Reference: Fraser Phillips, Senior Vice President, Investor Relations and Strategic Analysis 604.699.4621 Dale Steeves, Director, Stakeholder Relations 236.987.7405
Teck Resources Limited TSX: TECK.A, TECK.B NYSE: TECK
teck.com
News Release
For Immediate Release Date: July 23, 2024 24-26-TR
Teck Reports Unaudited Second Quarter Results for 2024
Record quarterly copper production and transformation to pure-play energy transition metals company
Vancouver, B.C. – Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (Teck) today announced its unaudited second quarter results for 2024.
"We generated $1.7 billion of Adjusted EBITDA1 in the second quarter driven by record copper production with QB ramp-up continuing, as well as strong copper market fundamentals with copper prices reaching all-time highs," said Jonathan Price, President and CEO. "In early July, we completed the sale of our steelmaking coal business, and we now move forward as a pure-play energy transition metals company with leading copper growth. With cash proceeds of US$7.3 billion we will reduce debt, retain cash to fund our near-term copper growth, and return significant cash to our shareholders."
Highlights
- Adjusted EBITDA1 of $1.7 billion in Q2 2024 was driven by record copper production as Quebrada Blanca (QB) continues to ramp-up operations, as well as strong copper prices and steelmaking coal sales volumes. Profit from continuing operations before taxes was $658 million in Q2 2024.
- Adjusted profit from continuing operations attributable to shareholders1 was $413 million, or $0.80 per share, in Q2 2024. Profit from continuing operations attributable to shareholders was $363 million, $0.70 per share, in Q2 2024.
- On July 11, 2024, we completed the sale of the remaining 77% interest in our steelmaking coal business, Elk Valley Resources (EVR) and received cash proceeds of US$7.3 billion, subject to customary closing adjustments. We will deploy the cash proceeds to reduce debt, fund our near-term copper growth, and return significant cash to our shareholders.
- With the proceeds from the sale of the steelmaking coal business, the Board authorized up to a $2.75 billion share buyback and approved payment of an eligible dividend of $0.625 per share, including a $0.50 per share supplemental dividend, payable on September 27, 2024 to shareholders of record on September 13, 2024. Combined with the $500 million share buyback announced in February, total cash returns to shareholders of $3.5 billion from the sale of the steelmaking coal business have been authorized.
- On July 15, 2024, we purchased US$1.4 billion of our public notes through a bond tender offer.
- Our liquidity as at July 23, 2024 is $14.3 billion, including $8.7 billion of cash. We generated cash flows from operations of $1.3 billion in Q2.
- We returned a total of $346 million to shareholders in the second quarter through the purchase of $282 million of Class B subordinate voting shares pursuant to our normal course issuer bid, and $64 million paid to shareholders as dividends.
- Record quarterly copper production of 110,400 tonnes in the second quarter, with QB producing 51,300 tonnes. QB production continues to ramp-up to full production rates with first molybdenum produced in the quarter.
- Copper prices (LME) averaged US$4.42 per pound in the second quarter with spot copper prices reaching all-time highs of US$4.92 per pound in the quarter.
All dollar amounts expressed in this news release are in Canadian dollars unless otherwise noted.
Reference: Fraser Phillips, Senior Vice President, Investor Relations and Strategic Analysis 604.699.4621 Dale Steeves, Director, Stakeholder Relations 236.987.7405
Additional corporate information is available at www.teck.com
- Red Dog had a strong second quarter with zinc production increasing by 4% from a year ago to 139,400 tonnes and lead production increasing by 23% to 28,900 tonnes.
Note:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
2 Teck Resources Limited 2024 Second Quarter News Release
Financial Summary Q2 2024
| Financial Metrics1 | ||
| Q2 2024 | Q2 2023 | |
| (CAD$ in millions, except per share data) | ||
| Revenue Gross profit Gross profit before depreciation and amortization2 Profit from continuing operations before taxes Adjusted EBITDA2 Profit from continuing operations attributable to shareholders Adjusted profit from continuing operations attributable to shareholders2 Basic earnings per share from continuing operations Diluted earnings per share from continuing operations Adjusted basic earnings per share from continuing operations2 Adjusted diluted earnings per share from continuing operations2 | $ 3,873 $ 1,162 $ 1,828 $ 658 $ 1,670 $ 363 $ 413 $ 0.70 $ 0.69 $ 0.80 $ 0.79 | $ 3,519 $ 1,410 $ 1,841 $ 805 $ 1,479 $ 510 $ 643 $ 0.98 $ 0.97 $ 1.24 $ 1.22 |
Notes:
1. The financial metrics presented for each period includes results from our steelmaking coal business because final regulatory approval of the sale of EVR was not received until July 4, 2024, and EVR was not classified as a discontinued operation as at June 30, 2024.
2. 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
- QB copper production of 51,300 tonnes in the second quarter increased compared to 43,300 tonnes in the first quarter of 2024, as quarter over quarter production ramp-up continues.
- First molybdenum production and sales at QB in the quarter, as planned, with ramp-up progressing.
- Robust plant design and construction supports debottlenecking, and we remain focused on recovery and throughput. We continue to expect to be operating at full rates by the end of 2024.
- Throughput has improved and is close to design rates. Recoveries have improved as we adjust to the clays in the transition ores and improve plant stability. We have confidence in achieving target recoveries by the end of 2024. We are forecasting slightly lower grades in the second half of 2024 compared to plan due to short term access issues related to pit de-watering and a localized geotechnical issue. As a result, we have updated our previously disclosed annual 2024 QB production guidance for copper to 200,000 to 235,000 tonnes and molybdenum to 1.8 to 2.4 thousand tonnes.
- We continued to advance our industry-leading copper growth portfolio in the second quarter, with the focus on progressing feasibility studies and permitting, advancing detailed engineering work, and planning for project execution. At QB, we progressed work to define the near term debottlenecking opportunities. We achieved milestones in the permitting processes for HVC MLE and San Nicolás projects, and advanced the preparation of construction permits and feasibility study updates to support the next stages of Zafranal project development.
3 Teck Resources Limited 2024 Second Quarter News Release
Sale of the Steelmaking Coal Business
- On July 11, 2024, we completed the sale of our remaining 77% interest in our steelmaking coal business, EVR, to Glencore and received transaction proceeds of US$7.3 billion, subject to customary closing adjustments.
- On July 4, 2024, we announced our intention to allocate the transaction proceeds consistent with Teck's Capital Allocation Framework. This includes the repurchase of up to $2.75 billion of Class B subordinate voting shares, a one-time supplemental dividend of approximately $250 million, a debt reduction program of up to $2.75 billion, funding retained for our value-accretive copper growth projects, and approximately $1.0 billion for final taxes and transaction costs.
- In our second quarter 2024 News Release, Management's Discussion and Analysis, and Condensed Interim Consolidated Financial Statements, EVR continues to be reported in continuing operations because final regulatory approval of the sale of EVR was not received until July 4, 2024. Beginning in the third quarter of 2024, EVR results will be presented as discontinued operations.
Safety and Sustainability Leadership
- Our High-Potential Incident (HPI) Frequency rate was 0.11 for the first half of 2024, a 46% reduction in HPI's compared to the same period last year.
- Teck was named one of the Best 50 Corporate Citizens in Canada by Corporate Knights for the 18th consecutive year.
Guidance
- Our previously disclosed guidance has been updated for changes to our 2024 annual copper and molybdenum production, and copper net cash unit costs1 as a result of changes to our 2024 annual production and net cash unit cost1 guidance for QB.
- Our 2024 annual copper production guidance has been revised to 435,000 to 500,000 tonnes. Our 2024 annual molybdenum production guidance has been revised to 4.3 to 5.5 thousand tonnes. Copper net cash units costs1 (including QB) guidance has been revised to US$1.90 to $2.30 per pound.
- Given the completion of the sale of EVR on July 11, 2024, we have removed all steelmaking coal business unit information from our Outlook and Guidance disclosures. Our guidance is outlined in summary below and our usual guidance tables, including three-year production guidance, can be found on pages 29–33.
| 2024 Guidance – Summary | Current |
| Production Guidance Copper (000’s tonnes) Zinc (000’s tonnes) Refined zinc (000’s tonnes) Sales Guidance – Q3 2024 Red Dog zinc in concentrate sales (000’s tonnes) Unit Cost Guidance Copper net cash unit costs (US$/lb.)1 Zinc net cash unit costs (US$/lb.)1 | 435 - 500 565 - 630 275 - 290 250 - 290 1.90 - 2.30 0.55 - 0.65 |
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 2024 Second Quarter News Release
Management's Discussion and Analysis
This management's discussion and analysis (MD&A) is dated as at July 23, 2024 and should be read in conjunction with the unaudited condensed interim consolidated financial statements of Teck Resources Limited (Teck) and the notes thereto for the three months and six months ended June 30, 2024 and with the audited consolidated financial statements of Teck and the notes thereto for the year ended December 31, 2023. In this news release, 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, 2023, is available on SEDAR+ at www.sedarplus.ca.
This document contains forward-looking statements and forward-looking information. Please refer to the cautionary language under the heading “CAUTIONARY STATEMENT ON FORWARD- LOOKING STATEMENTS” below.
Overview
- Our profit from continuing operations attributable to shareholders decreased to $363 million in the second quarter from $510 million in the same period a year ago partly due to the reduced ownership of Elk Valley Resources (EVR), our steelmaking coal business, as described below, and lower steelmaking coal prices. In addition, finance expense and depreciation and amortization expense increased compared to the same period last year as we are depreciating QB assets and no longer capitalizing interest on the project, starting in 2024, as anticipated. These items were partly offset by increased copper sales from QB, higher copper prices and increased steelmaking coal sales volumes compared with a year ago.
- Our profit from continuing operations attributable to shareholders in the second quarter and for the six months ended June 30, 2024 included our 77% ownership interest of EVR because final regulatory approval of the sale of EVR was not received until July 4, 2024, and EVR was not classified as a discontinued operation as at June 30, 2024. EVR results include 23% that are attributable to noncontrolling interests, which includes Nippon Steel Corporation's (NSC) 20% and POSCO’s 3% ownership in EVR. This is a result of the closing of transactions with NSC and POSCO on January 3, 2024. We continued to operate EVR in the second quarter and retained all cash flows until completion of the sale of our remaining 77% interest in EVR to Glencore on July 11, 2024.
- In the second quarter, London Metal Exchange (LME) copper prices increased by 15% compared with a year ago and averaged US$4.42 per pound, and LME zinc prices increased by 12%, averaging US$1.29 per pound. During the second quarter, spot copper prices reached all-time highs of US$4.92 per pound in late May.
- Realized steelmaking coal prices in the second quarter remained above historical averages at US$238 per tonne but decreased compared with US$264 per tonne in the second quarter last year.
Steelmaking coal prices also decreased compared to the first quarter of 2024, resulting in negative provisional pricing adjustments of $50 million in the second quarter.
| Average Prices and Exchange Rates | Three months ended | ||
|---|---|---|---|
| Change | |||
| June 30, | |||
| 2024 | 2023 |
| Copper (LME cash – US$/pound) | $ | 4.42 $ | 3.84 | 15 % |
| Zinc (LME cash – US$/pound) | $ | 1.29 $ | 1.15 | 12 % |
| Steelmaking coal (realized US$/tonne) | $ | 238 $ | 264 | (10) % |
| Average exchange rate (CAD$ per US$1.00) | $ | 1.37 $ | 1.34 | 2 % |
5 Teck Resources Limited 2024 Second Quarter News Release
- Copper production increased significantly to 110,400 tonnes in the second quarter, approximately 46,000 tonnes, or 71%, higher than the same period a year ago as a result of QB production continuing to ramp-up. Copper production from QB was 51,300 tonnes in the second quarter compared with 43,300 tonnes in the first quarter of 2024, as quarter over quarter production ramp-up continues.
- Zinc in concentrate production of 151,900 tonnes in the second quarter decreased by 8% compared to a year ago due to expected lower zinc production from Antamina, partly offset by higher production from Red Dog driven by higher grade and recovery.
- Steelmaking coal production in the second quarter was 6.3 million tonnes, up from 5.8 million tonnes a year ago. Production from all the plants was strong in the second quarter driven by higher plant reliability. Second quarter steelmaking coal sales were 6.4 million tonnes compared with 6.2 million tonnes in the same period last year, and at the top end of our previously disclosed guidance of 6.0 – 6.4 million tonnes.
- We remain highly focused on managing our controllable operating expenditures. Our underlying key mining drivers such as strip ratios and haul distances remain relatively stable. Inflation on key input costs, including the cost of certain key supplies and mining equipment, labour and contractors, and changing diesel prices, are included in our 2024 annual capital expenditure, capitalized stripping and unit cost guidance.
- On November 13, 2023, we announced the full sale of EVR for an implied enterprise value of US$9.0 billion, with a 77% majority stake sold to Glencore and a minority stake sold to NSC. On January 3, 2024, NSC acquired a 20% interest in EVR in exchange for its 2.5% interest in Elkview Operations plus US$1.3 billion in cash paid at closing to Teck and US$0.4 billion paid subsequently to Teck out of cash flows from EVR. Teck continued to operate the steelmaking coal business and retained all cash flows from EVR until closing of the Glencore transaction on July 11, 2024.
- On July 4, 2024, final regulatory approval was received for the sale of our remaining 77% interest in EVR to Glencore. The transaction closed on July 11, 2024 and we received cash proceeds of US$7.3 billion, excluding customary closing adjustments. We have or intend to allocate the transaction proceeds consistent with Teck's Capital Allocation Framework as follows:
1. Cash Return to Shareholders
- Repurchase of up to US$2.0 billion (CAD$2.75 billion) of Class B subordinate voting shares.
- Distribution of approximately US$182 million (CAD$250 million) through a supplemental eligible dividend of CAD$0.50 declared by the Board on July 11, 2024 on both Class A common and Class B subordinate shares. The supplemental dividend will be paid on September 27, 2024, to shareholders of record at the close of business on September 13, 2024. This one-time supplemental dividend is in addition to the regular base quarterly dividend of $0.125 per share, for an expected total eligible dividend payable of $0.625 per share.
- Total announced cash return to shareholders from the 100% sale of EVR of US$2.6 billion (CAD$3.5 billion).
2. Debt Reduction
Execute a debt reduction program of up to US$2.0 billion (CAD$2.75 billion), including the cash tender offer to purchase US$1.25 billion aggregate principal amount of our outstanding public notes, which was announced on July 4, 2024. On July 15, 2024, we completed the purchase of US$1.4 billion of our public notes through this bond tender.
6 Teck Resources Limited 2024 Second Quarter News Release
3. Well-Funded, Value-Accretive Copper Growth
Remaining proceeds, net of taxes and transaction costs, will be retained to fund near-term copper growth. We will continue to advance our near-term copper projects, including the Highland Valley Copper Mine Life Extension, Zafranal Project, San Nicolas Project and QB debottlenecking, with the first sanction decisions expected in 2025. The current estimated capital cost attributable to Teck for these projects is US$3.3–$3.6 billion (CAD $4.5–$4.9 billion).
4. Taxes and Transaction Costs
Estimated US$750 million (CAD$1.0 billion) to pay taxes and transaction costs.
7 Teck Resources Limited 2024 Second Quarter News Release
Profit from Continuing Operations Attributable to Shareholders and Adjusted Profit from Continuing Operations Attributable to Shareholders
Our profit from continuing operations attributable to shareholders in the second quarter of 2024 included our 77% ownership interest of the steelmaking coal business EVR because final regulatory approval of the sale of EVR was not received until July 4, 2024, and EVR was not classified as a discontinued operation as at June 30, 2024, as outlined above.
In the second quarter, profit from continuing operations attributable to shareholders was $363 million, or $0.70 per share, compared to $510 million, or $0.98 per share, in the same period last year, as outlined above.
Adjusted profit from continuing operations attributable to shareholders1 2 in the second quarter, taking into account the items identified in the table below, was $413 million, or $0.80 per share, compared with $643 million, or $1.24 per share, in the second quarter of 2023. Significant second quarter adjustments to profit, reflected in the table below, were after-tax expenses of $25 million relating to changes to the carrying value of the financial liability for the preferential dividend stream to ENAMI and $22 million of share-based compensation, partly offset by $29 million of commodity derivative gains.
| Three months ended | Six months ended | |||
|---|---|---|---|---|
| June 30, | June 30, | |||
| (CAD$ in millions) | 2024 | 2023 | 2024 | 2023 |
Profit from continuing operations attributable to
shareholders1 $ 363 $ 510 $ 706 $ 1,676 Add (deduct) on an after-tax basis:
| QB variable consideration to IMSA and ENAMI | 32 | 69 | 42 | 71 |
| Environmental costs | 5 | 3 | (12) | 16 |
| Inventory write-downs | — | — | 19 | — |
| Share-based compensation | 22 | 42 | 49 | 60 |
| Commodity derivatives | (29) | 23 | (27) | 19 |
| Loss (gain) on disposal or contribution of assets | 9 | — | 3 | (186) |
| Elkview business interruption claim | — | (81) | — | (149) |
| Other | 11 | 77 | 25 | 66 |
Adjusted profit from continuing operations
attributable to shareholders1 2 $ 413 $ 643 $ 805 $ 1,573
Basic earnings per share from continuing
operations $ 0.70 $ 0.98 $ 1.36 $ 3.25
Diluted earnings per share from continuing
operations $ 0.69 $ 0.97 $ 1.35 $ 3.20
Adjusted basic earnings per share from continuing
operations2 $ 0.80 $ 1.24 $ 1.55 $ 3.05
Adjusted diluted earnings per share from
continuing operations2 $ 0.79 $ 1.22 $ 1.54 $ 3.00
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 $30 million of after-tax gains ($45 million, before tax) in the second quarter, or $0.06 per share.
Notes:
1. Profit from continuing operations attributable to shareholders and adjusted profit from continuing operations attributable to shareholders for each period reported includes results from our steelmaking coal business because final regulatory approval of the sale of EVR was not received until July 4, 2024, and EVR was not classified as a discontinued operation as at June 30, 2024.
2. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
8 Teck Resources Limited 2024 Second Quarter News Release
| Three months ended | Six months ended | |||
|---|---|---|---|---|
| FINANCIAL OVERVIEW | ||||
| June 30, | June 30, | |||
| (CAD$ in millions, except per share data) | 2024 | 2023 | 2024 | 2023 |
Revenue and profit
| Revenue | $ | 3,873 $ | 3,519 $ | 7,861 $ | 7,304 |
| Gross profit | $ | 1,162 $ | 1,410 $ | 2,451 $ | 3,076 |
| Gross profit before depreciation and amortization1 | $ | 1,828 $ | 1,841 $ | 3,747 $ | 3,930 |
Profit from continuing operations before taxes 2,661 $ 658 $ 805 $ 1,399 $ Adjusted EBITDA1 $ 1,670 $ 1,479 $ 3,363 $ 3,451 Profit attributable to shareholders $ 363 $ 510 $ 706 $ 1,650 Profit from continuing operations attributable to shareholders $ 363 $ 510 $ 706 $ 1,676
Cash flow
| Cash flow from operations | $ | 1,326 $ | 1,130 $ | 1,368 $ | 2,222 |
| Expenditures on property, plant and equipment | $ | 958 $ | 1,264 $ | 1,741 $ | 2,535 |
| Capitalized production stripping costs | $ | 259 $ | 235 $ | 577 $ | 545 |
Balance Sheet
Cash and cash equivalents $ 918 $ 1,773 Total assets $ 58,787 $ 53,090 Debt and lease liabilities, including current portion $ 7,724 $ 7,258
Per share amounts
| Basic earnings per share | $ | 0.70 $ | 0.98 $ | 1.36 $ | 3.20 |
| Diluted earnings per share | $ | 0.69 $ | 0.97 $ | 1.35 $ | 3.15 |
| Basic earnings per share from continuing operations | $ | 0.70 $ | 0.98 $ | 1.36 $ | 3.25 |
| Diluted earnings per share from continuing operations | $ | 0.69 $ | 0.97 $ | 1.35 $ | 3.20 |
| Dividends declared per share | $ | 0.125 $ | 0.125 $ | 0.25 $ | 0.75 |
PRODUCTION, SALES AND PRICES Production (000’s tonnes, except steelmaking coal)
| Copper2 | 110 | 64 | 209 | 121 |
| Zinc in concentrate | 152 | 164 | 312 | 309 |
| Zinc – refined | 65 | 68 | 128 | 130 |
| Steelmaking coal (million tonnes)2 | 6.3 | 5.8 | 12.3 | 11.8 |
Sales (000’s tonnes, except steelmaking coal)
Copper2 62 121
104 199
| Zinc in concentrate | 64 | 90 | 163 | 199 |
| Zinc – refined | 68 | 67 | 130 | 122 |
| Steelmaking coal (million tonnes)2 | 6.4 | 6.2 | 12.3 | 12.4 |
Average prices and exchange rates
| Copper (LME cash – US$/pound) | $ | 4.42 $ | 3.84 $ | 4.12 $ | 3.95 |
| Zinc (LME cash – US$/pound) | $ | 1.29 $ | 1.15 $ | 1.20 $ | 1.29 |
| Steelmaking coal (realized US$/tonne) | $ | 238 $ | 264 $ | 266 $ | 273 |
| Average exchange rate (CAD$ per US$1.00) | $ | 1.37 $ | 1.34 $ | 1.36 $ | 1.35 |
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% of production and sales from Antamina, representing our proportionate ownership interest in this operation. We include 100% of production and sales from EVR operations in our production and sales volumes, even though we own 77% of EVR effective from January 3, 2024, because we fully consolidate (100%) EVR results in our financial statements.
9 Teck Resources Limited 2024 Second Quarter News Release
BUSINESS UNIT RESULTS
Our revenue, gross profit, and gross profit before depreciation and amortization1 by business unit are summarized in the table below.
| Three months ended | Six months ended | |||
|---|---|---|---|---|
| June 30, | June 30, | |||
| (CAD$ in millions) | 2024 | 2023 | 2024 | 2023 |
Revenue
| Copper | $ | 1,369 $ | 733 $ | 2,447 $ | 1,496 |
| Zinc | 433 | 532 | 974 | 1,148 | |
| Steelmaking coal | 2,071 | 2,254 | 4,440 | 4,660 | |
| Total | $ | 3,873 $ | 3,519 $ | 7,861 $ | 7,304 |
Gross profit
| Copper | $ | 397 $ | 205 $ | 503 $ | 466 |
| Zinc | 21 | 105 | 84 | 233 | |
| Steelmaking coal | 744 | 1,100 | 1,864 | 2,377 | |
| Total | $ | 1,162 $ | 1,410 $ | 2,451 $ | 3,076 |
Gross profit before depreciation and amortization1
| Copper | $ | 694 $ | 318 $ | 1,065 $ | 691 |
| Zinc | 67 | 144 | 193 | 317 | |
| Steelmaking coal | 1,067 | 1,379 | 2,489 | 2,922 | |
| Total | $ | 1,828 $ | 1,841 $ | 3,747 $ | 3,930 |
Gross profit margins before depreciation and
amortization1
| Copper | 51 % | 43 % | 44 % | 46 % |
| Zinc | 15 % | 27 % | 20 % | 28 % |
| Steelmaking coal | 52 % | 61 % | 56 % | 63 % |
Note:
1. This is a non-GAAP financial measure or ratio. See “Use of Non-GAAP Financial Measures and Ratios” for further information.
10 Teck Resources Limited 2024 Second Quarter News Release
COPPER BUSINESS UNIT
| Three months ended June 30, | Six months ended | |||
|---|---|---|---|---|
| June 30, | ||||
| (CAD$ in millions) | 2024 | 2023 | 2024 | 2023 |
| Copper price (realized – US$/pound) | $ | 4.44 $ | 3.80 $ | 4.16 $ | 3.94 |
| Production (000’s tonnes)1 | 110 | 64 | 209 | 121 | |
| Sales (000’s tonnes)1 | 104 | 62 | 199 | 121 | |
| Gross profit | $ | 397 $ | 205 $ | 503 $ | 466 |
| Gross profit before depreciation and amortization2 | $ | 694 $ | 318 $ | 1,065 $ | 691 |
| Property, plant and equipment expenditures | $ | 558 $ | 1,013 $ | 1,146 $ | 2,116 |
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 increased to $397 million in the second quarter, compared with $205 million a year ago (see table below). The increase in gross profit was due to higher copper prices and substantially higher sales volumes, partly offset by the depreciation of QB assets that commenced at the start of 2024.
Record quarterly copper production of 110,400 tonnes was achieved in the second quarter, 71% higher than the same period last year. The increase was primarily driven by continued quarter over quarter improvement in QB's production, with the operation contributing 51,300 tonnes of copper in concentrate in the second quarter. Slightly higher production from Antamina and Highland Valley Copper was offset by lower production at Carmen de Andacollo due to water restrictions in the second quarter as a result of continued extreme drought conditions. The water restrictions improved during the quarter and we expect that improvement to continue in the second half of 2024.
The table below summarizes the change in gross profit in our copper business unit for the quarter.
| Three months ended June 30, | |
| Gross Profit (CAD$ in millions) |
As reported in the second quarter of 2023 $ 205 Increase (decrease):
Copper price realized 194 Sales volumes 173 Unit operating costs (14) Co-product and by-product contribution 11 Foreign exchange (CAD$/US$) 12 Depreciation (184)
Net increase $ 192 As reported in current quarter $ 397
11 Teck Resources Limited 2024 Second Quarter News Release Property, plant and equipment expenditures in the second quarter totalled $558 million, including $202 million for sustaining capital, and $297 million for project development expenditures for QB2.
Capitalized production stripping costs were $88 million in the second quarter compared with $95 million a year ago.
Markets
In the second quarter, copper prices rose 16% over the previous quarter to an average US$4.42/lb. reaching a record high at the end of May with prices rising to US$4.92/lb. on the LME. Traditional markets continue to perform well with new technology and new energy sectors growing at an accelerated pace. Demand in Europe and North America during the quarter was quiet, with high copper prices keeping buyers operating prudently on a day to day basis. Demand in China remains strong despite weakness in the property market. Copper stocks in China rose by 70,000 tonnes in the quarter on the SHFE exchange and in bonded warehouses, and are up 375,000 tonnes year to date. In Asia, spot demand continues to be strong with India demand the standout, projected to rise this year by over 8%. Overall, global demand in 2024 is expected to remain supportive through the remainder of the year with both CRU and Wood Mackenzie expecting global demand growth to come in over 3.0% this year.
The tightness in the copper concentrate market continued through the second quarter, with spot smelter terms falling further to new record lows. Mid-Year settlements by major miners and major smelters for contracts into 2025 were settled below US$25/tonne and 2.5 cents/lb. Demand from smelters continued to outpace the rise in primary mine supply in 2024, and this tightness is projected to continue well into 2025. New smelter capacity being built to meet the growing demand from traditional markets, as well as demand from new energy and technology sectors, is coming to market sooner than primary mine supply can be brought on stream. Utilization rates at custom smelting facilities globally continue to fall as raw material shortages restrict production capability. Concentrate imports into China rose 2.5% to May 2024 following a record year of imports in 2023, as Chinese smelters and traders bid aggressively for marginal tonnes to keep utilization rates high. With concentrate tightness continuing into the second half and new integrated smelters coming online in the third quarter, removing custom concentrates from the open market, buyers will continue to face a lack of raw materials supply to feed growing cathode demand.
Operations
Quebrada Blanca
The following are the key updates relating to operational performance at QB in the second quarter:
- Copper in concentrate production in the second quarter was 51,300 tonnes, an increase from 43,300 tonnes produced in the first quarter of 2024 as a result of continued ramp-up. Sales for the second quarter were constrained to 42,500 tonnes due to temporary filter plant issues at the port in June. The filter plant issues were resolved and the plant was operational again at the end of the second quarter. We expect to make-up the sales volumes over the balance of 2024.
- First molybdenum production and sales, as planned, with ramp up progressing.
- Robust plant design and construction supports debottlenecking, and we remain focused on recovery and throughput. We continue to expect to be operating at full rates by the end of 2024.
- Throughput has improved and is close to design rates. Recoveries have improved as we adjust to the clays in the transition ores and improve plant stability. We have confidence in achieving target recoveries by the end of 2024. We are forecasting slightly lower grades in the second half of 2024, compared to plan due to short term access issues related to pit de-watering and a localized geotechnical issue. As a result, we have updated our previously disclosed 2024 annual QB production guidance for copper and molybdenum, as outlined below in the Outlook section.
12 Teck Resources Limited 2024 Second Quarter News Release