Teck stumbles again at QB2 copper mine, while zinc business outperforms

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 was firing 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 on Thursday said that its 2025 production forecast for the mine will be at the lower end of its projected estimate, and 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.

“QB2 teething pains continue,” Scotia Capital analyst Orest Wowkodaw, wrote in a note to clients on Thursday.

Production in the first quarter fell by 30 per cent compared to the previous quarter, owing to an 18-day maintenance outage but also 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 of the mine. 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 mine that underpinned its revamp to become a fully focused critical-minerals company after it sold its legacy coal business to Glencore PLC last year.

While QB2 disappointed, other parts of Teck’s business performed considerably better than expected in the first quarter, most notably volumes at its Red Dog zinc mine in Alaska, and margins at its Trail zinc smelter in B.C.

Teck’s adjusted earnings per share came in 60 cents for the first quarter, far higher than the 34 cents per share analysts were expecting.

Teck’s class B shares were up by 5 per cent in early trading on the Toronto Stock Exchange on Thursday.