Protecting balance sheet Teck’s priority

If Teck’s (TSE) latest annual report is any indication, shareholders can expect an all-out effort to match or exceed the company’s impressive growth rate of the past decade in the 1990s. That might be tough to do. During the 1980s, Teck became a dominant player in the Hemlo gold camp of Ontario, the Casa Berardi gold camp of Quebec and the coal-fields of northeastern British Columbia; it recently acquired a toehold stake in a new base metal discovery in Quebec. But the coup of the decade was undoubtedly the 1986 acquisition, made with several partners, of a controlling interest in base metal giant Cominco (TSE).

In his report to shareholders, President Norman Keevil Jr. said the company’s strategy will be to maintain a strong balance sheet in order to be able to take advantage of new opportunities as they arise. As if to demonstrate the point, Teck racked up record earnings for its fifth year in a row in 1989 when net earnings reached $106 million.

Like most diversified metal producers, Teck is projecting a downturn in economic growth in North America in the next year. But it sees ongoing strong demand from Asia and potential for a new period of economic growth in Eastern Europe.

Because Metallgesellschaft of West Germany and MIM Holdings of Australia are both shareholders in and joint venture partners with Teck, it appears likely that some of Teck’s new ventures could be international in scope.

Keevil also noted that Teck would likely increase its position in Cominco over the course of the next decade. Teck and its partners’ initial investment was 30%, but this has since been increased to 41% through market purchases.

While new mine development, reserve expansion and productivity improvements at existing operations figure prominently in Teck’s growth plans, Keevil noted that the company would be expanding its exploration budget and strategy to include more grassroots and early stage exploration.

Teck is also looking to help fund an industry-wide research effort to develop new technology and theories that will aid in the discovery of new deposits to replace Canada’s declining base metal reserves.