Teck Resources Ltd. TECK-B-T chief executive Jonathan Price indicated he is open to a tie-up with former foe Glencore PLC that would combine its giant QB2 copper mine in Chile with Glencore’s neighbouring Collahuasi operation.
QB2 is the mine that underpinned Teck’s revamp to become a fully focused critical-minerals company after it sold its legacy coal business to Glencore.
Glencore co-owns another giant copper mine near QB2 called Collahuasi. Billions in cost savings are potentially on the table if QB2 and Collahuasi can be brought under the same ownership and operated as one gigantic facility.
“We do recognize the potential value of some form of tie-up between those two operations,” Mr. Price said in a conference call on Thursday following the release of Teck’s fourth-quarter earnings.
“And it’s something that we’ve done a good deal of work on to understand the various ways in which that value could be unlocked.”
Teck owns 60 per cent of QB2. Japan’s Sumitomo Metal Mining Co. Ltd. and Sumitomo Corp. hold 30 per cent and Chile’s Codelco owns 10 per cent.
Glencore and London-based Anglo American PLC each own 44 per cent of Collahuasi. Japan Collahuasi Resources B.V. owns the remaining 12 per per cent.
Mr. Price said that Teck has engaged with the Collahuasi partners around the opportunities about combining QB2 and Collahuasi, “but as you’d appreciate those discussions are confidential.”
Switzerland-based Glencore in 2023 tried to buy all of Teck, including its copper mines, but ultimately settled for acquiring its steel-making coal business. Before hammering out the US$8.9-billion coal deal, relations between the two miners got heated, with Teck slamming Glencore’s ESG credentials.
Teck put QB2 in the high mountains of northern Chile into production in 2023 but the project went way over budget and the ramp-up has been difficult, with Teck dealing with ore grade problems and production shortfalls.
During the call on Thursday, Liam Fitzpatrick, mining analyst with Deutsche Bank, said that “from a value unlock perspective,” a combination of QB2 and with Collahuasi makes a lot of sense.
Copper mines are extremely expensive to construct and maintain. Teck spent around US$8.7-billion to build QB2. Combining adjacent mining operations can lead to cost savings around labour, and the ability to share onsite infrastructure such as mills and mining trucks.
When Glencore was hell-bent on acquiring all of Teck in 2023, it estimated more than US$2-billion in cost savings could be wrung from feeding high-grade ore mined at Collahuasi through QB2’s processing facilities, alongside other efficiencies such as procurement.
Teck at that time said it had engaged with Glencore around combining the two mines, but nothing materialized.
While the industry has long engaged in joint ventures as a way to spread the risks of mining, cost savings are also in sharp focus, given persistently high inflation. Over the past few years, many of the major global miners have struck joint venture deals.
Anglo, one of the partners in Collahuasi, on Thursday announced a joint venture with Chilean state mining company Codelco to develop their adjacent Los Bronces and Andina copper operations.
Last year, BHP Group Ltd., the world’s biggest mining company, announced an agreement with Canada’s Lundin Mining Corp. to develop two copper mines that straddle the Argentinian and Chilean borders.
Barrick Gold Corp. and Newmont Corp. in 2019 combined their gold operations in Nevada in a blockbuster deal. At the time, the companies said the merger would generate about US$500-million in cost savings over the first five years.
The Teck-operated QB2 mine produced 208,000 tonnes of copper last year. Teck predicts production at QB2 will rise to about 250,000 tonnes this year. Teck’s share of that production equates to around 150,000 tonnes.
Mr. Price on Thursday said that Teck continues to try to “debottleneck” QB2. The mine was shut down for 18 days in January for maintenance and it will be shut down for about a week every quarter for the foreseeable future for similar work.
Teck also operates one of the world’s largest zinc mines, Red Dog, which is located in Alaska. It refines a lot of the zinc mined at Red Dog at its smelter in Trail, B.C. It also produces germanium at Trail.
The 10-per-cent tariffs that U.S. President Donald Trump has threatened on imports of Canadian critical minerals won’t have a material impact on Teck’s business, Mr. Price said, owing to the company’s low exposure to the American market.