Teck cuts forecast again as it encounters more problems at anchor QB2 mine in Chile

Teck Resources Ltd. is cutting its full year forecast yet again owing to setbacks at multiple mines, including at its giant QB2 copper operation in Chile.

Vancouver-based Teck said on Thursday that its full year copper production will come in at between 420,000 tonnes and 455,000 tonnes this year, about 6.5 per cent lower than predicted. The downgrade was driven in part by haul truck issues at its Highland Valley mine in British Columbia, including labour availability and issues with its autonomous system. Teck also cut its guidance for the QB2 mine in Chile, reducing its forecast by 6 per cent to roughly 205,000 tonnes.

Teck in the summer had already cut its 2024 copper forecast by 7 per cent owing in part to geotechnical challenges at QB2.

QB2 has been pitched to investors as the anchor mine for the newly revamped critical minerals-focused Teck after the recent sale of its coal business. But QB2 has been a disappointment with major cost overruns during construction and now myriad problems with the ramp up.

Teck on Thursday reduced its 2025 outlook for QB2 by 12 per cent as it encounters equipment reliability issues and challenges regarding ore recoveries.

In a note to clients, RBC Dominion Securities Inc. analyst Sam Crittenden said the guidance downgrades at Teck “cast a shadow on the first quarter in the post-coal era.”

Shares in Teck fell by more than 6 per cent in early trading on the Toronto Stock Exchange on Thursday.

Teck in July closed the sale of 77 per cent of its metallurgical coal business to Glencore PLC of Switzerland for US$7.3-billon.  Teck had already sold the other 23 per cent to Japan’s Nippon Steel and South Korea’s POSCO. The sale of the dirty coal business has allowed Teck to reduce its debt significantly and given it increased firepower to buy back stock to boost its share price. But the company continues to be plagued by issues at QB2.

Teck put the copper mine in the high mountains of northern Chile into production last year after a difficult construction period. Commissioned in 2018, its construction costs were revised upward multiple times, as Teck dealt with myriad issues, including engineering setbacks, COVID-19-induced inflation, and challenges in building some of the port’s infrastructure. QB2′s costs eventually spiralled to about US$8.7-billion, or 85 per cent higher than predicted.

The company in July said it was experiencing grade problems at QB2 because of geotechnical issues and pit dewatering. Teck on Thursday said that the geotechnical issues have stabilized.