Teck OKs $2.4B Highland Valley Copper expansion

Teck Resources’ (TSX: TECK.A, TECK.B)(NYSE: TECK) board has approved a $2.4-billion (US$1.76-billion) project to extend the life of Canada’s largest copper mine for two decades.

Construction at Highland Valley Copper in British Columbia is set to begin in August. The Vancouver-based miner expects the expansion to support average annual production of 137,000 tonnes of copper through the remainder of the mine’s life.

“This extension is foundational to our strategy to double copper production by the end of the decade,” President and CEO Jonathan Price said. “Given the strong demand for copper as an energy transition metal, the [expansion] will generate a robust internal return rate and secure access to this critical mineral.” 

Class B shares in Teck Resources fell 4.3% to $50.26 apiece in Toronto on Thursday morning after the company reported second-quarter results. Earnings beat analyst expectations while cashflow didn’t and increased capital spending at Quebrada Blanca in Chile and Highland Valley weighed. The company’s market capitalization stood at $25.1 billion. The stock has traded in a 52-week range of $40.23 to $72.92.

BMO note

Teck reported adjusted earnings before interest, tax, debt and amortization of $722 million which bettered BMO Capital Markets estimate of $661 million. Copper production of 109,000 tonnes beat the bank’s forecast but missed the target of a consensus of analysts.

The company cut this year’s copper production forecast to 470,000 to 525,000 tonnes from 490,000 to 565,000 tonnes mostly due to lower output from Quebrada Blanca. That compared with BMO’s 479,000 tonnes estimate and the consensus at 502,000 tonnes.  

Teck ended the quarter in a net debt position of $211 million. It repurchased 9.8 million shares for $487 million during the quarter and has completed $2.2 billion of its $3.25-billion buyback program, the bank noted. 

Highland Copper 

The Teck board’s green light for Highland Valley Copper expansion follows B.C.’s approval of the project’s environmental assessment certificate last month. The expansion forms part of Teck’s broader $3.9 billion investment plan to boost copper output to 800,000 tonnes annually by 2030.

The project includes a major pushback of the Valley pit to access higher-grade ore, along with infrastructure upgrades: expanded mine fleet, grinding circuit enhancements, increased tailings capacity, and improved power and water systems.

Teck says the project will create roughly 2,900 construction jobs and support 1,500 ongoing roles once operational. Price also emphasized the project’s role in strengthening Canada’s critical minerals sector and stimulating economic activity in the region.