Teck on track to double copper output by 2023, Don Lindsay says

Teck Resources (TSX: TECK.A/TECK-B; NYSE: TECK) is preparing to double its copper output by 2023 to take advantage of accelerated metal demand from global economic growth and the transition to a lower-carbon economy, president and CEO Don Lindsay tells The Northern Miner.

The mining executive says Teck is well-positioned to benefit from the anticipated growth in global copper demand of 2.3 times by 2050. The company has a growth initiative in place at each of its core copper operations comprising four operating mines — Highland Valley in Canada, Antamina in Peru, Carmen de Andacollo in Chile and Quebrada Blanca, also in Chile.

“These mines have a ten-year average gross profit margin of 47% and place us amongst the lowest carbon intensity copper producers,” he says in an interview.

Copper is one of Teck’s four business units besides steelmaking coal, oil and zinc, and is considered a company priority.

The Vancouver-based company’s copper operations started 2021 strong with an increase in gross profit before depreciation and amortisation of 76% in the first quarter, compared with the same period last year, on 71,700 tonnes of the red metal, which was in line with the annual guidance.

Teck is Canada’s largest diversified miner, and it has prioritised the growth of its copper business. It is constructing the Quebrada Blanca Phase 2 (QB2) copper project, the crown jewel in its asset base, and passed the halfway mark in April. First copper production has been pencilled in for the second half of 2022.

At Quebrada Blanca, the QB2 project is set to deliver significant value for Teck. QB2 has an initial mine life of 28 years, which only accounts for about 18% of total reserves and resource tonnage.

Teck targets 316,000 tonnes of copper-equivalent production per year for the first five full years of QB2’s mine life, which would catapult the company into the world’s top 20 global copper producers.

Teck sees QB2 as its most significant growth opportunity, potentially doubling its copper business. It is expected to extend the ageing deposit’s life and substantially boost production from only 23,400 tonnes in 2017.

QB2 is expected to provide Teck with competitive operating cost and capital intensity. It has an exceptional strip ratio of 0.7 over the mine life, meaning that only 0.7 tonnes of waste need to be mined (0.44 over the first five full years) for every one tonne of ore mined. This compares favourably with other world-class asset strip ratios of 2.6 for Escondida, 3.0 for Antamina, and 3.7 for Collahuasi.

The project is expected to have an all-in sustaining cost of US$1.38 per lb., making it a significantly accretive venture in terms of profitability in the current record copper price environment.

QB2 has a probable reserve of 476.2 million tonnes grading of 0.51% copper, 0.018% molybdenum, 1.4 gram silver per tonne, and 923.8 million tonnes grading 0.47% copper 0.019% molybdenum, and 1.2 gram silver per tonne in the proven category. Together, the reserves entail 1.4 million tonnes grading 0.48% copper, 0.018% molybdenum, and 1.3 gram silver per tonne.

“For Teck, QB2 will be a game-changer. It will double our consolidated copper production beginning in 2023, which compares to copper production growth of just 21% for our diversified mining peers, and only 11% growth for our copper peers,” says Lindsay.

The Canadian mining giant is already studying a third development phase to double the mine’s capacity to 600,000 tonnes of copper a year. The potential extension will make the mine Chile’s second-largest copper operation, after Escondida. It will also situate Quebrada Blanca among the world’s top five copper mines.

In terms of costs, Phase 3 would need a US$5 billion investment, as it would have to include the installation of a new concentrator.

Teck is also guiding for copper growth elsewhere in the portfolio.

At the Highland Valley Copper mine in B.C., Canada’s largest open-pit copper mine, Teck is advancing work to extend the mine life to at least 2040. The Antamina mine, of which it owns 22.5%, is a Tier 1 asset with a current mine plan through 2028 and potential for a further 40 years of operation based on the current resource estimate.

Teck is also positioning its copper business to be more sustainable.

“We’ve set an objective to be carbon neutral across our operations by 2050, with milestone goals including reducing carbon intensity by 33% by 2030 and sourcing 100% of our electricity needs in Chile from renewable power,” Lindsay says. “And we’re continuing to progress other carbon reduction initiatives at our copper operations and across our other business units, including switching to low-emission vehicles.”

He reports the company has already made significant progress on those goals, including achieving renewable power agreements to source 100% renewable power for Teck’s Carmen de Andacollo operation and 50% renewable power for QB2’s power needs. This will reduce emissions by about one million tonnes annually — the equivalent of taking 210,000 cars off the road.

Teck has a long history of supporting local and global health initiatives. Through this work, it learned about the role copper has as an antimicrobial to reduce the spread of infection on surfaces.

In 2016, Teck launched the Copper and Health program to build partnerships and support research to help make communities safer. This has included several healthcare investments across the country, including the first installation of copper surfaces in a Canadian hospital.

Teck recently partnered with TransLink and Vancouver Coastal Health on a pilot project to install copper surfaces on two buses and two SkyTrain cars.

“The project found that copper products on transit are durable and kill up to 99.9% of all bacteria within one hour of the bacteria’s contact with the surface,” says Lindsay.

“Now we’re working with the partners on a second expanded phase of this trial while also advocating for the use of antimicrobial copper in other busy public spaces. We’re really excited about the opportunity to expand the use of copper surfaces in high-traffic areas and see great opportunity for copper to make our communities safer,” says Lindsay.