Teck signs new contract with Highland Valley union

Teck Resources Ltd. (TECK.B-TSX, TECK.A-TSX, TECK-NYSE) said it has signed a new collective agreement with unionized workers at its Highland Valley Copper operations in British Columbia.

The company said members of the United Steelworkers, Local 7619, representing 1,048 workers at Highland Valley have ratified a new five-year collective agreement, replacing one that expired on September 30, 2021.

“We are pleased to have reached a collective agreement that is fair to employees and supports the long-term success of the Highland Valley copper operation,” said Matt Parrilla, general manager, Highland Valley copper operations.

On January 21, 2022, Teck’s Class B common shares closed at $40.97 and are currently trading in a 52-week range of $44.15 and $21.86.

The Highland Valley Copper operations are located approximately 17 kilometres west of Logan Lake, and about 50 kilometres southwest of Kamloops, B.C. Teck has 100% interest in the operations.

Highland Valley produces both copper and molybdenum concentrates through autogenous and semi-autogenous grinding and flotation. Once processed, the metal concentrates are exported overseas, where the majority is sold under long-term sales contracts to smelters.

Copper production in 2021 is anticipated to be between 128,000 and 133,000 tonnes, with lower production in the first half of 2021. Annual copper production from 2022 to 2024 is expected to be 135,000 and 165,000 tonnes annually.

By comparison, Teck is developing the QB2 operation in the Tarapaca Region of northern Chile. QB2 is essentially a continuation of the existing Quebrada Blanca open pit operation, which is expected to produce up to 8,000 tonnes of cathode copper this year.

QB2 will boast an initial mine life of 28 years, the company has said. 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 recently said its copper business unit profit increased by 117% in the third quarter of 2021, supported by an averaged realized copper price of US$4.28 per pound and copper production of 70,700 tonnes, in line with plan.

However, the company said it expects to issue updated capital cost guidance in February, 2022, with the announcement of its fourth quarter 2021 results. It said challenges with port offshore and tailings facility construction have placed pressure on its estimated capital cost (disregarding COVID-19-releated costs) of US$5.26 billion.

The company expects its capital cost estimate to increase by up to 5.0% as adds more contingency to the budget.  There is also pressure on Teck’s estimate of COVID-19-related capital of US$600 million.