Teck Resources (TSX: TECK.A, TECK.B) (NYSE: TECK) has kissed coal goodbye after closing the sale of its minority stake in steelmaking coal operations to Japan’s Nippon Steel Corp. and South Korean steelmaker Posco.
Nippon Steel now has a 20% interest in Teck’s coal business, known as Elk Valley Resources. In exchange, the Japanese firm gave up its prior 2.5% stake in one of Teck’s coal operations and has paid $1.7 billion in cash.
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, which will see the Swiss miner and commodities trader pay $6.9 billion for for 77% of Elk Valley Resources.
The agreement with Glencore, which capped negotiations and takeover attempts initiated by the Baar-based firm, remains subject to regulatory review and is expected to close in the third quarter of 2024.
Canada’s largest diversified miner also said that 2023 production at Quebrada Blanca (QB), its flagship copper mine in Chile, was lower than expected.
Teck had forecasted 80,000-tonne copper production for 2023 due to reliability and consistency issues at the operation in the fourth quarter. But output from QB, excluding copper cathode, only totalled 56,200 tonnes for the year.
“During the second half of 2023, each of the operations at QB, including mine operations, crushing, grinding, flotation, tailings, desalination and concentrate handling, all operated at or above design capacity,” Teck said in the statement.
“Our focus in the fourth quarter was on achieving reliable and consistent operations. This took longer than expected to achieve and, as a result, production did not meet forecast,” it noted.
The Vancouver-based miner in October hiked the cost of its expansion project at QB, known as QB2, for at least the third time since it began its construction. The project is now expected to require $8.6 billion-$8.8 billion to be completed.
QB2, Teck’s key growth project, has faced rising costs and several delays. Initially, it was expected to begin production in 2021, but first copper was achieved by the end of March last year.
At full tilt, QB2 is slated to double Teck’s copper production on a consolidated basis. The expansion has an initial mine life of 27 years using only about 18% of the 2022 reserves and resource tonnage with significant potential for future growth.
QB2 is targeted to achieve 285,000 – 315,000 tonnes of annual copper production in 2024-2026, becoming Chile’s second-largest copper operation, after Escondida.
Teck has a 60% interest in Teck Quebrada Blanca SA (QBSA), which is the mine’s owner. Japan’s Sumitomo Metal Mining and Sumitomo Corporation have a collective interest of 30% in QBSA, while Chilean state company Enami holds a 10% non-financial interest in the project.
