Canadian mining company Teck Resources Limited reported adjusted earnings of 60 cents per share came in the first quarter, beating 34-cents-per-share estimates.Chris Helgren/Reuters
Teck Resources Ltd. TECK-B-T stumbled once again in its latest quarter, as it encountered more ramp-up problems at its giant QB2 copper mine, while its zinc business fired on all cylinders.
Teck put the high-altitude QB2 mine in the mountains of northern Chile into production in 2023, but the US$8.7-billion project went way over budget. The ramp-up has been difficult, with grade shortfalls and production misses among the early challenges.
Over the past few quarters, investors have been watching for signs that things have stabilized at QB2. But the Vancouver-based miner said Thursday in its earnings release that its 2025 production forecast for the mine will be at the lower end of its estimate, and that its costs will be on the higher end.
That’s in large part because QB2 will be subject to more maintenance downtime than originally predicted, as work on finishing its tailings dam construction continues.
“QB2 teething pains continue,” Scotia Capital analyst Orest Wowkodaw wrote in a note to clients on Thursday.
Production at QB2 in the first quarter fell by 30 per cent compared with the previous quarter owing to an 18-day maintenance outage, a massive power break that hit the whole country and weather issues. The mine operated at only 60 per cent of its “nameplate” or maximum capacity, according to Mr. Wowkodaw.
Teck owns 60 per cent of QB2 and is the operator. Japan’s Sumitomo Metal Mining Co. Ltd. and Sumitomo Corp. hold a 30-per-cent stake, and Chile’s Codelco owns 10 per cent.
QB2 is Teck’s cornerstone operation that underpinned its transformation into a fully focused critical-minerals company after it sold the remaining 77-per-cent share in its legacy coal business to Glencore PLC last year.
Teck chief executive officer Jonathan Price in a conference call with analysts on Thursday faced several questions about QB2’s latest travails. He detailed additional work that needs to be done to finish work on its tailings dam.
The company is making “good progress” on the work, Mr. Price said, predicting that QB2 will be running at a steady clip at year-end. He also pledged that there will be no cuts to the production forecast.
“We see no changes to guidance this year, or in the coming years,” he said.
While QB2 disappointed in the first quarter, other parts of Teck’s business performed considerably better than expected – most notably sales volumes at its Red Dog zinc mine in Alaska, and margins at its Trail smelter in B.C. At Trail, Teck refines some of the zinc that it mines at Red Dog, and it also produces the critical mineral germanium.
China halted exports of germanium to the U.S. in December in an early ratcheting up of trade tensions between the two countries that has since escalated wildly. Teck is the only Canadian supplier of germanium to the U.S., which is used in fibre optics, infrared night vision systems and solar panels.
For now, Teck’s business is well insulated from select tariffs imposed by U.S. President Donald Trump on Canada. While zinc mined at its Alaska mine would be subject to Chinese tariffs if the company ships it there, the shipping window doesn’t open until the summer because of sea ice restrictions.
China a few weeks ago imposed 125-per-cent tariffs on American imports. Mr. Trump has indicated in recent days that he is willing to drastically reduce tariffs he imposed on China, which go up to 145 per cent, pending the outcome of talks between the two superpowers.
“We don’t expect to face a material impact here as a result of tariffs between China and the U.S.,” Mr. Price said. “And we’ve got a number of months up our sleeve here to resolve any issues that might arise.”
Teck’s adjusted earnings per share came in $0.60 for the first quarter, far higher than the $0.34 per share analysts were expecting.
Teck’s class B shares on Thursday closed up 3.7 per cent on the Toronto Stock Exchange on Thursday, at $50.16 apiece.