Teck’s Strategic Shift: Exiting Coal, Navigating Lower Copper Output in Chile Teck’s Strategic Shift: Exiting Coal, Navigating Lower Copper Output in Chile

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Posco traded its interest in two of Teck’s coal operations for a 3% stake in the overall steelmaking coal business.

The transactions are part of an umbrella deal inked with Glencore (LON: GLEN) in November 2023, involving the Swiss miner and commodities trader paying $6.9 billion for 77% of Elk Valley Resources. The agreement with Glencore, which capped negotiations and takeover attempts initiated by the Baar-based firm, awaits regulatory review and is anticipated to finalize in the third quarter of 2024.

Challenges in Copper Production

Canada’s largest diversified miner highlighted a lower than anticipated 2023 production at Quebrada Blanca (QB), its flagship copper mine in Chile.

Teck had projected an 80,000-tonne copper production for 2023 due to reliability and consistency issues at the operation. However, output from QB, excluding copper cathode, totalled only 56,200 tonnes last year. Teck acknowledged that despite operations at QB functioning at or above design capacity in the second half of 2023, achieving reliable and consistent operations took longer than expected, resulting in unmet production forecasts.

In October, the Vancouver-based miner raised the cost of its expansion project at QB, known as QB2, for at least the third time since its inception, now anticipating a completion cost of $8.6 billion-$8.8 billion.

quebrada blanca
The QB operation is comprised of a mine area with a concentrator plant and tailings facility, utilities and port facilities. (Image courtesy of Teck.)

QB2, Teck’s key growth project, has encountered rising costs and numerous delays. Initially slated for production commencement in 2021, QB2 only achieved first copper by the end of March last year. At full capacity, QB2 is expected to double Teck’s copper production on a consolidated basis, with an initial mine life of 27 years using a mere 18% of the 2022 reserves and resource tonnage, offering significant potential for future growth.

QB2 is aimed to achieve 285,000 – 315,000 tonnes of annual copper production in 2024 – 2026, positioning itself as Chile’s second-largest copper operation, after Escondida. Teck possesses a 60% interest in Teck Quebrada Blanca SA (QBSA), the mine’s owner, while Japan’s Sumitomo Metal Mining and Sumitomo Corporation collectively hold 30% in QBSA, and Chilean state company Enami retains a 10% non-financial interest in the project.

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