Teck Resources (TSX: TECK.A聽| TECK.B) (NYSE: TECK)聽has raised its construction cost estimate for the Quebrada Blanca phase 2 (QB2) copper project in Chile by at least $500 million.
Canada鈥檚 largest聽diversified miner now expects QB2 to cost between $7.4 billion and $7.75 billion, up from a July 2022 guidance of $6.9 billion to $7 billion, and an earlier estimate of $4.7 billion.
In a , Teck cited current foreign exchange assumptions, as well as cost pressures relating to weather and subsurface conditions as the main reasons behind the estimate hike.
The new figure is in line with the $7.5 billion valuation given in August by Teck鈥檚 Japanese partner Sumitomo, which owns 33.33% of Quebrada Blanca.
QB2, Teck鈥檚 key growth project, has faced several delays. Initially, it was expected to begin production in 2021. The current timeline points at first copper by the end of December, but the company has said the start could be delayed into January 2023 if productivity impacts persist.
The miner sees Quebrada Blanca copper production ramping up over 2023 following commissioning of QB2, with output ranging between 170,000 and 300,000 tonnes per year from 2023 to 2025.聽
The fresh estimate compares with a previous forecast of 245,000 to 300,000 tonnes annually. Next year production, the company noted, will be at the lower end of the guidance range.
QB2 is the first step in Teck鈥檚 plan to grow its copper footprint and implies extending the aging deposit鈥檚 life by 28 years.
The next phase of development of QB will be the Quebrada Blanca and mill expansion (QBME). The QBME feasibility study, including all environmental baseline activities, is expected to be completed in 2023.聽
鈥淨BME is expected to be a significant contributor to our near-term copper growth portfolio with first production targeted for 2026,鈥� chief executive officer Jonathan Price, who聽assumed the top job at Teck earlier this month,聽told investors. 鈥淲e鈥檙e also continuing to progress our other copper growth projects,鈥� he said.
This project entails an increase in concentrator throughput of about 50% with the addition of one identical, semi autogenous grinding mill. Once finished, it will turn Quebrada Blanca into Chile鈥檚 second-largest copper operation, after Escondida. It will also situate it among the world鈥檚 top five copper mines.聽
Beyond Chile
Teck鈥檚 other copper projects include a plan to form a 50:50 joint venture with PolyMet Mining (TSX: POM) (NYSE: PLM) to advance copper and nickel projects in Minnesota, US. An updated feasibility study and detailed engineering are under way at NorthMet, it said.
Feasibility work at the San Nicolas copper-zinc project in Mexico will be completed in the first quarter of 2024, with first production expected in late 2026, the company noted.
The miner also said it was in the final stage of the permitting process for its 80%-owned Zafranal project, in Peru, as the feasibility study for the project was completed in mid-2019.
Teck Resources has a 60% interest in聽Teck Quebrada Blanca聽SA (QBSA), which is the mine鈥檚 owner. Japan鈥檚聽Sumitomo Metal Mining聽and Sumitomo Corporation have a collective interest of 30% in QBSA, while Chilean state company Enami holds a 10% non-financial interest in the project.
The company said on Wednesday it had agreed to sell its 21.3% stake in the Fort Hills oilsands project in Canada聽to Suncor Energy (TSX, NYSE: SU) to focus on core operations 鈥� copper and steelmaking coal.