The Teck Resources logo is seen on a podium before the company's special meeting of shareholders, in Vancouver, B.C., Wednesday, April 26, 2023. THE CANADIAN PRESS/Darryl Dyck
Teck Resources Ltd. is making progress in evaluating the various offers put forward by prospective buyers of its steelmaking coal business, the Vancouver-based mining company said Thursday.
On a conference call, CEO Jonathan Price declined to say whether a deal is imminent, but said Teck’s board and an independent special committee are engaged with “multiple counterparties” and are progressing talks as quickly as possible.
“I don’t want to say anything now to prejudge or pre-empt what the outcome might be. We’ll take the time to get it right,” said Price, who took questions from financial analysts following the release of the company’s second-quarter earnings report.
“But we’re not sitting on our hands here. We’re taking a very active and diligent approach to moving this forward as quickly as we can.”
Teck, Canada’s largest diversified mining company, has been working to split its coal assets from its base metal operations, in the hope of expanding its copper and zinc production to meet growing global demand for these metals, both of which are used in the production of electric vehicles and are considered to be key resources for the coming energy transition.
But a wrinkle was thrown into that plan this spring when Swiss commodities giant Glencore launched its $25-billion hostile takeover bid for Teck.
Teck’s board rejected Glencore’s original offer. But Glencore notched a victory of its own in April, when Teck called off a shareholder vote on its plan to spin off its steelmaking coal operations into a separate company. It had become apparent Teck did not have the required support for its proposal, which Glencore had lobbied against.
Glencore has since presented a new offer to Teck’s board, proposing to acquire the steelmaking portion of the company’s business for an undisclosed amount of cash.
The Swiss company has said it also remains willing to pursue its offer for all of Teck.
Price said the various parties that have expressed interest in Teck’s coal business have brought a forward a “range of proposals,” and added the board will only sign off on a deal that maximizes the value of the business.
“There will be a range of considerations we need to consider as we make those decisions,” he said.
“We have deliberately sought to keep a very open mind here.”
The update on the coal business negotiations came as Teck lowered its annual production guidance for its flagship project – its Quebrada Blanca, or QB2 copper mine expansion in Chile – due to construction and commissioning challenges.
The company said Thursday it now expects annual copper production of 330,000 tonnes to 375,000 tonnes, down from its previous estimate of 390,000 tonnes to 445,000 tonnes.
Price said Teck continues to expect the QB2 expansion project to be operating at full production rates by the end of this year, and added the company’s copper production guidance for the mine for 2024-2026 remains unchanged.
Teck also reported the death of an employee at the QB2 mine site during the quarter.
The company’s profit attributable to shareholders fell to $643 million for the three months ended June 30, down from $1.8 billion during the same period the year before, as global copper prices fell.
Revenue in the quarter totalled $3.5 billion, down from $5.3 billion in the second quarter of 2022.
On an adjusted basis, Teck says it earned $1.22 per diluted share for its most recent quarter, down from an adjusted profit of $3.25 per diluted share a year earlier.
This report by The Canadian Press was first published July 27, 2023.
Companies in this story: (TSX:TECK.B)
