Teck ups stake in Highland Valley

With the ink barely dry on a 3-year labour deal, Teck Cominco (TEK-T) is preparing to boost to 97.5% its stake in the Highland Valley Copper mine, 60 km southwest of Kamloops, B.C.

The company will do so by exercising its right of first refusal on BHP Billiton‘s (BHP-N) 33.57% stake. The price tag rings in at US$73 million. Late last year, BHP agreed to sell its stake to privately owned Quadra Mining of British Columbia.

“Increasing our interest in Highland Valley is a low-risk opportunity for Teck Cominco to increase its copper production significantly, at an ideal point in the copper price cycle,” says Teck Cominco CEO David Thompson.

Just hours before the announcement, the union at Highland Valley ratified what it calls “the best union contract in the B.C. mining industry in the past 15 years.”

The new deal provides for a 5% wage increase for the 776 union members (retroactive to Oct. 1, 2003) and includes 3% raises in October 2004 and October 2005, as well as improvements to the pension plan, health benefits, dental and optical coverage, long-term disability payments, and severance provisions.

The Highland Valley Copper mine, an open-pit operation, is expected to produce around 174,000 tonnes copper-in-concentrate per year over its remaining 5.5-year lifespan. Teck figures its increased stake will increase its copper production for 2004 by around 28%.