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Tar Sands/Oil Sands Cancellation the Least of Teck’s Problems as Analysts Question Mine Cost Overrun

http://www.greenpeace.org/canada/en/campaigns/Energy/tarsands/Jiri Rezac / Greenpeace

While Teck Resources’ bombshell decision [1] to walk away from its $20.6-billion Frontier tar sands/oil sands mine has received wall-to-wall coverage in the last seven days, the company’s broader financial picture is a bigger concern for investors, the Globe and Mail reports.

“While the outcome on Frontier has renewed the debate over responsible resource development in Canada, and raises questions about how open the country is to large-scale investment, it has little actual impact on Teck’s existing business,” the Globe wrote [2] early last week. “Of much more import to investors is Teck’s current financial condition,” after a weak fourth-quarter financial report just a couple of days before the Frontier announcement.

“The base metal miner’s shares have lost more than half of their value over the past year, as it grapples with cost overruns at two major projects, a weak outlook for its core metallurgical coal business, and the damaging impact of the coronavirus,” the paper adds. The mounting global health crisis “is hurting the share prices of many commodity sector companies,” but “the market is particularly concerned about a ratcheting up in capital costs at Quebrada Blanca Phase 2 (QB2), a new copper mine Teck is building in Chile. Originally budgeted at US$4.7-billion, Teck in recent months has made it clear that its original estimates were too low,” due to permitting problems and what it called “social unrest” that has delayed completion of the mine.

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“All these factors created a perfect storm,” CEO Don Lindsay told a mining conference last Monday, while sidestepping analysts’ calls for more clarity on the cost overruns. He said Teck would release details in late March, ahead of its [auspiciously-timed?] investors’ day April 1.

The Globe cites a number of analysts expressing skepticism about the company’s prospects, with its share price falling 2.7% last Monday.

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2 Comments To "Tar Sands/Oil Sands Cancellation the Least of Teck’s Problems as Analysts Question Mine Cost Overrun"

#1 Pingback By Tar Sands/Oil Sands Cancellation the Least of Teck’s Problems as Analysts Question Mine Cost Overrun – Enjeux énergies et environnement On March 2, 2020 @ 12:25 AM

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#2 Comment By Frances Deverell On March 3, 2020 @ 2:14 PM

The resource sector needs a new, more sustainable business model — cradle to grave planning including cleaning up the mess afterwards. No free resources like air and water to pollute. They have to protect the surrounding ecosystems. Smaller scale projects. Mega projects are not sustainable. And of course all this will cost so consumers will have to pay. It will provide motivation for manufacturers to return to building for quality and longevity rather than making cheap, throw away junk. We need a complete turnaround on our relations to resources and stuff.