Teck Reports Unaudited Annual and Fourth Quarter Results for 2021 Record-setting annual and quarterly financial performance driven by high commodity prices and underpinned by business resilience
Teck Resources Limited
TSX: TECK.A, TECK.B NYSE: TECK www.teck.com
News Release
For Immediate Release Date: February 23, 2022 22-16-TR
Teck Reports Unaudited Annual and Fourth Quarter Results for 2021
Record-setting annual and quarterly financial performance driven by high commodity prices and underpinned by business resilience
Vancouver, B.C. – Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (“Teck”) today announced its unaudited annual and fourth quarter results for 2021.
“We closed out 2021 by setting a number of financial performance records, including our highest-ever quarterly and annual adjusted EBITDA and adjusted profit attributable to shareholders,” said Don Lindsay, President and CEO. “Teck’s record-setting performance was driven by the ongoing positive commodity price environment and made possible by the tremendous resilience of our people, who persevered through heatwaves, wildfires, floods, freezing temperatures and the global pandemic to continue safely and sustainably producing the essential resources the world needs.”
Highlights
- Adjusted profit attributable to shareholders1 was a record $1.4 billion or $2.58 per share in Q4 2021, more than five times higher than the same period last year, and $3.1 billion or $5.74 per share for the year.
- Profit attributable to shareholders of $1.5 billion or $2.79 per share in Q4 2021 was a quarterly record. Profit attributable to shareholders was $2.9 billion or $5.39 per share for the year.
- Adjusted EBITDA1 was a record $2.5 billion in Q4 2021, more than 3 times higher than the same period last year, and $6.6 billion for the year. Profit before tax was a record $2.2 billion in Q4 2021 and $4.5 billion for the year.
- We generated cash flows from operations of $4.7 billion in the year, ending the year with a cash balance of $1.4 billion and no amounts drawn on our US$4 billion committed credit facility. Our liquidity as at February 23, 2022 is $7.0 billion.
- On February 23, 2022, we declared a $0.625 per share dividend, increased our annual base dividend to $0.50 per share and authorized up to $100 million share buyback.
- Overall progress on our QB2 project has reached 77% completion.
- Our copper business unit gross profit increased 20%, supported by an average realized copper price of US$4.46 per pound and copper production of 72,600 tonnes.
- Our zinc business unit gross profit increased 48%, supported by an average realized zinc price of US$1.52 per pound.
- Realized steelmaking coal prices of US$351 per tonne drove a $1.4 billion gross profit increase in our steelmaking coal business unit.
- In 2021, we reached multi-year collective agreements at our Antamina, Quebrada Blanca, Fording River and Elkview Operations, and subsequent to year end, our Highland Valley Copper Operations.
- We were named to the S&P Dow Jones Sustainability World Index for the 12th consecutive year and recognized as the #1 company in the Metals and Mining sector. We were recognized in January as one of the 2021 Global 100 Most Sustainable Corporations by Corporate Knights and the top-ranked mining company.
Note:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
All dollar amounts expressed in this news release are in Canadian dollars unless otherwise noted.
Reference: Fraser Phillips, Senior Vice President, Investor Relations and Strategic Analysis 604.699.4621
Marcia Smith, Senior Vice President, Sustainability and External Affairs 604.699.4616
Additional corporate information is available at www.teck.com
Financial Summary Q4 2021
| Financial Metrics (CAD$ in millions, except per share data) | Q4 2021 | Q4 2020 |
| Revenue Gross profit Gross profit before depreciation and amortization1 Profit (loss) before taxes Adjusted EBITDA1 Profit (loss) attributable to shareholders Adjusted profit attributable to shareholders1 Basic earnings (loss) per share Diluted earnings (loss) per share Adjusted basic earnings per share1 Adjusted diluted earnings per share1 | $ 4,406 $ 2,076 $ 2,480 $ 2,208 $ 2,521 $ 1,487 $ 1,377 $ 2.79 $ 2.74 $ 2.58 $ 2.54 | $ 2,560 $ 505 $ 911 $ (549) $ 839 $ (464) $ 248 $ (0.87) $ (0.87) $ 0.47 $ 0.46 |
Note:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
Key Updates
Executing on our copper growth strategy – QB2 a long-life, low-cost operation with major expansion potential
- We continue to aggressively mitigate COVID-19 impacts on the project with a focus on our proactive vaccination and testing programs.
- Overall project progress has reached 77% completion.
- We have energized our port substations and continue pre-operational testing of the desalination plant, construction of which is more than 85% complete.
- The water supply pipeline is more than 90% welded and the tailings starter dam construction is more than 85% complete.
- We continue to expect production in the second half of 2022.
• Based on ongoing COVID-19 conditions, we have put in place a variety of mitigation measures and incentives with our contractors.
- Click here for a photo gallery and click here for a video of construction progress on QB2.
Neptune drives resiliency in our steelmaking coal supply chain – response to unprecedented disruptions
- Neptune Bulk Terminals, following our port upgrade project, achieved periods where it exceeded design capacity during the quarter, driving steelmaking coal mine inventories to historic lows in the first half of November.
- In mid-November, the steelmaking coal supply chain was affected by an unprecedented disruption as a result of the B.C. flood events that damaged rail infrastructure and severed the rail link to Vancouver
2 Teck Resources Limited 2021 Fourth Quarter News Release terminals. Extreme cold weather following the flood events lasted through the first half of January, prolonging the recovery and resulting in steelmaking coal mine inventories rising to record highs.
- We expect that these inventories will be reduced in the first half of 2022, with Neptune being a key enabler to recover sales volumes.
Safety and sustainability leadership
- Our High Potential Injury Frequency was the lowest ever, down 38% for 2021 compared to 2020.
- Teck is currently ranked #1 in the Metals and Mining industry on the S&P Corporate Sustainability Assessment, #2 in the Diversified Metals industry by Sustainalytics, #1 among North America Metals and Mining companies by Moody’s ESG (formerly Vigeo Eiris) and ranked AA by MSCI for ESG performance.
- We were named one of Canada's Top 100 Employers for the fifth consecutive year and named to Forbes Canada's Best Employers 2022 List, Forbes World's Best Employer List and Canada's Top Employer for Young People List.
- We continue to make progress on our goal of becoming carbon neutral by 2050, including an agreement with Oldendorff Carriers to employ energy efficient bulk carriers for shipments of Teck steelmaking coal from the Port of Vancouver to international destinations, reducing supply chain CO2 emissions by 30 — 40% for shipments handled by Oldendorff. In January, we announced an agreement with Caterpillar Inc. to work towards deploying 30 of Caterpillar’s zero-emission, large haul trucks at Teck mining operations.
Guidance
- Summary guidance for 2022 is outlined below and our usual guidance tables, including three-year production guidance, can be found on pages 34 — 37.
- Like others in the industry, we are seeing inflationary cost pressures, notably in diesel prices, mill steel, supplies and replacement parts and labour costs. The increases in the cost of certain key supplies, including mining equipment, fuel, tires and explosives, are being driven largely by price increases for underlying commodities such as steel, crude oil and natural gas. These price increases impacted our fourth quarter operating costs across our business units and we expect continued upward pressure on our cash unit costs into 2022.
3 Teck Resources Limited 2021 Fourth Quarter News Release
2022 Guidance – Summary Production Guidance
Copper (000’s tonnes) 273 - 290 Zinc (000’s tonnes) 630 - 665 Refined zinc (000’s tonnes) 270 - 285 Steelmaking coal (million tonnes) 24.5 - 25.5 Bitumen (million barrels) 12.0 - 14.4
Sales Guidance – Q1 2022
Red Dog zinc in concentrate sales (000’s tonnes) 130 - 150 Steelmaking coal sales (million tonnes) 6.1 - 6.5
Unit Cost Guidance
Copper net cash unit costs (US$/lb.)1 1.40 - 1.50 Zinc net cash unit costs (US$/lb.)1 0.32 - 0.38 Steelmaking coal adjusted site cash cost of sales (CAD$/tonne)1 72 - 77 Steelmaking coal transportation costs (CAD$/tonne) 43 - 46 Bitumen adjusted operating costs (CAD$/barrel)1 26 - 30
Note:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
4 Teck Resources Limited 2021 Fourth Quarter News Release
This news release is dated as at February 23, 2022. Unless the context otherwise dictates, a reference to “the company” or “us,” “we” or “our” refers to Teck and its subsidiaries. Additional information, including our Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2020, is available on SEDAR at www.sedar.com.
This document contains forward-looking statements. Please refer to the cautionary language under the heading “CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION” below.
Overview
- Profitability in the fourth quarter improved significantly from a year ago as a result of higher prices for all of our principal products, as shown in the table below. The impact of higher prices was partly offset by lower sales volumes, higher operating costs and the strengthening of the Canadian dollar.
- Realized steelmaking coal prices in the fourth quarter were US$351 per tonne, up from US$107 per tonne a year ago. High realized prices reflected our strategy to sell approximately 1.8 million tonnes of sales to customers in China, priced at a premium to FOB Australia price assessments, which are the basis for pricing most of our sales outside China. The FOB Australia prices increased sharply in the latter half of Q2 and continued at record levels through Q4 2021.
- Copper prices reached an all-time quarterly record of US$4.40 per pound in the fourth quarter, up 35% from the same period a year ago. Zinc prices averaged US$1.53 per pound in the fourth quarter, up 29% from the same period a year ago.
| Average Prices and Exchange Rates | Three months ended December 31, | Change | |
|---|---|---|---|
| 2021 | 2020 |
| Copper (LME cash – US$/pound) | $ | 4.40 $ | 3.25 | 35 % |
| Zinc (LME cash – US$/pound) | $ | 1.53 $ | 1.19 | 29 % |
| Steelmaking coal (realized US$/tonne) | $ | 351 $ | 107 | 228 % |
| Blended bitumen (realized US$/barrel) | $ | 65.53 $ | 34.36 | 91 % |
| Average exchange rate (CAD$ per US$1.00) | $ | 1.26 $ | 1.30 | (3) % |
- Copper sales volumes decreased by 11% in the fourth quarter compared with the same period last year due to the impact of the B.C. flooding events on sales volumes at Highland Valley Copper. Zinc sales volumes decreased by 11% compared to the same period last year due to a late start to the shipping season and historic weather delays at Red Dog and operational issues at Trail. Steelmaking coal sales volumes of 5.1 million tonnes were 1.5 million tonnes lower than the same period last year due to unprecedented logistics chain disruptions resulting from the B.C. flood events and extreme cold weather in late December.
- Inflationary cost pressures, notably in diesel prices, mill steel, supplies and replacement parts and labour costs impacted our fourth quarter operating costs across our business units. In addition, royalty costs and profit-based compensation tied to profitability increased our operating costs in the fourth quarter. Our steelmaking coal transportation costs also increased in the fourth quarter as a result of the B.C. flood events and extreme cold weather.
- On February 23, 2022, Teck’s Board declared an eligible dividend of $0.625 per share and announced an increase in our annual base dividend to $0.50 per share. The $0.625 per share dividend consists of the increased $0.125 per share quarterly base dividend and a supplemental dividend of $0.50 per share on our Class A common and Class B subordinate voting shares, to be paid on March 31, 2022 to shareholders of record at the close of business on March 15, 2022. We also announced that our Board of Directors has granted management the authority to purchase up to $100 million of Class B
5 Teck Resources Limited 2021 Fourth Quarter News Release subordinate voting shares annually, subject to compliance with applicable corporate and securities laws and stock exchange rules. Additional buybacks will be considered regularly. Taking into account the new annual base dividend in 2022, the supplemental dividend and assuming the $100 million in share repurchases, these initiatives represent approximately $635 million in aggregate of dividends and potential share repurchases.
Profit and Adjusted Profit Attributable to Shareholders
In the fourth quarter, profit attributable to shareholders was $1.5 billion, or $2.79 per share, compared to a loss of $464 million, or $0.87 per share, in the same period last year. The increase in profit attributable to shareholders compared to the same period last year is primarily due to substantial increases in the prices for our principal products, partly offset by lower sales volumes, higher operating costs and the strengthening of the Canadian dollar. In the fourth quarter, we recorded an after-tax impairment reversal of $150 million at our Carmen de Andacollo operation relating to an increase in market expectations for longterm copper prices.
In the fourth quarter of 2020, we incurred a loss attributable to shareholders primarily due to an after-tax impairment charge of $438 million on our interest in Fort Hills and $201 million in after-tax environmental charges relating to a decrease in the rate used to discount our decommissioning and restoration provisions for closed operations and increased expected remediation costs.
Adjusted profit attributable to shareholders1 in the fourth quarter, taking into account the items identified in the table below, was $1.4 billion, or $2.58 per share, compared with $248 million, or $0.47 per share, in the fourth quarter of 2020. The most significant fourth quarter 2021 adjustment to profit attributable to shareholders, reflected in the table below, is the after-tax impairment reversal noted above.
| (CAD$ in millions) | Three months ended December 31, | Year ended December 31, |
| 2021 2020 | 2021 2020 |
Profit (loss) attributable to shareholders $ 1,487 $ (464) $ 2,868 $ (864) Add (deduct) on an after-tax basis:
| Asset impairment (impairment reversal) | (150) | 438 | (150) | 912 | |
| COVID-19 costs | — | — | — | 233 | |
| QB2 variable consideration to IMSA and ENAMI | (16) | — | 124 | (34) | |
| Environmental costs | 19 | 201 | 79 | 210 | |
| Inventory write-downs | 8 | 15 | 2 | 91 | |
| Share-based compensation | 32 | 21 | 94 | 34 | |
| Commodity derivatives | 10 | (15) | 15 | (46) | |
| Other | (13) | 52 | 25 | 25 | |
| Adjusted profit attributable to shareholders1 | $ | 1,377 $ | 248 $ | 3,057 $ | 561 |
| Basic earnings (loss) per share | $ | 2.79 $ | (0.87)$ | 5.39 $ | (1.62) |
| Diluted earnings (loss) per share | $ | 2.74 $ | (0.87)$ | 5.31 $ | (1.62) |
| Adjusted basic earnings per share1 | $ | 2.58 $ | 0.47 $ | 5.74 $ | 1.05 |
| Adjusted diluted earnings per share1 | $ | 2.54 $ | 0.46 $ | 5.66 $ | 1.04 |
In addition to the items identified in the table above, our results include gains and losses due to changes in market prices in respect of pricing adjustments. Pricing adjustments resulted in $111 million of after-tax gains ($171 million, before tax) in the fourth quarter, or $0.21 per share.
Note:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
6 Teck Resources Limited 2021 Fourth Quarter News Release
| FINANCIAL OVERVIEW (CAD$ in millions, except per share data) | Three months ended Year ended December 31, December 31, | |
|---|---|---|
| 2021 | 2020 2021 2020 |
Revenue and profit
Revenue $ 4,406 $ 2,560 $ 13,481 $ 8,948 Gross profit $ 2,076 $ 505 $ 5,081 $ 1,333 Gross profit before depreciation and amortization1 $ 2,480 $ 911 $ 6,664 $ 2,843 Profit (loss) attributable to shareholders $ 1,487 $ (464) $ 2,868 $ (864) Profit (loss) before taxes $ 2,208 $ (549) $ 4,532 $ (1,136) Adjusted EBITDA1 $ 2,521 $ 839 $ 6,573 $ 2,570
Cash flow
| Cash flow from operations | $ | 2,098 $ | 594 $ | 4,738 $ | 1,563 |
| Property, plant and equipment expenditures | $ | 1,091 $ | 930 $ | 4,046 $ | 3,129 |
| Capitalized stripping costs | $ | 186 $ | 120 $ | 667 $ | 499 |
| Investments | $ | 26 $ | 55 $ | 160 $ | 190 |
Balance Sheet
Cash and cash equivalents $ 1,427 $ 450 Total assets $ 47,368 $ 41,278 Debt and lease liabilities, including current portion $ 8,068 $ 6,947
Per share amounts
| Basic earnings (loss) per share | $ | 2.79 $ | (0.87)$ | 5.39 $ | (1.62) |
| Diluted earnings (loss) per share | $ | 2.74 $ | (0.87)$ | 5.31 $ | (1.62) |
| Dividends declared per share | $ | 0.05 $ | 0.05 $ | 0.20 $ | 0.20 |
PRODUCTION, SALES AND PRICES Production (000’s tonnes, except steelmaking coal and bitumen)
| Copper2 | 72 | 78 | 287 | 276 |
| Zinc in concentrate | 148 | 179 | 607 | 587 |
| Zinc – refined | 68 | 80 | 279 | 305 |
| Steelmaking coal (million tonnes) | 6.3 | 6.0 | 24.6 | 21.1 |
| Bitumen (million barrels)2 | 2.0 | 2.3 | 7.3 | 8.4 |
Sales (000’s tonnes, except steelmaking coal and blended bitumen)
| Copper2 | 71 | 80 | 280 | 277 |
| Zinc in concentrate | 165 | 184 | 549 | 646 |
| Zinc – refined | 70 | 80 | 281 | 307 |
| Steelmaking coal (millions tonnes) | 5.1 | 6.1 | 23.4 | 21.9 |
| Blended bitumen (million barrels)2 | 2.6 | 3.0 | 9.3 | 11.6 |
Average prices and exchange rates
| Copper (LME cash – US$/pound) | $ | 4.40 $ | 3.25 $ | 4.23 $ | 2.80 |
| Zinc (LME cash – US$/pound) | $ | 1.53 $ | 1.19 $ | 1.36 $ | 1.03 |
| Steelmaking coal (realized US$/tonne) | $ | 351 $ | 107 $ | 209 $ | 113 |
| Blended bitumen (realized US$/barrel) | $ | 65.53 $ | 34.36 $ | 58.14 $ | 27.99 |
| Average exchange rate (CAD$ per US$1.00) | $ | 1.26 $ | 1.30 $ | 1.25 $ | 1.34 |
Notes:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
2. We include 100% of production and sales from our Quebrada Blanca and Carmen de Andacollo mines in our production and sales volumes, even though we do not own 100% of these operations, because we fully consolidate their results in our financial statements. We include 22.5% and 21.3% of production and sales from Antamina and Fort Hills, respectively, representing our proportionate ownership interest in these operations.
7 Teck Resources Limited 2021 Fourth Quarter News Release
BUSINESS UNIT RESULTS
Our revenues, gross profit and gross profit before depreciation and amortization1 by business unit are summarized in the table below.
Three months ended Year ended December 31, December 31, (CAD$ in millions) 2021 2020 2021 2020
Revenue
| Copper | $ | 924 $ | 820 $ | 3,452 $ | 2,419 |
| Zinc | 987 | 739 | 3,063 | 2,700 | |
| Steelmaking coal | 2,285 | 861 | 6,251 | 3,375 | |
| Energy | 210 | 140 | 715 | 454 | |
| Total | $ | 4,406 $ | 2,560 $ 13,481 $ | 8,948 |
Gross profit (loss)
| Copper | $ | 442 $ | 368 $ | 1,741 $ | 859 |
| Zinc | 217 | 147 | 688 | 523 | |
| Steelmaking coal | 1,455 | 36 | 2,785 | 277 | |
| Energy | (38) | (46) | (133) | (326) | |
| Total | $ | 2,076 $ | 505 $ | 5,081 $ | 1,333 |
Gross profit (loss) before depreciation
and amortization1
| Copper | $ | 536 $ | 470 $ | 2,126 $ | 1,242 |
| Zinc | 285 | 217 | 918 | 815 | |
| Steelmaking coal | 1,668 | 248 | 3,657 | 1,009 | |
| Energy | (9) | (24) | (37) | (223) | |
| Total | $ | 2,480 $ | 911 $ | 6,664 $ | 2,843 |
Gross profit (loss) margins before depreciation
and amortization1
| Copper | 58 % | 57 % | 62 % | 51 % |
| Zinc | 29 % | 29 % | 30 % | 30 % |
| Steelmaking coal | 73 % | 29 % | 59 % | 30 % |
| Energy | (4) % | (17) % | (5) % | (49) % |
Note:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
8 Teck Resources Limited 2021 Fourth Quarter News Release
COPPER BUSINESS UNIT
Three months ended Year ended December 31, December 31,
| (CAD$ in millions) | 2021 | 2020 | 2021 | 2020 | |
| Copper price (realized – US$/pound) | $ | 4.46 $ | 3.42 $ | 4.27 $ | 2.85 |
| Production (000’s tonnes)1 | 72 | 78 | 287 | 276 | |
| Sales (000’s tonnes)1 | 71 | 80 | 280 | 277 | |
| Gross profit | $ | 442 $ | 368 $ | 1,741 $ | 859 |
| Gross profit, before depreciation and amortization2 | $ | 536 $ | 470 $ | 2,126 $ | 1,242 |
| Property, plant and equipment expenditures | $ | 830 $ | 564 $ | 2,867 $ | 1,845 |
Notes:
1. We include 22.5% of production and sales from Antamina, representing our proportionate ownership interest in this operation. We include 100% of production and sales from our Quebrada Blanca and Carmen de Andacollo mines in our production and sales volumes, even though we do not own 100% of these operations, because we fully consolidate their results in our financial statements.
2. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
Performance
Gross profit from our copper business unit was $442 million in the fourth quarter compared with $368 million a year ago. Gross profit increased by $74 million compared with a year ago (see table below) primarily due to substantially higher copper prices, partially offset by lower sales volumes, higher unit operating costs and one-time labour settlements at Antamina and Quebrada Blanca.
Copper production in the fourth quarter was 7%, or 5,500 tonnes, lower than a year ago, primarily due to decreased production from Carmen de Andacollo as a result of lower ore grades, as expected, and lower mill throughput. Production at Highland Valley Copper was also slightly lower than a year ago, while Antamina remained similar and production declined at Quebrada Blanca, as planned.
The table below summarizes the change in gross profit in our copper business unit for the quarter:
Three months ended Gross Profit (CAD$ in millions) December 31,
As reported in the fourth quarter of 2020 $ 368 Increase (decrease):
Copper price realized 204 Sales volumes (44) Unit operating costs (56) Labour settlement (26) Co-product and by-product contribution 10 Foreign exchange (CAD$/US$) (22) Depreciation 8
Net increase $ 74 As reported in current quarter $ 442
9 Teck Resources Limited 2021 Fourth Quarter News Release Property, plant and equipment expenditures in the fourth quarter totalled $830 million, including $70 million for sustaining capital and $715 million for project development expenditures for QB2. Capitalized stripping costs were $62 million in the fourth quarter, $16 million higher than a year ago when waste movement was deferred as a result of mine plan changes at Antamina.
During the fourth quarter, as a result of higher market expectations for long-term copper prices, we recorded a non-cash, pre-tax impairment reversal of $215 million (after-tax $150 million) related to our Carmen de Andacollo operation. The economic model for determining the amount of impairment reversal for Carmen de Andacollo in the fourth quarter assumes a long-term copper price of US$3.30/lb. from 2026 onward. A 6% real, post-tax discount rate was used to discount cash flow projections based on a marketparticipant weighted average cost of capital.
Markets
Fourth quarter refined LME copper prices averaged US$4.40 per pound, 4% higher than the third quarter 2021 average of US$4.25 per pound and 35% higher than the fourth quarter of 2020. Global demand for copper remained strong in the fourth quarter, despite some moderation in manufacturing activity later in the quarter due to power constraints in Europe and China. Prices remained well supported as supplies of raw materials remained constrained due to logistics and production issues and inventories continued to fall. Global stocks of copper on exchanges around the world fell 225,000 tonnes in the second half of the year and stocks held in bonded warehouses in China fell a further 225,000 tonnes. Visible copper stocks ended the year near their lowest levels since 2008.
Tightness in the copper concentrate market eased slightly in the fourth quarter, with spot treatment charges rising above the 2021 annual contract terms. Reported mine production disruptions in the fourth quarter were relatively minor with mine production returning to pre-COVID-19 levels. Concentrate demand improved in the fourth quarter with several smelters coming back from scheduled maintenance. Imports into China in the fourth quarter were up 11% over the previous year and up 3% over the previous quarter. Scrap availability improved during the quarter with imports into China up 11% over the previous quarter and up 69% over the same quarter last year. Increased scrap availability and a moderation in manufacturing activity pushed spot premiums for copper cathode delivered to China down from an average US$85 to US$105 per tonne in the third quarter to an average of US$65 to US$95 per tonne in fourth quarter.
South American mine production improved in the fourth quarter with combined Peruvian and Chilean production up 5.0% compared to the previous quarter. For 2021, combined mine production from Chile and Peru remained relatively flat over 2020 production but has still not returned to pre-COVID-19 levels with combined production down 3.9% over 2019. Year to date mine production in Peru was 7.0% higher than in 2020 when the country faced shutdowns due to COVID-19. In Chile, despite a recovery in production, year to date mine production remains down 2.8% as lower production and lower grades at several mines were greater than production increases from new mines in the country. Both Chilean and Peruvian production remain below 2019 levels. The availability of vessels and containers out of South America remains an issue and continued to impact exports in the fourth quarter with exports below both 2020 and 2019 levels.
Operations
Highland Valley Copper
Copper production of 33,000 tonnes in the fourth quarter was 900 tonnes lower than a year ago, due to lower mill throughput as a result of minor mill maintenance, offset by a higher copper grade. Fourth quarter molybdenum production of 300,000 pounds was approximately 40% lower than a year ago primarily due to substantially lower grades.
Copper sales volumes in the fourth quarter were impacted by heavy rains and flooding in British Columbia, which affected rail service to port loading terminals in Vancouver. Extreme winter weather also affected
10 Teck Resources Limited 2021 Fourth Quarter News Release shipments in late December. As a result, fourth quarter sales volumes of 27,400 tonnes lagged production levels and were 22% lower than fourth quarter 2020 sales volumes of 35,300 tonnes.
Operating costs before changes in inventory in the fourth quarter were $166 million, or $12 million higher than a year ago, primarily due to increased consumables costs and higher maintenance and repair supplies costs.
Copper production in 2022 is anticipated to be between 127,000 and 133,000 tonnes, with a relatively even distribution throughout the year. Copper production from 2023 to 2025 is expected to be between 130,000 and 160,000 tonnes per year. Molybdenum production in 2022 is expected to be between 0.8 million and 1.3 million pounds, with production expected to be between 3.0 million and 5.0 million pounds per year from 2023 to 2025.
Subsequent to year end, Highland Valley Copper settled a new five-year collective bargaining agreement. We expect to record an expense of approximately $20 million in the first quarter of 2022 as a result.
Antamina
Copper production (100% basis) of 117,900 tonnes in the fourth quarter was similar to a year ago. The mix of mill feed in the quarter was 55% copper-only ore and 45% copper-zinc ore, similar to a year ago. Zinc production (100% basis) decreased 43,100 tonnes from a year ago to 103,900 tonnes in the fourth quarter due to lower zinc grade, as expected in the mine plan, and lower mill throughput.
Operating costs before changes in inventory in the fourth quarter were US$100 million (22.5% share), or US$24 million higher than a year ago, primarily due to a one-time labour settlement cost of US$14 million and higher worker's participation expense as a result of increased profitability.
Our 22.5% share of 2022 production at Antamina is expected to be in the range of 91,000 to 96,000 tonnes of copper, 90,000 to 95,000 tonnes of zinc and 1.8 to 2.2 million pounds of molybdenum. Our share of annual copper production is expected to be between 90,000 and 95,000 tonnes from 2023 to 2025. Our share of annual zinc production is expected to average between 80,000 and 100,000 tonnes per year during 2023 to 2025, with annual production fluctuating due to feed grades and the amount of copper-zinc ore available to process. Our share of annual molybdenum production is expected to be between 3.0 and 4.0 million pounds between 2023 and 2025.
Carmen de Andacollo
Copper production of 10,300 tonnes in the fourth quarter was 4,000 tonnes lower than a year ago primarily due to lower copper grades, which declined by 15% as expected in the mine plan, as well as lower mill throughput as a result of unplanned maintenance.
Operating costs before changes in inventory in the fourth quarter of US$58 million were US$9 million higher than a year ago, primarily due to higher consumables costs.
Carmen de Andacollo’s production in 2022 is expected to be in the range of 45,000 to 50,000 tonnes of copper. Annual copper in concentrate production is expected to be between 50,000 and 60,000 tonnes for 2023 to 2025.
Quebrada Blanca
Copper cathode production of 2,900 tonnes in the fourth quarter was 400 tonnes lower than a year ago, as expected, due to the continued decline of cathode production as the operation ceased mining in 2018.
Operating costs before changes in inventory in the fourth quarter were US$25 million, or US$9 million higher than a year ago, primarily due to a one-time labour settlement cost of US$7 million.
11 Teck Resources Limited 2021 Fourth Quarter News Release Copper cathode production is now expected to continue through 2023 using existing leach piles and ore that is expected to be mined in the first half of 2022. We expect cathode production of approximately 10,000 to 11,000 tonnes in 2022 and 5,000 tonnes in 2023.
Quebrada Blanca concentrate production is expected to commence in the second half of 2022 following commissioning of the Quebrada Blanca Phase 2 project (QB2), in line with previous guidance. We expect copper in concentrate production to be between 240,000 and 300,000 tonnes per year for 2023 to 2025 with molybdenum production between 4.0 and 13.0 million pounds per year.
Cost of Sales
Cost of sales was $482 million in the fourth quarter compared with $452 million in the same period last year primarily due to higher consumables costs, and higher workers’ participation and royalty expense resulting from increased profitability at Antamina. Total cash unit costs1 of product sold in the fourth quarter, before cash margins for by-products1, of US$1.96 per pound were US$0.36 per pound higher than the same period a year ago. Cash margins for by-products1 were US$0.44 per pound compared with US$0.33 per pound in the same period a year ago due to substantially higher zinc prices. The resulting net cash unit costs1 for copper, after cash margins for by-products, of US$1.52 per pound were US$0.25 per pound higher than the same period a year ago.
| Three months ended Year ended December 31, December 31, | |
| (amounts reported in US$ per pound) 2021 2020 2021 2020 |
| Adjusted cash cost of sales1 | $ | 1.78 $ | 1.42 $ | 1.63 $ | 1.39 |
| Smelter processing charges | 0.18 | 0.18 | 0.17 | 0.18 | |
| Total cash unit costs1 | $ | 1.96 $ | 1.60 $ | 1.80 $ | 1.57 |
| Cash margin for by-products1 | (0.44) | (0.33) | (0.41) | (0.29) | |
| Net cash unit costs1 | $ | 1.52 $ | 1.27 $ | 1.39 $ | 1.28 |
Note:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
12 Teck Resources Limited 2021 Fourth Quarter News Release