Teck outlines detailed strategy for copper growth

Teck Resources (TSX: TECK.A and TECK.B; NYSE: TECK) unveiled on Tuesday its strategy for generating value for stakeholders and laying out its investment pathway to grow copper production to 800,000 tonnes (176.37 billion lb.) per year before the end of the decade.

“Teck is uniquely positioned in our industry, with the ability to deliver transformative near-term copper growth while simultaneously returning significant cash to shareholders,” Teck CEO Jonathan Price said in a news release. “We are executing on a disciplined strategy to grow copper production by advancing our portfolio of lower capital intensity, high-returning projects in stable jurisdictions.”

Teck says its near-term growth will be supported by a strong balance sheet, allowing both shareholder dividends and funding for growth projects. So far in 2024, the company has reduced its debt by C$2.3 billion and is has a current net cash position of C$1.8 billion.

Since 2019, a total of C$5.3 billion has been returned to shareholders, including more than C$900 million in share buybacks. A further C$2.3 billion has been authorized to continue buybacks.

The company plans to invest C$4.44 billion to C$5.41 billion ($3.2 billion to $3.9 billion) over four years to develop four key projects to reach its announced copper output.

Optimization and debottlenecking will take place at Quebrada Blanca (60% owned by Teck) in Chile. This is noted as a very low capital cost options to boost production by a further 15% to 25% at a capital cost of C$138.6 million to C$277.3 million.

At Highland Valley copper (100% Teck owned) in British Columbia, the company plans to extend the life of the mine to the mid-2040. The estimated capital cost will be C$1.80 billion to C$1.94 billion, and it will bring another 302.0 million lb. of copper to market annually beginning next year.

Teck calls the Zafranal project (80% owned) in Peru a long-life, competitive capital cost and low-complexity copper-gold project. Permitting is underway in anticipation of a decision in the first half of next year. Estimated copper production of 277.8 million lb. annually over the first five years is planned, and there will be additional gold value. The attributable capital budget is C$2.08 billion to C$2.50 billion.

The San Nicolás project ( 50% Teck owned) in Mexico is another low capital cost, low-complexity copper-zinc project. Teck’s partner in the project is Agnico Eagle Mines (TSX: AEM; NYSE: AEM). Estimated production over the first five years will be 183.9 million lb. of copper and 324.1 million lb. of zinc annually. The feasibility study is underway, and a production decision may be made in the first half of next year. Teck’s funding requirement will be C$415.9 million to C$693.2 million.

“We are focused on disciplined allocation of capital that balances value-accretive growth with continued cash returns to shareholders, all while maintaining a strong balance sheet through market cycles,” said Price.