Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK)
(“Teck”) today announced its unaudited second quarter results for
2022.
“This marks Teck’s fourth consecutive quarter of record-setting
EBITDA and profitability, driven by strong commodity prices in the
quarter, which enabled us to complete $572 million in share
buybacks and pay down a further US$650 million in outstanding
debt,” said Don Lindsay, President and CEO. “Our solid operational
performance, strong balance sheet and $8.4 billion in liquidity all
put Teck on a very strong footing as we manage through inflationary
pressures and a slowdown in the global economy.”
Highlights
- Adjusted profit attributable to shareholders1 was a quarterly
record $1.8 billion or $3.30 per share in Q2 2022 and more than
five times higher than the same period last year.
- Profit attributable to shareholders was a quarterly record of
$1.7 billion or $3.12 per share in Q2 2022.
- Adjusted EBITDA1 was a quarterly record $3.3 billion in Q2 2022
and more than three times higher than the same period last year.
Profit before tax was a record $2.7 billion in Q2 2022.
- We generated cash flow from operations of $2.9 billion in Q2
2022, purchased US$650 million of our outstanding term notes and
ended the quarter with a cash balance of $2.7 billion. As at July
26, 2022, our liquidity is $8.4 billion, including
$3.3 billion of cash.
- In Q2 2022, we completed $572 million in Class B subordinate
voting share buybacks, including US$436 million ($562 million) of
the US$500 million previously announced in April and the remaining
$10 million of the $100 million announced in Q1. We also returned
$67 million to shareholders through dividends in the second
quarter. On July 26, 2022, we declared a $0.125 per share dividend
and authorized up to a US$500 million share buyback, in addition to
the previously announced buybacks noted above. Additional buybacks
will be considered regularly in the context of market conditions at
the time.
- At QB2, we now have approximately 13,000 workers on the project
and have seen steady progress through the quarter with our focus on
system completion and handover, as we continue to target first
copper late this year. Our capital cost estimate, before COVID-19
impacts, remains unchanged from our Q3 2021 guidance of US$5.26
billion with up to 5% additional contingency. Our capital cost
guidance for COVID-19 impacts has increased to US$1.4—$1.5 billion
due to the impact of inflation on labour costs, the ultimate
impacts of the Omicron wave experienced in Q1 and ongoing
inefficiencies including as a result of COVID-19 related
absenteeism, which continues to run approximately 10%. We continue
to target first copper from Line 1 in the later part of this year,
however, if COVID-19 absenteeism and related vendor specialty craft
availability continue into the fourth quarter, this may be delayed
into January 2023.
- Our copper business unit gross profit increased 5% from a year
ago, supported by an average realized copper price of US$4.28 per
pound and copper sales volumes of 75,800 tonnes.
- Our zinc business unit gross profit more than doubled from a
year ago, supported by an average realized zinc price of US$1.79
per pound and quarterly zinc in concentrate sales volumes of 55,800
tonnes. In July, we reached a five-year collective agreement at our
Trail Operations.
- Record high realized steelmaking coal prices of US$453 per
tonne drove a $2.3 billion gross profit increase in our steelmaking
coal business unit, compared to the same period last year. Strong
supply chain performance through our upgraded Neptune port enabled
the rapid reduction of record-high inventory levels from early
2022, allowing us to capitalize on high steelmaking coal prices in
the quarter. As the cornerstone of our supply chain transformation,
our upgraded Neptune port supported improved supply chain
reliability and resilience, avoiding the potential loss in revenue
in excess of $1 billion since July 2021.
- While our underlying key mining drivers remain relatively
stable, like others in the industry, we continue to face
inflationary cost pressures. Inflationary pressures have increased
our operating costs by 14% compared to the same period last year,
of which approximately half relates to an increase in diesel
costs.
- We set a goal to be a nature positive company by 2030,
including through conserving or rehabilitating at least three
hectares of land for every one hectare of land affected by our
mining operations.
Note:
- This is a non-GAAP financial measure or ratio. See “Use of
Non-GAAP Financial Measures and Ratios” for further
information.
Financial Summary Q2 2022
Financial Metrics(CAD$ in millions, except per
share data) |
Q2 2022 |
Q2 2021 |
Revenue |
$ |
5,787 |
$ |
2,558 |
Gross
profit |
$ |
3,288 |
$ |
689 |
Gross
profit before depreciation and amortization1 |
$ |
3,740 |
$ |
1,059 |
Profit
before taxes |
$ |
2,663 |
$ |
469 |
Adjusted
EBITDA1 |
$ |
3,290 |
$ |
989 |
Profit
attributable to shareholders |
$ |
1,675 |
$ |
260 |
Adjusted
profit attributable to shareholders1 |
$ |
1,772 |
$ |
339 |
Basic
earnings per share |
$ |
3.12 |
$ |
0.49 |
Diluted
earnings per share |
$ |
3.07 |
$ |
0.48 |
Adjusted
basic earnings per share1 |
$ |
3.30 |
$ |
0.64 |
Adjusted diluted earnings per share1 |
$ |
3.25 |
$ |
0.63 |
Note:
- This is a non-GAAP financial measure or ratio. See “Use of
Non-GAAP Financial Measures and Ratios” for further
information.
Key Updates
Executing on our copper growth strategy – QB2 a
long-life, low-cost operation with major expansion
potential
- We now have approximately 13,000 workers on the project,
despite the impact COVID-19 continues to have on workforce
absenteeism;
- Focus continues to be on system completion and handover;
- We have completed construction of the 220kV Transmission
System;
- We are continuing sequential energization of electrical
substations;
- We have commenced pumping of seawater into the pretreatment
area of the desalination plant for commissioning;
- We have completed the starter dam to its design elevation;
- Our capital cost estimate, before COVID-19 impacts, remains
unchanged from our Q3 2021 guidance of US$5.26 billion with up to
5% additional contingency;
- Our capital cost guidance for COVID-19 impacts has increased to
US$1.4—$1.5 billion due to the impact of inflation on labour costs,
the ultimate impacts of the Omicron wave experienced in Q1 and
ongoing inefficiencies including as a result of COVID-19
absenteeism, which continues to run approximately 10%; and
- We continue to target first copper from Line 1 in the later
part of this year, however, if COVID-19 absenteeism and related
vendor specialty craft availability continue into the fourth
quarter, this may be delayed into January 2023.
- Click here for a photo gallery and click here for a video of
construction progress on QB2.
Safety and sustainability leadership
- Our High Potential Incident Frequency remained low at a rate of
0.10 in the first half of 2022.
- We announced a Carbon Capture Utilization and Storage pilot
project at our Trail Operations, which supports Teck's Net Zero
Climate Change Strategy including our goal to reduce the carbon
intensity of our operations by 33% by 2030 and achieve net-zero
emissions by 2050.
- We were named to the Best 50 Corporate Citizens in Canada
ranking as one of the top 50 companies in Canada for corporate
citizenship for the 16th consecutive year.
Guidance
- We have updated our 2022 annual guidance for unit costs across
our business units, as well as steelmaking coal production volumes,
steelmaking coal capital expenditures, and COVID-19 capital cost
guidance for QB2, as outlined in summary below. Our usual guidance
tables, including three-year production guidance, can be found on
pages 31—35 of Teck’s full second quarter results for 2022 at the
link below.
- Like others in the industry, we continue to face inflationary
cost pressures, which have increased our operating costs by 14%
compared to the same period last year, approximately half of which
relates to diesel costs at our operations and in our transportation
costs. Diesel prices have increased by 75% compared to the same
period last year. The increases in the cost of certain key
supplies, including mining equipment, fuel, tires and explosives,
are being driven largely by price increases for underlying
commodities such as steel, crude oil and natural gas. While our
underlying key mining drivers remain relatively stable,
inflationary pressures on diesel prices and other key input costs,
as well as profit-based compensation and royalties continue to put
upward pressure on our unit cost guidance through 2022.
2022 Guidance – Summary |
Previous |
Change |
Current |
Production
Guidance |
|
|
|
Copper (000’s tonnes) |
273 - 290 |
— |
273 - 290 |
Zinc (000’s tonnes) |
630 - 665 |
— |
630 - 665 |
Refined zinc (000’s tonnes) |
270 - 285 |
— |
270 - 285 |
Steelmaking coal (million tonnes) |
24.5 - 25.5 |
(1.0) - (1.5) |
23.5 - 24.0 |
Bitumen (million barrels) |
12.0 - 14.4 |
— |
12.0 - 14.4 |
Sales Guidance – Q3
2022 |
|
|
|
Red Dog zinc in concentrate sales (000’s tonnes) |
|
|
215 - 240 |
Steelmaking coal sales (million tonnes) |
|
|
5.8 - 6.2 |
Unit Cost
Guidance |
|
|
|
Copper net cash unit costs (US$/lb.)1 |
1.40 - 1.50 |
0.08 - 0.08 |
1.48 - 1.58 |
Zinc net cash unit costs (US$/lb.)1 |
0.32 - 0.38 |
0.05 - 0.05 |
0.37 - 0.43 |
Steelmaking coal adjusted site cash cost of sales
(CAD$/tonne)1 |
79 - 83 |
8 - 9 |
87 - 92 |
Steelmaking coal transportation costs (CAD$/tonne) |
43 - 46 |
— |
43 - 46 |
Bitumen adjusted operating costs (CAD$/barrel)1 |
28 - 32 |
5 - 4 |
33 - 36 |
Note:
- This is a non-GAAP financial measure or ratio. See “Use of
Non-GAAP Financial Measures and Ratios” for further
information.
Click here to view Teck’s full second quarter results for
2022.
WEBCAST
Teck will host an Investor Conference Call to discuss its
Q2/2022 financial results at 11:00 AM Eastern time, 8:00 AM Pacific
time, on July 27, 2022. A live audio webcast
of the conference call, together with supporting presentation
slides, will be available at our website at www.teck.com. The
webcast will be archived at www.teck.com.
Reference:
Fraser Phillips, Senior Vice President, Investor Relations and
Strategic Analysis: 604.699.4621
Chris Stannell, Public Relations Manager: 604.699.4368
USE OF NON-GAAP FINANCIAL MEASURES AND
RATIOS
Our financial results are prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board. This document refers to a
number of non-GAAP financial measures and non-GAAP ratios which are
not measures recognized under IFRS and do not have a standardized
meaning prescribed by IFRS or by Generally Accepted Accounting
Principles (GAAP) in the United States.
The non-GAAP financial measures and non-GAAP ratios described
below do not have standardized meanings under IFRS, may differ from
those used by other issuers, and may not be comparable to similar
financial measures and ratios reported by other issuers. These
financial measures and ratios have been derived from our financial
statements and applied on a consistent basis as appropriate. We
disclose these financial measures and ratios because we believe
they assist readers in understanding the results of our operations
and financial position and provide further information about our
financial results to investors. These measures should not be
considered in isolation or used in substitute for other measures of
performance prepared in accordance with IFRS.
Adjusted profit attributable to shareholders –
For adjusted profit attributable to shareholders, we adjust profit
attributable to shareholders as reported to remove the after-tax
effect of certain types of transactions that reflect measurement
changes on our balance sheet or are not indicative of our normal
operating activities.
EBITDA – EBITDA is profit before net finance
expense, provision for income taxes, and depreciation and
amortization.
Adjusted EBITDA – Adjusted EBITDA is EBITDA
before the pre-tax effect of the adjustments that we make to
adjusted profit attributable to shareholders as described
above.
Adjusted profit attributable to shareholders, EBITDA, and
Adjusted EBITDA highlight items and allow us and readers to analyze
the rest of our results more clearly. We believe that disclosing
these measures assists readers in understanding the ongoing cash
generating potential of our business in order to provide liquidity
to fund working capital needs, service outstanding debt, fund
future capital expenditures and investment opportunities, and pay
dividends.
Gross profit before depreciation and
amortization – Gross profit before depreciation and
amortization is gross profit with depreciation and amortization
expense added back. We believe this measure assists us and readers
to assess our ability to generate cash flow from our business units
or operations.
Adjusted site cash cost of sales – Adjusted
site cash cost of sales for our steelmaking coal operations is
defined as the cost of the product as it leaves the mine excluding
depreciation and amortization charges, out-bound transportation
costs and any one-time collective agreement charges and inventory
write-down provisions.
Total cash unit costs – Total cash unit costs
for our copper and zinc operations includes adjusted cash costs of
sales, as described below, plus the smelter and refining charges
added back in determining adjusted revenue. This presentation
allows a comparison of total cash unit costs, including smelter
charges, to the underlying price of copper or zinc in order to
assess the margin for the mine on a per unit basis.
Net cash unit costs – Net cash unit costs of
principal product, after deducting co-product and by-product
margins, are also a common industry measure. By deducting the co-
and by-product margin per unit of the principal product, the margin
for the mine on a per unit basis may be presented in a single
metric for comparison to other operations.
Adjusted cash cost of sales – Adjusted cash
cost of sales for our copper and zinc operations is defined as the
cost of the product delivered to the port of shipment, excluding
depreciation and amortization charges, any one-time collective
agreement charges or inventory write-down provisions and by-product
cost of sales. It is common practice in the industry to exclude
depreciation and amortization as these costs are non-cash and
discounted cash flow valuation models used in the industry
substitute expectations of future capital spending for these
amounts.
Adjusted operating costs – Adjusted operating
costs for our energy business unit is defined as the costs of
product as it leaves the mine, excluding depreciation and
amortization charges, cost of diluent for blending to transport our
bitumen by pipeline, cost of non-proprietary product purchased and
transportation costs of our product and non-proprietary product and
any one-time collective agreement charges or inventory write-down
provisions.
Adjusted basic earnings per share – Adjusted
basic earnings per share is adjusted profit attributable to
shareholders divided by average number of shares outstanding in the
period.
Adjusted diluted earnings per share – Adjusted
diluted earnings per share is adjusted profit attributable to
shareholders divided by average number of fully diluted shares in a
period.
Profit Attributable to Shareholders and Adjusted Profit
Attributable to Shareholders
|
Three months ended June 30, |
Six months ended June 30, |
(CAD$ in millions) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
Profit attributable to
shareholders |
$ |
1,675 |
|
$ |
260 |
|
$ |
3,246 |
|
$ |
565 |
|
Add (deduct) on an after-tax
basis: |
|
|
|
|
Loss on debt purchase |
|
46 |
|
|
— |
|
|
46 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
37 |
|
|
13 |
|
|
96 |
|
|
43 |
|
Environmental costs |
|
(51 |
) |
|
44 |
|
|
(111 |
) |
|
11 |
|
Inventory write-downs (reversals) |
|
23 |
|
|
— |
|
|
23 |
|
|
(6 |
) |
Share-based compensation |
|
6 |
|
|
24 |
|
|
88 |
|
|
34 |
|
Commodity derivatives |
|
34 |
|
|
(20 |
) |
|
(3 |
) |
|
(5 |
) |
Other |
|
2 |
|
|
18 |
|
|
7 |
|
|
23 |
|
|
|
|
|
|
Adjusted profit
attributable to shareholders |
$ |
1,772 |
|
$ |
339 |
|
$ |
3,392 |
|
$ |
665 |
|
|
|
|
|
|
Basic earnings per
share |
$ |
3.12 |
|
$ |
0.49 |
|
$ |
6.05 |
|
$ |
1.06 |
|
Diluted earnings per
share |
$ |
3.07 |
|
$ |
0.48 |
|
$ |
5.94 |
|
$ |
1.05 |
|
Adjusted basic
earnings per share |
$ |
3.30 |
|
$ |
0.64 |
|
$ |
6.33 |
|
$ |
1.25 |
|
Adjusted diluted
earnings per share |
$ |
3.25 |
|
$ |
0.63 |
|
$ |
6.21 |
|
$ |
1.23 |
|
|
|
|
|
|
Reconciliation of Basic Earnings per share to Adjusted
Basic Earnings per share
|
Three months ended June 30, |
Six months ended June 30, |
(Per share amounts) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
Basic earnings per
share |
$ |
3.12 |
|
$ |
0.49 |
|
$ |
6.05 |
|
$ |
1.06 |
|
Add (deduct): |
|
|
|
|
Loss on debt purchase |
|
0.09 |
|
|
— |
|
|
0.09 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
0.07 |
|
|
0.02 |
|
|
0.18 |
|
|
0.08 |
|
Environmental costs |
|
(0.10 |
) |
|
0.08 |
|
|
(0.21 |
) |
|
0.02 |
|
Inventory write-downs (reversals) |
|
0.04 |
|
|
— |
|
|
0.04 |
|
|
(0.01 |
) |
Share-based compensation |
|
0.01 |
|
|
0.05 |
|
|
0.16 |
|
|
0.06 |
|
Commodity derivatives |
|
0.06 |
|
|
(0.04 |
) |
|
(0.01 |
) |
|
(0.01 |
) |
Other |
|
0.01 |
|
|
0.04 |
|
|
0.03 |
|
|
0.05 |
|
|
|
|
|
|
Adjusted basic
earnings per share |
$ |
3.30 |
|
$ |
0.64 |
|
$ |
6.33 |
|
$ |
1.25 |
|
|
|
|
|
|
Reconciliation of Diluted Earnings per share to Adjusted
Diluted Earnings per share
|
Three months ended June 30, |
Six months ended June 30, |
(Per share amounts) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
Diluted earnings per
share |
$ |
3.07 |
|
$ |
0.48 |
|
$ |
5.94 |
|
$ |
1.05 |
|
Add (deduct): |
|
|
|
|
Loss on debt purchase |
|
0.08 |
|
|
— |
|
|
0.08 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
0.07 |
|
|
0.03 |
|
|
0.18 |
|
|
0.08 |
|
Environmental costs |
|
(0.09 |
) |
|
0.08 |
|
|
(0.20 |
) |
|
0.02 |
|
Inventory write-downs (reversals) |
|
0.04 |
|
|
— |
|
|
0.04 |
|
|
(0.01 |
) |
Share-based compensation |
|
0.01 |
|
|
0.04 |
|
|
0.16 |
|
|
0.06 |
|
Commodity derivatives |
|
0.06 |
|
|
(0.04 |
) |
|
(0.01 |
) |
|
(0.01 |
) |
Other |
|
0.01 |
|
|
0.04 |
|
|
0.02 |
|
|
0.04 |
|
|
|
|
|
|
Adjusted diluted
earnings per share |
$ |
3.25 |
|
$ |
0.63 |
|
$ |
6.21 |
|
$ |
1.23 |
|
|
|
|
|
|
Reconciliation of EBITDA and Adjusted
EBITDA
|
Three months ended June 30, |
Six months ended June 30, |
(CAD$ in millions) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
Profit before taxes |
$ |
2,663 |
|
$ |
469 |
|
$ |
5,113 |
|
$ |
970 |
|
Finance expense net of finance
income |
|
46 |
|
|
51 |
|
|
95 |
|
|
102 |
|
Depreciation and amortization |
|
452 |
|
|
370 |
|
|
901 |
|
|
748 |
|
|
|
|
|
|
EBITDA |
|
3,161 |
|
|
890 |
|
|
6,109 |
|
|
1,820 |
|
|
|
|
|
|
Add (deduct): |
|
|
|
|
Loss on debt purchase |
|
63 |
|
|
— |
|
|
63 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
62 |
|
|
21 |
|
|
161 |
|
|
71 |
|
Environmental costs |
|
(71 |
) |
|
61 |
|
|
(153 |
) |
|
15 |
|
Inventory write-downs (reversals) |
|
32 |
|
|
— |
|
|
32 |
|
|
(10 |
) |
Share-based compensation |
|
5 |
|
|
33 |
|
|
115 |
|
|
47 |
|
Commodity derivatives |
|
45 |
|
|
(27 |
) |
|
(4 |
) |
|
(7 |
) |
Other |
|
(7 |
) |
|
11 |
|
|
11 |
|
|
20 |
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
3,290 |
|
$ |
989 |
|
$ |
6,334 |
|
$ |
1,956 |
|
|
|
|
|
|
Reconciliation of Gross Profit Before Depreciation and
Amortization
|
Three months ended June 30, |
Six months ended June 30, |
(CAD$ in millions) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Gross profit |
$ |
3,288 |
|
$ |
689 |
|
$ |
5,856 |
|
$ |
1,343 |
|
Depreciation and amortization |
|
452 |
|
|
370 |
|
|
901 |
|
|
748 |
|
Gross
profit before depreciation and amortization |
$ |
3,740 |
|
$ |
1,059 |
|
$ |
6,757 |
|
$ |
2,091 |
|
|
|
|
|
|
Reported as: |
|
|
|
|
Copper |
|
|
|
|
Highland Valley Copper |
$ |
217 |
|
$ |
194 |
|
$ |
463 |
|
$ |
396 |
|
Antamina |
|
298 |
|
|
254 |
|
|
556 |
|
|
456 |
|
Carmen de Andacollo |
|
37 |
|
|
59 |
|
|
76 |
|
|
106 |
|
Quebrada Blanca |
|
7 |
|
|
11 |
|
|
20 |
|
|
22 |
|
Other |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
559 |
|
|
518 |
|
|
1,115 |
|
|
980 |
|
|
|
|
|
|
Zinc |
|
|
|
|
Trail Operations |
|
12 |
|
|
(3 |
) |
|
46 |
|
|
40 |
|
Red Dog |
|
183 |
|
|
91 |
|
|
457 |
|
|
216 |
|
Other |
|
(1 |
) |
|
8 |
|
|
(4 |
) |
|
11 |
|
|
|
194 |
|
|
96 |
|
|
499 |
|
|
267 |
|
Steelmaking
coal |
|
2,806 |
|
|
457 |
|
|
4,838 |
|
|
869 |
|
Energy |
|
181 |
|
|
(12 |
) |
|
305 |
|
|
(25 |
) |
Gross profit before
depreciation and amortization |
$ |
3,740 |
|
$ |
1,059 |
|
$ |
6,757 |
|
$ |
2,091 |
|
|
|
|
|
|
CAUTIONARY STATEMENT ON FORWARD-LOOKING
STATEMENTS
This news release contains certain forward-looking information
and forward-looking statements as defined in applicable securities
laws (collectively referred to as forward-looking statements).
These statements relate to future events or our future performance.
All statements other than statements of historical fact are
forward-looking statements. The use of any of the words
“anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”,
“will”, “project”, “predict”, “potential”, “should”, “believe” and
similar expressions is intended to identify forward-looking
statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking statements. These statements speak only as of the
date of this news release.
These forward-looking statements include, but are not limited
to, statements concerning: our focus and strategy; anticipated
global and regional supply, demand and market outlook for our
commodities; the potential impact of the COVID-19 on our business
and operations, including our ability to continue operations at our
sites and progress our projects and strategy; our ability to manage
challenges presented by COVID-19, including the effectiveness of
our management protocols implemented to protect the health and
safety of our employees; expectation of additional Class B
subordinate voting share buybacks; our nature positive, carbon
reduction and net-zero goals and expected actions and their
effectiveness to achieve those goals; expectation that QB2 will be
a long-life, low-cost operation with major expansion potential; QB2
capital cost guidance and estimate of QB2 COVID-19 related capital
costs; size of estimated contingency for QB2; estimated timing of
first production from QB2; expectation of increased molybdenum
production in the third quarter of 2022 at Highland Valley Copper;
expectation of higher copper production through the second half of
2022 at Quebrada Blanca; expectations regarding our QBME project,
including the impact of the project and associated timing
expectations; targeted timing of first production at San Nicolás;
expectation that the high steelmaking coal price environment will
continue to help offset cost pressures and drive high margins;
expectation of improved plant performance in our steelmaking coal
business unit in the second half of the year; timing of completion
of the Fording River North SRF Phase II expansion and related
capacity increases, and expectations for total water treatment
capacity by the end of 2022; expected Elk Valley water related
capital investment; expectation that our steelmaking coal business
unit is well positioned to deliver strong financial performance in
the third quarter; liquidity and availability of borrowings under
our credit facilities; our expectations regarding our effective tax
rate; and all guidance appearing in this document including but not
limited to the production, sales, cost, unit cost, capital
expenditure, cost reduction and other guidance under the heading
“Guidance” and discussed in the various business unit sections.
These statements are based on a number of assumptions,
including, but not limited to, assumptions regarding general
business and economic conditions, interest rates, commodity and
power prices, acts of foreign or domestic governments and the
outcome of legal proceedings, the supply and demand for, deliveries
of, and the level and volatility of prices of copper, coal, zinc
and blended bitumen and our other metals and minerals, as well as
oil, natural gas and other petroleum products, the timing of the
receipt of regulatory and governmental approvals for our
development projects and other operations, including mine
extensions; positive results from the studies on our expansion and
development projects; our ability to secure adequate
transportation, including rail, pipeline and port services, for our
products; our costs of production and our production and
productivity levels, as well as those of our competitors;
continuing availability of water and power resources for our
operations; changes in credit market conditions and conditions in
financial markets generally, the availability of funding to
refinance our borrowings as they become due or to finance our
development projects on reasonable terms; our ability to procure
equipment and operating supplies in sufficient quantities and on a
timely basis; the availability of qualified employees and
contractors for our operations, including our new developments and
our ability to attract and retain skilled employees; the
satisfactory negotiation of collective agreements with unionized
employees; the impact of changes in Canadian-U.S. dollar and other
foreign exchange rates on our costs and results; engineering and
construction timetables and capital costs for our development and
expansion projects; the benefits of technology for our operations
and development projects, including the impact of our RACE21™
program; environmental compliance costs; market competition; the
accuracy of our mineral reserve and resource estimates (including
with respect to size, grade and recoverability) and the geological,
operational and price assumptions on which these are based; tax
benefits and tax rates; the outcome of our coal price and volume
negotiations with customers; the outcome of our copper, zinc and
lead concentrate treatment and refining charge negotiations with
customers; the resolution of environmental and other proceedings or
disputes; our ability to obtain, comply with and renew permits in a
timely manner; and our ongoing relations with our employees and
with our business and joint venture partners. Our Guidance tables
include footnotes with further assumptions relating to our guidance
and assumptions for certain other forward-looking statements
accompany the statements in the document.
In addition, assumptions regarding the Elk Valley Water Quality
Plan include assumptions that additional treatment will be
effective at scale, and that the technology and facilities operate
as expected, as well as additional assumptions discussed under the
heading “Elk Valley Water Management Update”. Assumptions regarding
QB2 include current project assumptions and assumptions regarding
the final feasibility study, estimates of future construction
capital at QB2 (including the range of COVID-19 capital costs) are
based on a CLP/USD rate range of 900 to 975, as well as there being
no unexpected material and negative impact to the various
contractors, suppliers and subcontractors for the QB2 project
relating to COVID-19 or otherwise that would impair their ability
to provide goods and services as anticipated during the suspension
period or ramp-up of construction activities. Statements regarding
the availability of our credit facilities and project financing
facility are based on assumptions that we will be able to satisfy
the conditions for borrowing at the time of a borrowing request and
that the facilities are not otherwise terminated or accelerated due
to an event of default. Statements concerning future production
costs or volumes are based on numerous assumptions regarding
operating matters and on assumptions that counterparties perform
their contractual obligations, that operating and capital plans
will not be disrupted by issues such as mechanical failure,
unavailability of parts and supplies, labour disturbances,
interruption in transportation or utilities, adverse weather
conditions, and that there are no material unanticipated variations
in the cost of energy or supplies and may be further impacted by
reduced demand for oil and low oil prices. The foregoing list of
assumptions is not exhaustive. Events or circumstances could cause
actual results to vary materially.
Factors that may cause actual results to vary materially
include, but are not limited to, changes in commodity and power
prices, changes in market demand for our products, changes in
interest and currency exchange rates, acts of governments and the
outcome of legal proceedings, inaccurate geological and
metallurgical assumptions (including with respect to the size,
grade and recoverability of mineral reserves and resources),
unanticipated operational difficulties (including failure of plant,
equipment or processes to operate in accordance with specifications
or expectations, cost escalation, unavailability of materials and
equipment, government action or delays in the receipt of government
approvals, industrial disturbances or other job action, adverse
weather conditions and unanticipated events related to health,
safety and environmental matters), union labour disputes, impact of
COVID-19 mitigation protocols, political risk, social unrest,
failure of customers or counterparties (including logistics
suppliers) to perform their contractual obligations, changes in our
credit ratings, unanticipated increases in costs to construct our
development projects, difficulty in obtaining permits, inability to
address concerns regarding permits of environmental impact
assessments, and changes or further deterioration in general
economic conditions. Certain operations and projects are not
controlled by us; schedules and costs may be adjusted by our
partners, and timing of spending and operation of the operation or
project is not in our control. Current and new technologies
relating to our Elk Valley water treatment efforts may not perform
as anticipated, and ongoing monitoring may reveal unexpected
environmental conditions requiring additional remedial measures.
QB2 costs, construction progress and timing of first production is
dependent on, among other matters, our continued ability to
successfully manage through the impacts of COVID-19. QB2 costs may
also be affected by claims and other proceedings that might be
brought against us relating to costs and impacts of the COVID-19
pandemic. Red Dog production may also be impacted by water levels
at site. Unit costs in our copper business unit are impacted by
higher profitability at Antamina, which can cause higher workers’
participation and royalty expenses. Sales to China may be impacted
by general and specific port restrictions, Chinese regulation and
policies and normal production and operating risks. Share buybacks
depend on a number of additional factors that may cause actual
results to vary, including, the ability to acquire Class B Shares
in the market through the normal course issuer bid and in
compliance with regulatory requirements, share price volatility,
negative changes to commodity prices, availability of funds to
purchase shares, alternative uses for funds. Share repurchases are
also subject to conditions under corporate law.
The forward-looking statements in this news release and actual
results will also be impacted by the effects of COVID-19 and
related matters. The overall effects of COVID-19 related matters on
our business and operations and projects will depend on how the
ability of our sites to maintain normal operations, and on the
duration of impacts on our suppliers, customers and markets for our
products, all of which are unknown at this time. Continuing
operating activities is highly dependent on the progression of the
pandemic and the success of measures taken to prevent transmission,
which will influence when health and government authorities remove
various restrictions on business activities.
We assume no obligation to update forward-looking statements
except as required under securities laws. Further information
concerning risks and uncertainties associated with these
forward-looking statements and our business can be found in our
Annual Information Form for the year ended December 31, 2021, filed
under our profile on SEDAR (www.sedar.com) and on EDGAR
(www.sec.gov) under cover of Form 40-F, as well as subsequent
filings that can also be found under our profile.
Scientific and technical information in this quarterly report
regarding our coal properties, which for this purpose does not
include the discussion under “Elk Valley Water Management Update”
was reviewed, approved and verified by Jo-Anna Singleton, P.Geo.
and Robin Gold P.Eng., each an employee of Teck Coal Limited and a
Qualified Person as defined under National Instrument 43-101.
Scientific and technical information in this quarterly report
regarding our other properties was reviewed, approved and verified
by Rodrigo Alves Marinho, P.Geo., an employee of Teck and a
Qualified Person as defined under National Instrument 43-101.
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