Teck Resources Ltd. (TECK.B-TSX, TECK.A-TSX, TECK-NYSE) reported a slightly weaker than expected second quarter profit but said it continues to makes solid progress at the Quebrada Blanca Phase 2 (QB2) copper project in Chile.
However, due to the impact of west coast wildfires on transportation, the Vancouver-based metals giant has trimmed its 2021 coal production forecast to between 25.0-26.0 million tonnes. That compares to the previous estimate of 25.5-26.5 million tonnes.
Meanwhile, the company said the QB2 copper project is almost 60% complete in spite of the workforce being constrained by the COVID-19 pandemic. Although the anticipated production start-up in the second half of 2022 is unchanged, the project capex overrun estimate has further increased to US$600 million from the previous estimate of US$450-US$500 million. That brings the current estimated cost to US$5.88 billion.
Teck’s Class B common shares fell slightly on the news, dropping 1.17% or 32cents to $27.03 on volume of 1.59 million. The shares are currently trading in a 52-week range of $32.27 and $13.46.
The company said adjusted profit attributable to shareholders was $339 million or 63 cents a share (diluted) (64 cents basic) in the second quarter of 2021. That was below the consensus estimate of 67 cents, but an increase of 281% compared to the same period last year.
Teck said it benefitted from a strong second quarter performance in both its zinc and copper operations.
QB2 is essentially as continuation of the existing Quebrada Blanca open pit operation, which is located in the Tarapaca Region of northern Chile, and is expected to produce up to 8,000 tonnes of cathode copper this year.
QB2 has been described by the company as a long-life, low cost operation with major expansion potential, including the option to double production or more, to become a top five global copper producer. The copper growth from QB2 will, over time, help to balance Teck’s portfolio so that the contribution from the company’s copper business could be similar to its steelmaking coal business.
QB2 will boast an initial mine life of 28 years. Project highlights include 316,000 tonnes of copper equivalent production per year for the first five full years of mine life, putting QB2 among the world’s top 20 copper producers.
The first production is currently planned for the second half of 2022, but is dependent on the Teck’s continued ability to successfully manage through the impacts of COVID-19 among other things.
Teck holds an indirect 60% interest in Compania Minera Teck Quebrada Blanca SA (QBSA), which owns QB2. Sumitomo Metal Mining Co. Ltd. and Sumitomo Corp. together have a collective 30% indirect interest in QBSA. ENAMI, a Chilean state agency, has a 10% non-funding interest in QBSA.