Teck suspends work on US$4.7 billion QB2 project
Teck Resources Ltd. [TECK.B-TSX; TECK.A-TSX; TECK-NYSE] said Wednesday March 18 that it is temporarily suspending construction activities at its US$4.7 billion Quebrada Blanca Phase 2 (QB2) copper project in Chile to protect its employees and limit the spread of COVID-19.
“The orderly suspension of construction activities is effective immediately, and the workforce will demobilize over the coming days,” the Vancouver-based mining giant said. The suspension will be for an initial two-week period, and will affect at least 15,000 workers on the QB2 Project.
“Considering the significant size and scale of the QB2 project, and the fact that workers on the project commute in large numbers from all over Chile, this is the right decision to project the health and safety of workers and their families, and the support the Chilean government efforts to halt the spread of COVID-19,” said Teck President and CEO Don Lindsay.
“In the days ahead, we will be putting a plan in place to be ready to restart construction as soon as possible, subject to further developments in the response to the COVID-19,” he said. Lindsay said there have been no confirmed cases of COVID19 associated with QB2 employees or contractors to date.
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 2021.
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.
The project scope includes the construction of a 143,000 tonne-per-day concentrator and related facilities, which are connected to a new port and desalination plant by 165-km concentrate and desalinated water pipelines.
QB2 will produce clean copper and molybdenum concentrates. The project is expected to benefit from low all-in-sustaining costs of US$1.38 and cash costs of US$1.28 per payable pound of copper produced during the first full five years of mine life.
On Wednesday, Teck’s Class B common shares fell 22.6% or $2.50 to $8.54 on volume of 3.42 million. The shares are currently trading in a 52-week range of $9.61 and $34.32.