo's Wanblad expects Glencore and the consortium to sign off on the plans.

"The key materiality of all of this is the combination of Collahuasi's high-grade ore body and then processing that through what is today one of the state-of-the-art concentrators at QB," he told analysts earlier this month. "I'm sure that there's going to be a bit of work to do to agree on terms and make it all happen, but just given the nature of this, I'm quite positive that we should be successful in getting it done."

Teck holds an indirect 60% stake in QB, while Sumitomo Metal Mining and Sumitomo Corp. collectively own a 30% indirect stake. Codelco, the Chilean state-owned mining company, holds a 10% non-funding interest in the mine, which has been beset by problems since the completion of a major expansion project in 2024, Pradier said.

Teck is set to deliver a plan in October that "focuses on identifying and implementing solutions to address slow sand drainage, which has impacted the pace of [tailings management facility] development and constrained production," the company said in a statement before the merger was announced.

Fixing its tailings dam, which stores the waste materials from copper production, is an extra incentive for Teck to merge and integrate the mines, Pradier said.

"Eventually you'll have these synergies and it makes even more sense to fix the tailings dam," he said. "You can better justify putting more money into the tailings dam to fix it if you're going to get $1.4 billion extra synergies."

London-based Anglo American and Vancouver-based Teck Resources ( TECK ) will locate the headquarters of the combined company in the Canadian city, an overture to the nation whose government has the ability to block the deal under the Investment Canada Act. More work remains to be done to get the green light, according to the government.

"There have been conversations with the companies, and clearly we wanted to make sure that there would be a net benefit to Canada. But I think right now that it's not enough," Canadian Industry Minister Melanie Joly said Tuesday, according to media reports. "I think right now that it's not about short-term, and also we need to think about the longer term, and how can we make sure that ultimately we create jobs, and we have a strong headquarters, not only now, but also for the next decade."

Joly is scheduled to meet with the companies next week, according to the reports. She did not immediately reply to a request for comment from MT Newswires.

"Our prime minister said that moving the headquarters to Canada was a precondition," said Pradier, who is based in Canada. "That part is not negotiable. They have been talking to the government for months. The rest might be up for negotiation. They have promised $4.5 billion of investment in Canada for the next five years. I'm not sure what other things the government wants."

Once the companies have secured regulatory approvals and permits, they can start to build. The main project will be the roughly $1.2 billion construction of a 15-kilometer (9.3-mile) conveyer belt to deliver Collahuasi's high-grade ore to QB's processing facilities. The companies will also need to repurpose some of the QB plant to accommodate the different types of ore, Wanblad said.

"One construct here is you would run one stream on the high grade, the other stream on the QB ore," he said, adding that they have allowed for about $700 million in plant capital expenditure.

Given the tasks the companies must accomplish, a 2030 start date for the integrated facilities "seems reasonable," Pradier said.

"The construction does not seem that complex," he said. "We are talking about conveyor belts to transport minerals and buying mining equipment to increase the mining rate at Collahuasi. I almost wonder if it could happen before that."