Teck Resources, the Canadian mining company, has revised its 2023 production targets due to various challenges. This includes wildfires, a delay in constructing a molybdenum plant at its Quebrada Blanca Phase 2 project in Chile, and recent setbacks. While the company remains optimistic about its long-term prospects, adjustments were necessary.
Copper Production Guidance
Teck Resources has adjusted its annual copper production guidance for 2023. The revised target is set between 320,000 and 365,000 metric tons, down from the previous range of 330,000 to 375,000 tons. The adjustment was made after a localized geotechnical event at its Highland Valley Copper operation in British Columbia. However, Teck Resources believes that the event will not have any significant impact on production beyond 2023.
For the Quebrada Blanca Phase 2 project in Chile, the company still expects to produce between 80,000 and 100,000 tons of copper annually by 2023. However, it anticipates that the production will be at the lower end of this range.
Molybdenum Production Guidance
Teck Resources has also revised its molybdenum production guidance for 2023. The new target is set between 3 million and 3.8 million pounds, a decrease from the previous range of 4.5 million to 6.8 million pounds. This adjustment is primarily due to the delay in constructing the QB2 molybdenum plant.
Steelmaking Coal Production Target
In addition to copper and molybdenum, Teck Resources has adjusted its annual steelmaking coal production target for this year. The company now expects to produce between 23 million and 23.5 million tons, lower than the previous guidance of 24 million to 26 million tons. The adjustment is a result of plant challenges faced during the year.
Teck Resources experienced lower-than-anticipated coal sales of 5.2 million tons in the latest quarter. This was influenced by factors such as forest fires in British Columbia and a nearly two-week shutdown of ports on Canada's west coast due to a strike by port workers. Despite these challenges, the company is working towards a recovery in its coal supply chain.
Conclusion
Teck Resources remains committed to its long-term goals, but external factors have necessitated adjustments to its production targets for 2023. The company is confident in its ability to overcome these setbacks and continue moving forward with its projects, including the Quebrada Blanca Phase 2 initiative.
QB2 Molybdenum Plant Completion Delayed
Teck has announced that the completion of the QB2 molybdenum plant is now expected by the end of the fourth quarter of 2023. Additionally, the completion of the port offshore facilities is projected to be finished in the first quarter of 2024. Despite these delays, Teck assures that existing shipping arrangements will provide sufficient capacity for product transportation in the first three months of next year.
Impact on Cost Guidance and Efforts to Mitigate Risks
Due to delays in construction, slower demobilization progress, and the risk of contract claims, the capital cost for QB2 has been revised. Previously estimated at $8 billion to $8.2 billion, the cost is now forecasted to be between $8.6 billion and $8.8 billion. Teck is actively working on mitigating these risks and cost pressures.
Operational Progress and Adjusted Production Guidance
As of the end of the third quarter, the QB2 plant was operating consistently at 70% of its design capacity. Teck anticipates reaching design throughput and recovery rates by year-end. However, the company expects the annual production for QB2 in 2023 to be at the lower end of its guidance.
Strong Steelmaking Coal Prices
Teck reports that steelmaking coal prices continue to be robust, primarily driven by supply constraints and strong demand from India and China. Prices have risen throughout the third quarter and into October, with free-on-board premium spot prices trading at $343 per metric ton as of October 23.
