bmo 26th global metals & mining conference
Post on 20-Mar-2017
1.075 Views
Preview:
TRANSCRIPT
26th Global Metals & Mining ConferenceFebruary 27, 2017
Forward Looking Information
Both these slides and the accompanying oral presentations contain certain forward-looking statements within the meaning of the United States Private Securities LitigationReform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario). Forward-looking statements involve known and unknown risks,uncertainties and other factors which may cause the actual results, performance or achievements of Teck to be materially different from any future results, performance orachievements expressed or implied by the forward-looking statements. These forward-looking statements include statements relating to the long-life of our assets andestimated resource life, our production guidance, estimated profit and estimated EBITDA and the sensitivity of estimated profit and estimated EBITDA to foreign exchangeand commodity prices, the expectation that there will be a significant market opportunity for QB2 production in 2021, our expectations regarding market supply anddemand in the commodities we produce, expected 2017 zinc production and increase in Antamina zinc production, the expected timing and amount of production at theFort Hills oil sands project, capital costs and our remaining capital commitment at Fort Hills, Fort Hills anticipated production rate, our statement that Quebrada Blanca 2 isa potential tier 1 asset, the statements made regarding the potential mine life, capital costs, mine life extension and expansion optionality and production for our QuebradaBlanca Phase 2 project, 2017 potential EBITDA, our statement that debt reduction remains our priority, 2017 production guidance and cost guidance, 2017 capitalexpenditures guidance, our growth/value pipeline, our statements regarding amount of resources and reserves and anticipated number of years that production will besustained, Q1 2017 average realized coal price expectations, all projections for our Quebrada Blanca 2 project, including those on the slide titled “Quebrada Blanca 2Summary”, all projections for NuevaUnión, including statements made on the “NuevaUnión Summary” slide, Red Dog resource potential, the Fort Hills project indicativeNPV, and financial projections and other statements regarding the project made on the “The Real Value of Long-Life Assets” slide, all statements made on the “Fort HillsKey Numbers”, transportation capacity and our ability to secure transport for our Fort Hills production, and management’s expectations with respect to production, demandand outlook regarding coal, copper, zinc and energy.
These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially, which are described in Teck’s publicfilings available on SEDAR (www.sedar.com) and EDGAR (www.sec.gov). In addition, the forward-looking statements in these slides and accompanying oral presentationare also based on assumptions, including, but not limited to, regarding general business and economic conditions, the supply and demand for, deliveries of, and the leveland volatility of prices of, zinc, copper and coal and other primary metals and minerals as well as oil, and related products, the timing of the receipt of regulatory andgovernmental approvals for our development projects and other operations, our costs of production and production and productivity levels, as well as those of ourcompetitors, power prices, continuing availability of water and power resources for our operations, market competition, the accuracy of our reserve estimates (includingwith respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, conditions in financial markets, the futurefinancial performance of the company, our ability to attract and retain skilled staff, our ability to procure equipment and operating supplies, positive results from the studieson our expansion projects, our coal and other product inventories, our ability to secure adequate transportation for our products, our ability to obtain permits for ouroperations and expansions, our ongoing relations with our employees and business partners and joint venturers. Reserve and resource life estimates assume the minelife of longest lived resource in the relevant commodity is achieved, assumes production at planned rates and in some cases development of as yet undevelopedprojects. Management’s expectations of mine life are based on the current planned production rates and assume that all resources described in this presentation aredeveloped. Certain forward-looking statements are based on assumptions disclosed in footnotes to the relevant slides. Our estimated profit and EBITDA sensitivityestimates are based on the commodity price and currency exchange assumptions stated on the relevant slide. Cost statements are based on assumptions noted in therelevant slide. Assumptions regarding Fort Hills also include the assumption that project development and funding proceed as planned, as well as assumptions noted onthe relevant slides discussing Fort Hills. Assumptions regarding our potential reserve and resource life assume that all resources are upgraded to reserves and that allreserves and resources could be mined. The foregoing list of assumptions is not exhaustive. Assumptions regarding NuevaUnión include that the project is built andoperated in accordance with the conceptual preliminary design from a preliminary economic assessment.
2
Forward Looking Information
Factors that may cause actual results to vary materially include, but are not limited to, changes in commodity and power prices, changes in market demand for ourproducts, changes in interest and currency exchange rates, acts of foreign governments and the outcome of legal proceedings, inaccurate geological and metallurgicalassumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), unanticipated operational difficulties (including failure of plant,equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action ordelays in the receipt of government approvals, industrial disturbances or other job action, adverse weather conditions and unanticipated events related to health, safetyand environmental matters), union labour disputes, political risk, social unrest, failure of customers or counterparties to perform their contractual obligations, changes inour credit ratings, unanticipated increases in costs to construct our development projects, difficulty in obtaining permits, inability to address concerns regarding permits ofenvironmental impact assessments, and changes or further deterioration in general economic conditions. We will not achieve the maximum mine lives of our projects, orbe able to mine all reserves at our projects, if we do not obtain relevant permits for our operations. Our Fort Hills project is not controlled by us and construction andproduction schedules may be adjusted by our partners. NuevaUnión is jointly owned. The effect of the price of oil on operating costs will be affected by the exchange ratebetween Canadian and U.S. dollars.
Statements concerning future production costs or volumes are based on numerous assumptions of management regarding operating matters and on assumptions thatdemand for products develops as anticipated, that customers and other counterparties perform their contractual obligations, that operating and capital plans will not bedisrupted by issues such as mechanical failure, unavailability of parts and supplies, labour disturbances, interruption in transportation or utilities, adverse weatherconditions, and that there are no material unanticipated variations in the cost of energy or supplies.
We assume no obligation to update forward-looking statements except as required under securities laws. Further information concerning assumptions, risks anduncertainties associated with these forward-looking statements and our business can be found in our most recent Annual Information Form, as well as subsequent filingsof our management’s discussion and analysis of quarterly results, all filed under our profile on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov).
3
Agenda
Teck Overview & Strategy
Commodity Market Observations
Teck Update
4
• Focused on long-life orebodies in stable jurisdictions
• High-quality assets: All operating business units generate significant cash flow
• Sustainability: Key to managing risks and developing opportunities
Strong Resource Position1
With Sustainable Long-Life Assets
Coal Resources ~100 years
Copper Resources ~40 years
Zinc Resources ~15 years
Energy Resources ~50 years
Attractive Portfolio of Long-Life Assets In Low Risk Jurisdictions
1. Reserve and resource life estimates refer to the production weighted average of mine lives in the relevant commodity assuming production at planned rates from proven and probable reserves and measured and indicated resources and in some cases development of as yet undeveloped projects . See the reserve and resource disclosure in our most recent Annual Information Form, available on SEDAR and EDGAR, for additional detail regarding underlying assumptions.
5
Diversified business model
Attractive portfolio of long life assets
Low half of the cost curve
Appropriate scale
Low risk jurisdictions
Consistent Long-Term Strategy
6
Q4 2016 2016Revenue $3.6 billion $9.3 billionAssets (December 31, 2016)
$35.6 billion $35.6 billionGross profitbefore depreciation & amortization1 $2.0 billion $3.8 billionProfitattributable to shareholders
$697 million $1.0 billionCash Flow from Operations $1.5 billion $3.1 billionAdjusted EBITDA1,2 $1.8 billion $3.6 billion
Adjusted profitattributable to shareholders2
$930 million$1.61/share
$1.1 billion$1.91/share
Financial Results Overview
Significant increases in adjusted profit attributable to shareholders2
1. Adjusted EBITDA is EBITDA less impairment charges. 2. Non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” section of our quarterly news releases for further information.
7
The Value of our Diversified Business Model
Production Guidance3
Unit of Change
Effect on EstimatedProfit5
Effect on EstimatedEBITDA2,5
$C/$US C$0.01 C$42M /$0.01∆ C$68M /$0.01∆
Coal 27.5 Mt US$1/tonne4 C$21M /$1∆ C$32M /$1∆
Copper 282 kt US$0.01/lb C$5M /$0.01∆ C$7M /$0.01∆
Zinc 972 kt US$0.01/lb C$9M /$0.01∆ C$14M /$0.01∆
Leverage to Strong Steelmaking Coal & Zinc Markets in 2017
1. Gross profit before depreciation and amortization. 2. Non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” section of our quarterly news releases for further information.3. Assumes the midpoint of 2017 guidance ranges. Zinc includes 670 kt of zinc in concentrate and 302 kt of refined zinc.4. Based on a US$1/tonne change in benchmark premium steelmaking coal price.5. Annual effect based on commodity prices and our balance sheet as of February 14, 2017 and a C$/US$ exchange rate of 1.30. The effect varies from quarter to quarter depending on
sales volumes and is sensitive to movements in commodity prices.
0%
25%
50%
75%
100%
2009 2010 2011 2012 2013 2014 2015 2016
Div
ersi
fied
Cas
h O
pera
ting
Prof
it1,2
Coal Copper Zinc
Commodity Mix Shifts with Changes in Relative Commodity Prices
8
Agenda
Teck Overview & Strategy
Commodity Market Observations
Teck Update
9
Coal Price Assessments
Source: Argus Plotted to February 15, 2017
• Q4/2016 market tightness due to:− Global curtailments− Production interruptions − Inventory build to cover risks of
floods in Australia− China’s operating days
• Recent market developments:− Increased production− No new mine restart announcements− Steel mills reducing inventories− Traders liquidating positions?− China relaxed restrictions on
operating days (until March 2017?)
Supply driven volatility
Source: Argus
6080
100120140160180200220240260280300320
$ / to
nne
Quarterly Contract Settlement Argus FOB Australia
Steelmaking Coal Prices Seeking Balance
10
SGX TSI FOB Aus Forward Contracts
Source: FIS
• Upward shift in forward contracts
• Spot prices increasing
Met Coal Market Responding to Supply Concerns
February 23, 2017
February 15, 2017
$100
$110
$120
$130
$140
$150
$160
$170
Feb-17 Mar-17 Apr-17 Q2-17 Q3-17 Q4-17 Cal18 Cal19
US$
per
Ton
ne
(6,000)
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
0
1,000
2014 2017 2020 2023
Thou
sand
tonn
es
• Demand growth absorbing new mine supply
• Less supply growth post 2017
• Disruptions increasing
• Market finely balanced through 2018
• Structural deficits grow from 2019
• Significant market opportunity for QB2 production in 2021
Forecast Copper Refined Balance
Source: ICSG, Wood Mackenzie, Teck
Long-Term Copper Mine Production Still Needed
11
Zinc Metal Market Moving Towards TightnessU
S¢/lb
Data plotted from 2000 to February 3, 2017Source: LME, SHFE, Wood Mackenzie
Zinc Prices vs. Days of Reported Stocks• Significant mine
closures completed
• Mine production has fallen
• Asian metal production curtailments
• Inventories declining
• Stocks approaching critical levels
• Treatment charges have tightened significantly
days of stocks
12
Source: Consensus Economics, December 2016
Fort Hills first production may coincide with forecasted supply deficit
Oil Market to Rebalance
Global Crude Oil Supply and Demand Balances
Mill
ion
of b
arre
ls p
er d
ay
Mill
ion
of b
arre
ls p
er d
ay
13
Agenda
Teck Overview & Strategy
Commodity Market Observations
Teck Update
14
Solid Record of Delivery Against Guidance
15
598
673
560
580
600
620
640
660
680
2012 2013 2014 2015 2016 2017E
kt
Zinc Production – At the Right Time!
16
Zinc in Concentrate Production1
1. Including co-product zinc production 2017E is the mid-point of the production guidance range.
• Significant production at Red Dog
− Declining zinc grade offset by increasing mill throughput
• Antamina production ~2x
16
Fort Hills Project Status & Progress
Source: Fort Hills Energy Limited Partnership, October 2016.
• 5 out of 6 areas on plan• Construction >76% complete
at year end 2016• 2 of 6 areas turned over to
Operations • First oil end of 2017 • Teck’s share of project costs to
completion: $640M in 2017; $165M in 2018
• Nameplate capacity increased to 194 kbpd
• Steady state production increased to 186 kbpd
Expect to achieve 90% of nameplate capacity by end 2018
17
Quebrada Blanca 2 is a Potential Tier 1 Asset
• Top 15 copper producer globally
• Development capital costs reduced significantly to US$4.7B
• Change in scope, including revised tailings facility
• Initial mine life of 25 years uses only ~25% of known reserves & resources
• Mine life extension & expansion optionality
• Familiar, mining-friendly jurisdiction
• Operating and sustaining costs in low half of cost curve
• 300 kt annual copper equivalent production in first 5 years
18
Significant Cash Flow Generation
Potential EBITDA1
Less: Corporate
Steelmaking Coal
Copper
Zinc
1. Non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” section of our quarterly news releases for further information. Estimates are based on the mid-point of our2017 production guidance ranges and assume a C$/US$ exchange rate of 1.30 and our typical steelmaking coal sales mix of 40% contract and 60% spot. The steelmaking coal priceassumption is based on a combination of the Q1 2017 expected realized price of US$200 to US$215 per tonne, and an assumed quarterly contract benchmark price of US$155per tonne and an average realized price of 92% of the contract price for the balance of the year. Base metal price assumptions are based on the 2017 year to date average copper priceof US$2.60 per pound and average zinc price of US$1.25 per pound. Actual prices will vary, and operating performance and sales may vary materially for a variety of reasons, causingthese production and sales estimates to be materially incorrect. These estimates are based on numerous assumptions, and are subject to various risks and uncertainties that may causeresults to vary materially. Please see the Cautionary Note on Forward-Looking Information at the beginning of this presentation for more specific information.
• Expanded operating margins –prices and costs
• Increasing zinc production
• Significant leverage to coal, copper and zinc
2017 Based on Current Prices
Also Energy from 2018
>C$5 Billion
19
7.2
6.1
5.0
5.5
6.0
6.5
7.0
7.5
9/30/2015 12/31/2015 9/30/2016 12/31/2016
US$
Billi
ons
Debt Reduction Remains The Priority
1. As at February 14, 2017.2. Non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” section of our quarterly news releases for further information. Our revolving credit facility requires a debt to
debt-plus-equity ratio of <50%.
Bonds Outstanding
Current Debt Portfolio1
Public notes outstanding US$6.1B
Average coupon 5.7%
Weighted average term to maturity ~13 years
Debt to debt-plus-equity ratio2 32%
>US$1BReduction
20
Capitalizing on the Turn in the Cycle
• Continuing to execute for higher production per share
− No equity dilution
− No operating assets sold
− Investing in production growth from Fort Hills
− Maintaining strong liquidity
− Reducing debt & managing maturities
• Record quarterly results
• Generating significant free cash flow
• Strengthening our financial position
21
Additional Information
22
Teck Stock Price vs. London Metal Exchange Index
Commodity Price Correlation With Stock Price
Plotted to February 13, 2017Source: Bloomberg
C$/
shar
e
Bloo
mbe
rg C
omm
odity
Pric
e In
dex
$0
$10
$20
$30
$40
$50
$60
$70
700
1200
1700
2200
2700
3200
3700
4200
4700
5200
22/0
5/20
0122
/11/
2001
22/0
5/20
0222
/11/
2002
22/0
5/20
0322
/11/
2003
22/0
5/20
0422
/11/
2004
22/0
5/20
0522
/11/
2005
22/0
5/20
0622
/11/
2006
22/0
5/20
0722
/11/
2007
22/0
5/20
0822
/11/
2008
22/0
5/20
0922
/11/
2009
22/0
5/20
1022
/11/
2010
22/0
5/20
1122
/11/
2011
22/0
5/20
1222
/11/
2012
22/0
5/20
1322
/11/
2013
22/0
5/20
1422
/11/
2014
22/0
5/20
1522
/11/
2015
22/0
5/20
1622
/11/
2016
22/0
5/20
17
LME Index (Left Axis) Teck (Right Axis)
23
NorthAmerica
~22%Europe~14%
LatinAmerica
~3%
China~19%
Asia excl. China~42%
Diversified Global Customer BaseExposure to Recovery in Developed Markets As well as Growing Emerging Markets
* Based on 2016 revenue.
Revenue Contribution from Diverse Markets*
24
Significant Increase in Margins
25
Gross Profit Margins Before Depreciation1
1. 2013 reflects deferred stripping accounting change, Q1 2012 restated for deferred stripping and pension IFRS adjustments. Non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” section of our quarterly news releases for further information.
0%
25%
50%
75%
100%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2009 2010 2011 2012 2013 2014 2015 2016
Steekmaking Coal Copper Zinc Overall
25
Solid Delivery Against 2016 Guidance
1. Approximate, based on capitalized stripping guidance and mid-point of production guidance range.2. Steelmaking coal unit cost of sales include site costs, inventory adjustments, collective agreement charges and transport costs. Total cash unit costs are unit cost of sales
plus capitalized stripping. US dollar unit costs assume a Canadian dollar to US dollar exchange rate of 1.33 in 2016 and 1.30 in 2017.3. Non-GAAP financial measures. See ‘Use of Non-GAAP Financial Measures’ in our quarterly results news releases for additional information.4. Includes one-time collective agreement settlement charges of $2 per tonne.5. Net of by-product credits.6. Copper total cash unit costs include cash C1 unit costs (after by-product margins) and capitalized stripping. 7. Including co-product zinc production from our copper business unit.8. Including capitalized stripping.
Guidance ResultsSteelmaking Coal
Production 25-26 Mt 27.6 Mt Record productionSite costs $45-49/t $43/tCapitalized stripping $11/t1 $10/tTransportation costs $35-37/t $34/t
Total cash unit costs2,3 $91-97/tUS$69-73/t
$89/t4US$67/t4
Lower unit costs
CopperProduction 305-320 kt 324 ktC1 unit costs5 US$1.50-1.60/lb US$1.35/lbCapitalized stripping US$0.21/lb1 US$0.17/lbTotal cash unit costs3,6 US$1.71-1.81/lb US$1.52/lb Lower unit costs
ZincMetal in concentrate production7 630-665 kt 662 ktRefined production 290-300 kt 312 kt Record production
Capital Expenditures8 $2.0B $1.9B Lower capex
26
2016 Results 2017 GuidanceSteelmaking Coal
Production 27.6 Mt 27-28 MtSite costs $43/t $46-50/tCapitalized stripping $10/t $16/t1
Transportation costs $34/t $35-37/t
Total cash costs2, 3 $89/tUS$67/t
$97-103/tUS$74-79/t
CopperProduction 324 kt 275-290 ktC1 unit costs4 US$1.35/lb US$1.40-1.50/lbCapitalized stripping US$0.17/lb US$0.18/lb1
Total cash costs4 US$1.52/lb US$1.58-1.68/lbZinc
Metal in concentrate production5 662 kt 660-680 ktRefined production 312 kt 300-305 kt
2017 Production & Site Cost Guidance
1. Approximate, based on capitalized stripping guidance and mid-point of production guidance range.2. Average C$/US$ exchange rate of 1.33 in 2016. Assumes C$/US$ exchange rate of 1.30 in 2017.3. Steelmaking coal unit cost of sales include site costs, inventory adjustments, collective agreement charges and transport costs. Total cash costs are unit cost of sales
plus capitalized stripping. 4. Net of by-product credits. Copper total cash costs Include cash C1 unit costs (after by-product margins) and capitalized stripping. 5. Including co-product zinc production from our Copper business unit.27
($M) SustainingMajor
EnhancementNew Mine
Development Sub-totalCapitalized
Stripping TotalSteelmakingCoal 140 120 - 260 430 690Copper 130 20 200 350 140 490
Zinc 210 15 20 245 50 295
Energy 50 - 675 725 - 725
TOTAL 530 155 895 1,580 620 2,200
Total capex of ~$1.6B, plus capitalized stripping
2017 Capital Expenditures Guidance
28
Staged Growth/Value Pipeline
Strong platform combined with diverse portfolio of options allows us to be selective in terms of commodity and timing
CoalWell established with capital efficient value options
In Construction Pre-Sanction
CopperStrong platform with substantial growth options
ZincWorld-class resource combined with integrated assets
EnergyBuilding a new business through partnership
Fort Hills
Red DogSatellite Deposits
San Nicolás (Cu-Zn)
Elk Valley Replacement Brownfield Quintette/Mt. Duke
Frontier
Lease 421
QB Phase 2 NuevaUnión Mesaba
ZafranalHVC Brownfield
Galore/Schaft Creek
Cirque
Future Options
Trail #2 Acid Plant
Medium-term Growth Options
Elk Valley Brownfield
Antamina Brownfield
Neptune Terminals to >18Mtpa
Red DogMill Optimization
Teena
Coal Mountain 2
29
Operation Expiry DatesHighland Valley Copper In Negotiation - September 30, 2016Trail May 31, 2017Cardinal River June 30, 2017
Quebrada BlancaOctober 30, 2017
November 30, 2017December 31, 2017
Quintette April 30, 2018Antamina July 31, 2018Coal Mountain December 31, 2018Line Creek May 31, 2019
Carmen de Andacollo September 30, 2019December 31, 2019
Elkview October 31, 2020Fording River April 30, 2021
Collective Agreements
30
0
250
500
750
1,000
1,250
1,500
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
US
$MNo Substantial Maturities for 5 Years
1. As at February 14, 2017. Notes due in January 2017 were repaid from cash.
Maturity Profile1
Few maturities while Fort Hills completes construction, commissioning, and ramps up to full production
31
Credit Ratings
S&P Moody’s Fitch
BBB Baa2 BBB
BBB- Baa3 BBB-
BB+ Ba1 BB+
BBstable Ba2 BB
BB- Ba3positive BB-
B+ B1stable
B+negative
Investment Grade
Non-Investment Grade
Supported by:• Diversified business model• Low risk jurisdictions• Low cost assets• Conservative financial policies• Significant cost reductions• Capital discipline• Excellent operating execution• Increasing coal production• Responsible dividend• Reducing debt
Constrained by:• Debt-to-EBITDA*, due to improving
metrics
Debt reduction is the priority
As at February 16, 2017.* EBITDA is a Non-GAAP financial measure. See ‘Use of Non-GAAP Financial Measures’ in our quarterly results news releases for additional information.
Issuer Credit Ratings
32
Teck Credit Ratings vs. Bloomberg Commodity Price Index
Credit Ratings Reflect Commodity Prices
Plotted to February 15, 2017
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000Ja
n-05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Jan-
17
Moody's S&P LME Index (Right Axis)
BBB/Baa2
BBB-/Baa3
BB+/Ba1
BB/Ba2
BB-/Ba3
BBB+/Baa1
B+/B1
B/B2
B-/B3
A+/A1
A/A2
A-/A3
Inve
stm
ent G
rade
Non
-Inve
stm
ent G
rade
33
Significant Tax Pools in Canada1
~$6B in Available Tax Pools, Including:• >$4B in loss carryforwards• $1.77B in Canadian Development Expenses
Applies To:• Cash income taxes in Canada
Does Not Apply To:• Resource taxes in Canada• Cash taxes in foreign jurisdictions
Multiples should reflect tax efficiency of earnings
1. As of December 31, 2015.34
• Six focus areas• Community • Biodiversity• Our People• Water• Air• Energy and Climate Change
• Achieved all 2015 goals• Set new short-term 2020
goals • Working towards long-term
2030 goals
Our Sustainability Strategy
35
Our External Recognition
Best 50 Corporate Citizens in Canada 2016
On the Dow Jones Sustainability World Index seven years in a row
Top 50 Socially Responsible Corporations in Canada
Listed on FTSE4Good Index in 2015
36
Steelmaking CoalBusiness Unit & Markets
45 55 65 75
China
0
3
6
9
12
15
Jan-
10
May
-10
Sep
-10
Jan-
11
May
-11
Sep
-11
Jan-
12
May
-12
Sep
-12
Jan-
13
May
-13
Sep
-13
Jan-
14
May
-14
Sep
-14
Jan-
15
May
-15
Sep
-15
Jan-
16
May
-16
Sep
-16
Traditional Steel Markets
• China stable
• JKT stable
• EU slowing
Rest of the World
• India strong growth
• Brazil stable
• US slowing
Monthly Hot Metal Production
Source: WSA, based on data reported by countries monthly; NBS
Mt
Plotted to December 2016
Global Hot Metal Production
JKT
India
Europe
USA
Brazil
38
• Total capacity of ~1,200 Mt, including ~400 Mt of surplus capacity• ~100Mt closed in 2016• Additional 80 Mt committed to closure by provinces and centrally-owned steel companies in
2017-2020
Reductions in Chinese Steel Capacity
97
44
2511
0
20
40
60
80
100
120
2016 2017-18 2019-20 Within 3-5 Years(No DetailsAnnounced)
Mt
Timing of Capacity Reduction Targets AnnouncedChina’s Steel Capacity
Exceeds government target of 140 Mt
2016 production
808Mt
Closed in 201697Mt
Committed to close80Mt
Additional surplus capacity215Mt
39
0
200
400
600
800
1000
2010 2015 2020 2025 2030 2035
Milli
on to
nnes
Crude Steel and Hot Metal Production
Source: WSA, China Association of Metalscrap Utilization, Wood Mackenzie
Crude Steel
China Scrap Use to Increase Slowly
China’s Scrap Ratio Low vs. Other Countries
73%54%
33%
88%
28%
50%
11%
36%
0%
20%
40%
60%
80%
100%
UnitedStates
Europe Japan Turkey Russia Korea China WorldAverage China
Steel Use By Sector(2000-15)
Electric Arc Furnace
Hot Metal
Hot metal / crude steel ratio to remain >90% and EAF share of crude steel production <10% until ~2028
Source: Wood Mackenzie
Source: China Metallurgy Industry Planning and Research Institute
Construction55-60%
Others15-20%
Machinery15-20%
Auto5-10%
40
38 Mt34Mt
0
10
20
30
40
50
60
70
Mt
2000-2009average at 23Mt
2010-2014average at 55Mt
Strong Demand Fundamentals ex. China
• US exports declined in 2016• Imports into China flat in 2016, but analysts forecast a decline longer term
(subject to China’s policy)• Stronger fundamentals ex-China
Tighter Market ex-ChinaUS Steelmaking Coal Exports (ex. Canada)
Decline in China offset by growth in other markets
Source: Global Trade Atlas Source: Average of Wood Mackenzie & CRU
-18
-12
-6
0
6
12
18
China JKT Brazil Europe &CIS
India GlobalSe
abor
nem
et. c
oal i
mpo
rts c
hang
e,
2021
vs.
201
6, M
t
41
Seaborne Coking Coal Imports
Hegang Project• Inland plant relocating to coastal area• Capacity: crude steel 20Mt• Status: Timeline not announced
Guofeng Project• Inland plant relocating to coastal area• Capacity: crude steel 8Mt, hot metal 8Mt• Status: Construction to be started in 2017;
completion in 2021
Shougang Jingtang Plant• Expansion• Capacity: crude steel 9.4Mt (phase 2)• Status: Construction started in 2015; completion in
2018
Shandong Steel Rizhao Project• Greenfield project• Capacity: crude steel 8.5Mt• Status: Construction started in 2015; completion
in 2017
WISCO Fangchenggang Project• Greenfield project• Capacity: crude steel 9.2Mt• Status: Timeline for blast furnace not announced
Large users and coastal steel projects to support seaborne demandSource: NBS, China Customs, company reports
10
21 21 22 25
25
39
26
13 11
0
10
20
30
40
50
60
70
2012 2013 2014 2015 2016
Small users 14 large users
China’s Large Users Increasing Seaborne Imports
42
35
13
3
8
36
24
2
9
0
5
10
15
20
25
30
35
40
Seaborne Landborne Stock at sixports
Stock at sampleend users
Milli
on to
nnes
2015 2016
Seaborne coal utilization increased by ~2 Mt YoYSource: NBS, China Customs, Fenwei, Mysteel
China's Coking Coal Imports & Stock ChangesChina’s Coal Production
276 Days Policy (April – October)
China’s 276-Day Policy Requires Increased Imports
100
150
200
250
300
350
400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Raw coal output 2015 (rhs) Raw coal output 2016 (rhs)
43
An Integrated Long Life Coal Business
44
Prince Rupert
Ridley Terminal
Vancouver
Prince George Edmonton
Calgary
Westshore Terminal
Quintette
Cardinal River
Elk Valley
Kamloops
British Columbia
Alberta
Seattle
Elkford
Sparwood
Hosmer
Fernie
Fording River
Greenhills
Line Creek
Elkview
Coal Mountain
ElcoElk Valley
1,150 km
• >1 billion tonnes of reserves support ~27 Mt of production for many years• Geographically concentrated in the Elk Valley• Established infrastructure and capacity with mines, railways and terminals• Only steelmaking coal mines still operating in Canada; competitive globally
Neptune Terminal
44
Coal MountainPhase 2
44
We Are a Leading Steelmaking Coal Supplier To Steel Producers Worldwide
High quality, consistent, reliable, long-term supply
Proactively realigning sales with changing market
North America~5%
Europe~15%
China 2016: ~20%2013: ~30%
Asia excl. China2016: ~55%2013: ~45% Latin America
~5%
45
0
50
100
150
200
250
300
350
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
US$
/ to
nne
Teck Realized Price (US$) Benchmark Price
Average realized price relative to the benchmark price is a function of:
1. Product mix: >90% hard coking coal
2. Direction of quarterly benchmark prices (QBM) and spot prices- Q4 2016 average realized price was
higher than benchmark price
- Expect Q1 2017 average realized price to be US$200-US$215/tonne(70-75% of benchmark), which is an increase from Q4 2016
Historical Average Realized Prices
Average Realized Price in Steelmaking Coal
Realized prices averaged 94% of QBM over the past three years
96%
88%
93%
94%
92%
91%
99%
46
4635 32
3
12
35
28 26
15
128
2014 2015 2016
Total cash unit costs down 35% from 2014 to 20162,3
Total Cash Unit Costs2 US$/t 2014 2015 2016 Change
Site $46 $35 $32 -30%
Inventory Adjustments $3 $1 $0 -100%
Transportation $35 $28 $26 -26%
Unit Cost of Sales (IFRS) $84 $64 $603 -29%
Capitalized Stripping $15 $12 $8 -50%
Total Cash Unit Costs2 $99 $76 $683 -32%
Sustaining Capital $6 $2 $1 -83%
All In Sustaining Costs2 $105 $78 $693 -35%
1. In US dollars per tonne. Assumes a Canadian dollar to US dollar exchange rate of 1.10 in 2014, 1.28 in 2015 and 1.33 in 2016.2. Steelmaking coal unit cost of sales include site costs, inventory adjustments and transport costs. Total cash costs are unit cost of sales plus capitalized stripping. All in sustaining costs are
total cash costs plus sustaining capital. Non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” section of our quarterly press releases for further information.3. Includes one-time collective agreement settlement charges of ~US$2 per tonne in 2016.
IFRS
Steelmaking Coal Unit Costs1
$99
$76
IFRS IFRS
$683
Site
Inventory
Transport
Capitalized Stripping
Collective Agreement
47
>75 Mt of West Coast Port Capacity PlannedOur Portion is 40 Mt
• Exclusive to Teck • Recently expanded to 12.5 Mt • Planned growth to 18.5 Mt
Westshore Terminals
Neptune Coal Terminal
Ridley Terminals
West Coast Port Capacity
• Current capacity: 18 Mt• Expandable to 25 Mt• Teck contracted at 3 Mt
• Teck is largest customer at 19 Mt• Large stockpile area• Recently expanded to 33 Mt• Planned growth to 36 Mt • Contract expires March 2021
Milli
on T
onne
s (N
omin
al)
Our share of capacity exceeds current production plans, including Quintette
12.518
336
7
3
0
5
10
15
20
25
30
35
40
Neptune CoalTerminal
RidleyTerminals
WestshoreTerminals
Current Capacity Planned Growth
48
Our Market - Seaborne Hard Coking Coal2: ~200 Million Tonnes
1. Source: International Energy Agency 2014 data2. Source: CRU
Global Coal Production1: 7.9 billion tonnesSteelmaking Coal Production2: ~1,185 million tonnes
Export Steelmaking Coal2: ~325 million tonnesSeaborne Steelmaking Coal2: ~290 million tonnes
High Grade Hard Coking Coal Is A Niche Market
49
• Around the world, and especially in China, blast furnaces are getting larger and increasing PCI rates
• Coke requirements for stable blast furnace operation are becoming increasingly higher
• Teck coals with high hot and cold strength are ideally suited to ensure stable blast furnace operation
• Produce some of the highest hot strengths in the world
50 60 70 80 90 100
South Africa
Japan (Sorachl)
Japan(Yubarl)
U.S.A.Canada OtherTeck HCCAustraliaJapanSouth Africa
Australia(hard coking)and Canada
U.S.A.
Australia(soft coking)
10
20
30
40
50
60
70
80
Drum Strength Dl 30 (%)
CSR
Teck HCC
Coking Coal Strength
High Quality Hard Coking Coal
Source: Yasuschi, Masashi et al, 1983
50
Copper Business Unit & Markets
Copper Stock Movements Don’t Support Price Rally
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0¢
50¢
100¢
150¢
200¢
250¢
300¢
350¢
400¢
450¢
500¢
LME Stocks Comex SHFE Bonded Estimate Price
Daily Copper Prices & Stocks
Source: LME/SHFE/Comex/CRU/SRO Estimates Plotted to February 15, 2017
US¢
/lb
52
-1,200
-1,000
-800
-600
-400
-200
02005 2007 2009 2011 2013 2015
2017(Feb)
Thou
sand
tonn
es
1. Relative to initial expectations
8.1%
Disruptions to Concentrate Production Averaged 6.3% in 2007-20151
2.8%
• Market has moved into deficit in 2017 and 2018
• Disruptions in 2016 were lower than projected, but 2017 could revert to historic levels.
• Post-2017, new supply minimal
• Exchange stocks represent <2 weeks of supply
Copper Surplus Shifts Into Deficit
Source: Wood Mackenzie, Teck
5.1%
53
10,000
15,000
20,000
25,000
30,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Thou
sand
Ton
nes
Mine Production SXEW Scrap Demand
Mine Production Peaks in 2019
Existing and Fully Committed Mines
Source: Wood Mackenzie, CRU, ICSG, Teck
Copper Mine Production Peaking
54
Copper Mine Production Forecasts Continue to Decline
Forecast 2017 Net Mine Production Lower than 2016
15,000
15,500
16,000
16,500
17,000
17,500
18,000
18,500
Apr
-15
Jun-
15A
ug-1
5O
ct-1
5D
ec-1
5Fe
b-16
Apr
-16
Jun-
16A
ug-1
6O
ct-1
6D
ec-1
6
5% Disruption net of ProjectsMarket Adjustment2017 Adjusted
thou
sand
tonn
es c
onta
ined
cop
per
2016 2017
15,000
15,500
16,000
16,500
17,000
17,500
18,000
18,500
Apr
-14
Aug
-14
Dec
-14
Apr
-15
Aug
-15
Dec
-15
Apr
-16
Aug
-16
Dec
-16
5% Disruption & ProjectsMarket Adjustment2016 Adjusted
2018
thou
sand
tonn
es c
onta
ined
cop
per
thou
sand
tonn
es c
onta
ined
cop
per
• Down 161 kt from 2016 estimates• Projects down 652 kmt from guidance in
March or 84%.
Source: Wood Mackenzie
• Down 1.5 Mt from 2014 estimates• Growth over 2015 2.0% lower than
projected at beginning of year.
• Down 1.4 Mt from April 2015 estimates • Projects down by 96% or 836 kt • 2017 production down 232 kt over 2016.
Source: Wood Mackenzie Source: Wood Mackenzie
15,000
15,500
16,000
16,500
17,000
17,500
18,000
18,500
Mar
-16
Apr
-16
May
-16
Jun-
16Ju
l-16
Aug
-16
Sep
-16
Oct
-16
Nov
-16
Dec
-16
Jan-
17
5% Disruption net of ProjectsMarket Adjustment2017 Adjusted
55
Rising Copper TC/RCs – China Imports Increase
0¢
10¢
20¢
30¢
40¢
50¢
60¢
Spot Realised TC/RC
Strong TCs Allowed Port Stocks to Rise
Low prices & High BM TCs kept Concentrate Imports Strong;Stocks of Copper Concentrates Built in Q4 2016 at the Ports
Source: Wood Mackenzie
Spot TC/RCs Spot Rising Above Benchmark
0
100
200
300
400
500
600
700
800
2011 2012 2013 2014 2015 2016 2017
56
0
200
400
600
800
1,000
1,200
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Cathode Concs Scrap Blister/Semis
000’
s to
nnes
(con
tent
)
Net Copper Imports
Source: NBS Plotted to November 2016
Total copper unit imports continue to climb;Up ~5% in 2015 and 8% in 2016
China Switching to Copper Concentrates
57
Significant Chinese Copper Demand Remains
…But Will Add Significantly in Additional Tonnage Terms
Annual Growth Rate of Chinese Copper Consumption to Slow Dramatically…
China expected to add 1.5x QBs in new demandeach year for the next 14 years
Source: Wood Mackenzie, Teck
-
200
400
600
800
1,000
1,200
1,400
1,600
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 20300%
5%
10%
15%
20%
25%
30%
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030
Annual Avg. 11.9%
Annual Avg. 2.7%
Annual Avg. Growth372 Mt/yr Annual Avg. Growth
283 Mt/yr
Thou
sand
tonn
es
Source: Wood Mackenzie, Teck
58
Copper Metal Demand Gap Outpacing New Supply
-1,200
-1,000
-800
-600
-400
-200
02005 2007 2009 2011 2013 2015
2017(Feb)
Thou
sand
tonn
es
2.8%
Production Disruptions Average 6% per Year
5.1%
~5.5 Mt of Uncommitted Production Needed by 2025
0
1,000
2,000
3,000
4,000
5,000
6,000
2017 2018 2019 2020 2021 2022 2023 2024 2025
A Projects B Projects Copper Metal Gap
Source: Wood Mackenzie, CRU, ICSG, Teck59
-300
-100
100
300
500
700
900
-300
-100
100
300
500
700
900
2018 Refined Balance2017 Refined Balance
Wood Mackenzie’s Copper Outlook Trending Down
60
Thou
sand
tonn
es
Thou
sand
tonn
es
Market expected to be in deficit in 2017 despite a fall in demand; Deficit also now expected in 2018
Ore Grade TrendsOngoing Decline will put Upward Pressure on Unit Costs
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024
Cop
per G
rade
Cu
%
All Operations Primary Mines Co-By Product Mines - (RH axis)
Industry Head Grade Trends (Weighted by Paid Copper)
Source: Wood Mackenzie
61
Quebrada Blanca 2 Summary
Project Capital1
US$4.7billion
Copper Production2
275,000tonnes per year
Moly Production2
7,700tonnes per year
Mine Life
25years
Copper in Reserves
14.2billion pounds
C1 Cash Costs2
US$1.28per pound
Note: Based on Feasibility Study.1. 100% basis, in constant first quarter of 2016 dollars, excluding working capital and interest during construction. Teck owns a 75.% share.2. Average production rates and C1 cash costs are based on the first full five years of operations
Initial mine life uses ~25% of reserves & resources
62
NuevaUnión Summary
Initial Capital
$3.0 - $3.5billion
Copper Production1
190,000tonnes per year
Gold Production1
315,000ounces per year
Mine Life
32+years
Copper in Reserves2
16.6billion pounds
Gold in Reserves2
8.9million ounces
Note: Conceptual based on preliminary design from the PEA1. Average production rates are based on the first full ten years of operations2. Total copper and gold contained in mineral reserves as reported separately by Teck and Goldcorp.3. Capital estimate for Phase 1a based on preliminary design shown in 2015 dollars on an unescalated basis
63
ZincBusiness Unit & Markets
Zinc Prices & Stocks
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0¢
50¢
100¢
150¢
200¢
250¢
LME Stocks SHFE Price
US¢
/lb
Plotted to February 15, 2017Source: LME/SHFE
Daily Zinc Prices & Stocks
65
Significant Recent Increase In Rate of LME Zinc Stock Decline
66
340,000
360,000
380,000
400,000
420,000
440,000
460,0000
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1-N
ov-1
6
8-N
ov-1
6
15-N
ov-1
6
22-N
ov-1
6
29-N
ov-1
6
6-D
ec-1
6
13-D
ec-1
6
20-D
ec-1
6
27-D
ec-1
6
3-Ja
n-17
10-J
an-1
7
17-J
an-1
7
24-J
an-1
7
31-J
an-1
7
7-Fe
b-17
Mt
Mt/d
ay
Avg Daily Decrease Q4 Avg Daily Decrease Q1 Stocks
LME Zinc Stocks
(Right axis)(Left axis)(Left axis)
66
2014-2020 2014-2020
Significant Zinc Mine ReductionsLarge Short-Term Losses, More Long Term
-500
-400
-300
-200
-100
0
Cen
tury
Lish
een
Skor
pion
Red
Dog
Brac
emac
-McL
eod
Rap
ura
Aguc
ha
Pom
orza
ny-O
lkus
z (in
cl B
ulk)
Jagu
ar
Mae
Sod
Wol
verin
e
San
Cris
toba
l0
100
200
300
400
500
Gam
sber
gAn
tam
ina
Dug
ald
Riv
erM
cArth
ur R
iver
Bish
aG
ansu
Jin
hui
Sind
esar
Khu
rdKy
zyl-T
asht
ygsk
oeSh
alki
ya R
esta
rtAg
uas
Teni
das
Cas
tella
nos
Zaw
ar M
ines
Mid
dle
Tenn
esse
eEl
Bro
cal
Sang
uiko
uC
arib
ou…
Pena
squi
toC
hang
ba
Source: ICSG, Wood Mackenzie Teck, Company Reports Source: ICSG, Wood Mackenzie Teck, Company Reports
67
Source: Teck, ILZSG
10,000
11,000
12,000
13,000
14,000
15,000
16,000
17,000
2012 2013 2014 2015 2016 2017 2018 2019 2020
Base SecondaryConcentrate Stocks Exchange StocksHidden Stocks A' ProjectsB' Projects Demand
Thou
sand
tonn
es c
onta
ined
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2018F LastYear
2018F Today 2020F LastYear
2020F Today
Thou
sand
tonn
es
Highly Probable Probable Possible
Uncommitted Projects Increasingly Delayed
Source: Wood Mackenzie
Global Mine Production
Global Zinc Mine Production Increasing, But At a Slower Pace
68
Monthly Chinese Mined Zinc Production
Chinese Mined Zinc Production Seasonality is a Potential Catalyst for Market Inflection
Source: CNIA
Production typically declines in winter (January-April)
0
100
200
300
400
500
600
Jan-
06Ju
n-06
Nov
-06
Apr
-07
Sep
-07
Feb-
08Ju
l-08
Dec
-08
May
-09
Oct
-09
Mar
-10
Aug
-10
Jan-
11Ju
n-11
Nov
-11
Apr
-12
Sep
-12
Feb-
13Ju
l-13
Dec
-13
May
-14
Oct
-14
Mar
-15
Aug
-15
Jan-
16Ju
n-16
Nov
-16
Thou
sand
s D
MT
69
Zinc Concentrate Stocks at Chinese Ports Declining
Plotted to January 2017
Monthly Stocks of Zinc Concentrate
0
50
100
150
200
250
300
350
400
450
500
Thou
sand
Ton
nes
Huangpu port:
Zhanjiang port:
Beihai port:
Yunyuejiang port
Fangcheng port:
Nanjing port:
Qinzhou port:
Dalian port:
BaYuQuan port:
QHD port:
Jinzhou port:
Yantai Port:
LYG port:
Source: Teck70
thou
sand
tonn
es c
onta
ined
Global Zinc Mine Production Down in 2016
Source: Teck
Mine Production Down in 2016 TCs Dropping to Multi-Year Lows
Source: Teck , CNIA, Wood Mac, NBS
11,000
11,500
12,000
12,500
13,000
13,500
12 13 14 15 16 f
0
50
100
150
200
250
300
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Jan-
13
Jul-1
3
Jan-
14
Jul-1
4
Jan-
15
Jul-1
5
Jan-
16
Jul-1
6
Imported TC, $/dmt
Spot TC Annual TC
71
Concentrate Supply Shrinking
Chinese Zinc Metal Imports
0
100
200
300
400
500
600
700
Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16
kt
Mine production Concs imports Annualized Monthly Avg. Supply
Spot and Benchmark TCs Tighten
• Domestic concentrate production plus imports ~550 kt/mth in 2013 - Currently ~450 kt/mth
• Concentrate imports averaged ~95 kt/mth 2013 to 2015 − 2016 averaging 69 kt/mth
• Reduction in supply forcing metal production cuts
• Continued tightness is evidenced by the falling TCs
Source: NBS/CNIA, Customs
$0
$50
$100
$150
$200
$250
$300
2011 2012 2013 2014 2015 2016 2017
Spot Annual
Down ~75%
0
20
40
60
80
100
120
Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16
kt
555 kt
Down ~10%
502 kt
Chinese Zinc Concentrate Supply Declining
Source: NBS/CNIA, Customs
Source: NBS/CNIA, Customs
Plotted to November 2016
Plotted to December 2016
Plotted to January 2016
72
Zinc Metal Market Mostly in Deficit Since 2013
-800
-600
-400
-200
0
200
400
600
2013 2014 2015 2016 2017 2018
WoodMac CRU
Market View – Wood Mackenzie & CRU
• Zinc metal deficit forecasted for 2016 and 2017
• Mine production decreased 6.1% in 2016 is expected to increase 11.9% in 2017
− Closure of Century and Lisheen, combined with production cuts, will decrease mine production in 2016
− Higher prices are expected to bring a large amount of Chinese mine production online, and to bring back Glencore’s production.
• Deficits of around 500kt/year in 2016 and 2017 will still result in large draw down of stocks
Zinc Metal Balance
Source: Wood Mackenzie, CRU
thou
sand
tonn
es c
onta
ined
zin
c
73
China5%
USA 20%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Galvanized Steel as % Crude ProductionChina Zinc Demand
Construction15%
Transportation 20%
Other 5%
Consumer Goods30%
Infrastructure30%
Chinese Zinc Demand to Outpace Supply
Source: Teck
If China were to galvanize crude steel at half the rate of the US using the same rate of zinc/tonne, a further 2.1 Mt would be added to global zinc consumption
Source: Teck
74
Committed Zinc Supply Insufficient for Demand
Forecast Zinc Refined Balance
Source: Teck
• We expect insufficient mine supply to constrain refined production− From 2015-2020, refined metal supply
increase of only 250 kt − Over the same period, refined demand
increase of 2.1 Mt
• Market is projected to be in significant deficit in 2016 due to a lack of concentrate leading to smelter cuts
• Metal market moving into substantial deficits with further mine closures and depleting inventories
(1,000)
(900)
(800)
(700)
(600)
(500)
(400)
(300)
(200)
(100)
0
2013 2014 2015 2016 2017 2018
Thou
sand
tonn
es
75
Largest Global Net Zinc Mining Companies
0
50
100
150
200
250
300
350
400
Thou
sand
tonn
es
Source: Wood Mackenzie, 2016E
Teck is the Largest Net MinerProvides Increased Exposure to Zinc Price
Public Company
Private CompanyTeck
76
2cm
1.1 m @ 42.2% Zn, 14.7 % Pb, 558g/t Ag
2cm
1.9 m @ 24.6% Zn, 6.3 % Pb, 53g/t Ag
Red Dog: Anarraaq High Grade Intercepts Demonstrate Significant Resource Potential1
DDH171854.7m @ 15.7%Zn, 4.0% Pb, 106g/t AgIncl. 11.2m @ 34.2% Zn, 11.5% Pb, 382g/t Ag
DDH1714 42m @ 18.3% Zn, 4.5% Pb, 82g/t AgIncl. 23.4m @ 23.2% Zn, 5.2% Pb, 74g/t Ag
Industry Average Zinc Grades Falling
High Grade Anarraaq Intercepts
Red Dog zinc grades are much higher than industry average
0
5
10
15
20
25
2009 2010 2011 2012 2013 2014 2015
Gra
de %
Weighted Average Industry Grade
Red Dog
1. The scientific and technical information disclosed has been reviewed and approved by Rodrigo Marinho, P.Geo., Technical Director, Reserve Evaluation, Teck who is a Qualified Person under NI 43-101. For further information, please see Teck’s most recent Annual Information Form.
77
0 250 500
Meters
Teena 1
TNDD015
NR
28.0 @ 6.1/0.9 TNDD013
5.8 @ 9.3/1.316.6 @ 7.7/1.3
TNDD012Teena 5NR
3.8 @ 6.9/1.1Teena 2
TNDD014
24.4 @ 14.6/2.39.8 @ 9.4/1.5
TNDD020
20.1 @ 13.0/2.05.2 @ 9.2/1.6
TNDD010
38.8 @ 14.7/2.33.0 @ 4.6/2.96.7 @ 8.2/1.4
TNDD019
31.9 @ 9.9/1.55.0 @ 9.5/1.2
TNDD009
13.1 @ 5.2/0.9Teena 6
22.8 @ 10.3/1.63.8 @ 10.3/0.7
Teena 22
24.2 @ 8.2/1.33.6 @ 8.3/1.3
Teena 17
20.4 @ 11.6/1.84.7 @ 8.5/1.2
TNDD011
Teena 4/Teena 4A4.8 @ 5.5/2.7 (4)8.4 @ 12.9/0.2 (4)8.6 @ 7.1/2.7 (4A)
19.7 @ 12.9/2.07.2 @ 8.0/1.2
TNDD021
Teena 7
5.8 @ 8.1/1.14.9 @ 10.2/1.66.0 @ 5.9/0.9
Teena/Reward Zinc Project
Tene
men
t Bou
ndar
y
DDH Pierce Points
NR No results above threshold
Drill composites were calculated using a 6% Zn+Pb threshold. Drill intersections are reported as drilled thicknesses. True width of the mineralized interval is interpreted to be 70-90% of the reported length. The scientific and technical information disclosed on this slide has been reviewed and approved by Rodrigo Marinho, P.Geo., Technical Director, Reserve Evaluation, Teck who is a qualified person under NI 43-101.
m @ Zn%/Pb%
NRTeena 8
NR
NR
78
EnergyBusiness Unit & Markets
Crude Oil Overview
North American Rig Count Down Sharply
Sources: Baker Hughes, EIA, Citi Research, National Bank of Canada
US Crude Oil Inventory (Mmbbls)
West Texas Intermediate (WTI) Price
$0
$20
$40
$60
$80
$100
$120
US
$/bb
l
WTI Feb 2017 Forward Oct 2016 Forward
Production Accord Announced
As of 02/15/17
Joint OPEC/Non-OPEC Production Cut• 1.80 MM bpd• Effective January to June 2017• Moderate compliance to date• Muted price impact − US rig activity increasing− US crude inventories continue to climb− North America oil production growth
5000
6000
7000
8000
9000
10000
200400600800
1,0001,2001,4001,6001,8002,000
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Jan-
17
Thou
sand
bpd
Rig
Cou
nt U
nits
US Rig Count CAD Rig Count US 4-week Production Avg.
80
Benchmark Differentials
Western Canadian Select (WCS) Differential Western Canadian Select (WCS) Is The Benchmark Price For Canadian Heavy Oil At Hardisty, Alberta• Contract settled monthly as differential to Nymex WTI• Long term differential of Nymex WTI minus $10-20 US/bbl• Based on heavy/light differential, supply/demand, alternate
feedstock accessibility, refinery outages and export capability• Year To Date differential: $14.60 US/bbl− Heavy sour pricing supported by OPEC cuts− Strong demand to compensate for higher Enbridge
apportionment, “air barrels” being purchased and nominated. • Post apportionment prices not significantly distressed
compared to pre apportionment • Differentials forecasted to widen throughout 2017 − Increased oilsands production in 2017-2018− Rail volumes will increase to US Gulf Coast
Diluent (C5+) at Edmonton, Alberta Is the benchmark contract for diluent supply for oil sands• Contract settled monthly as differential to Nymex WTI• Long-term diluent (C5+) differential of Nymex WTI +/- $5 US/bbl• Based on supply/demand, seasonal demand (high in winter, low
in summer), import outages• Activity ramping up, e.g. Norlite Pipeline linefill, Fort Hills ‘first
fills’ requirements• Supply forecasted to exceed demand − Growing local production, − Contract carriage import pipelines
Average Monthly WTI/Diluent (C5+) Differential
Average Monthly WTI-WCS Differential
$- $5
$10 $15 $20 $25 $30 $35 $40 $45
WCS Differential (US$/bbl)
$23.122012-2013
$15.692010-2011 $16.45
2014-2015 $13.992016-2017
Long-term WCS Differential
Constrained Pipe &
Balanced Rail
Balanced Pipe & Excess
Rail
$(10)
$(5)
$-
$5
$10
$15
$20
WTI- C5+ Diff (US$/bbl)
Plotted to Feb 2017
Plotted to Feb 2017Long-term Condensate Differential
Cochin Pipeline Reversal
81
Oil Liquids – Discovered Resources & Production (Billion bbl)
Oil Exploration Success Fell To a Post-1952 Low in 2015
Enough oil has been discovered to meet production in only four of the past 30 years
Source: Rystad Energy, Morgan Stanley
82
Source: BMO Capital Markets, May 2016
Oil Sands Mining Costs Lower Than Understood
0
10
20
30
40
50
60
Cash Cost Royalty Cash Tax Sustaining Capex
$/bbl Phase 2: Stabilized Market
Where we are now
83
Sufficient Western Canadian Takeaway Capacity Expected
Source: CAPP, Teck, Lee & Doma Energy Group
Sufficient takeaway capacity expected for forecast growth
• 2011–2014− Rapid production growth resulted in
takeaway capacity challenges− Industry added significant pipeline &
rail capacity
• 2015–2030− Sufficient takeaway capacity expected
through existing pipeline capacity, new pipelines (TransMountain and Keystone XL) and existing rail capacity3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
K bp
d
Western Canada Supply Growth Western Canada Supply
Total Pipeline & Local Refining Total Pipeline, Local Refining & Rail
TransMountain
Keystone XL
Enbridge
Western Canadian Supply and Takeaway Capacity
84
Building An Energy Business
Strategic diversification
Large truck & shovel mining projects
World-class resources
Long-life assets
Mining-friendly jurisdiction
Competitive margins
Minimizing execution risk
Tax effective
Mined bitumen is in Teck’s ‘sweet spot’85
• Significant value created over long term
• 60% of PV of cash flows beyond year 5
• IRR of 50-year project is only ~1% higher than a 20-year project
• Options for debottlenecking and expansion
The Real Value of Long-Life Assets
Fort Hills Project Indicative Rolling NPV1
1. Indicative NPV assumes US$95 WTI, $1.05 Canadian/US dollar exchange rate, and costs as disclosed with the Fort Hills sanction decision (October 30, 2013).
50-year assets provide for superior returns operating through many price cycles
86
Teck’s Remaining Project Capital
~$805million
Teck’s Estimated 2017 Spend
$640million
Teck’s Share of Production
37,200bitumen barrels per day
Operating Costs1
$20-24per barrel of bitumen
Sustaining Capital2
$3-5per barrel of bitumen
Teck’s Share of Production3
13,300,000bitumen barrels per year
1. Based on Suncor’s estimates at project sanction in October 2013. 2. Based on estimates at project sanction in October 2013. 3. Life of mine average.
Mine life: ~45 years
Fort Hills Key Numbers
87
Progress in Implementing Our Diversified Marketing Strategy
Market Access Options for Teck’s 50 kbbls/day of Fort Hills Diluted Bitumen Blend
Cushing
Flanagan
Houston
Edmonton
US Gulf Coast
Europe
Asia
TransCanada Energy East (Proposed, Contract Carriage)
TransCanada Keystone/MarketLink (Existing, Contract Carriage)Enbridge Flanagan South (Existing, Contract Carriage)
Vancouver
TransMountain Pipeline Expansion (Proposed, Contract Carriage)
Asia
Agreements for pipelines to Hardisty in place
Agreement for Hardisty product storage in place
Monitoring production vs market access balance
Developing a portfolio of pipeline capacity opportunities, to enable access to diversified markets
Evaluating opportunities in the secondary market for pipeline capacity
Developing a diversified customer base
Hardisty
Chicago
Sarnia
Patoka
SuperiorGuernsey
MontrealSaint John
Enbridge Mainline System (Existing, Common Carriage)Spectra Express (Existing, Contract Carriage)
Teck can enter into long-term take or pay contracts
88
Intra Alberta Logistics On Schedule For Fort Hills Commissioning
RailLocal Market
Pipeline LegendBitumenBlendDiluentExistingNew
East Tank Farm Blending w/Condensate
Wood Buffalo Extension
Norlite Diluent Pipeline
Cheecham Terminal
Hardisty Terminal
Wood Buffalo Pipeline
Athabasca Pipeline
Edmonton Terminal
Fort HillsMine Terminal
Northern CourierHot Bitumen Pipeline
Teck
OptionsExport Pipeline
Kirby Athabasca Twin Pipeline
Pipeline/Terminal OperatorPipelineCapacity
(kbpd)
Teck Capacity
(kbpd)
Project Construction Status*(% completion)
Northern Courier Hot Bitumen TransCanada 202 40.4 Pipeline and Facilities: Tank terminal:
East Tank Farm - Blending Suncor 292 58.4 Diluent terminaling and blending
Wood Buffalo Blend Pipeline Enbridge 550 65.3 In service
Wood Buffalo Extension Enbridge 550 65.3 Pipeline:Pump stations and facilities:
Norlite Diluent Pipeline Enbridge 130 18.0 Pipeline:Pumpstations and facilities:
Hardisty Blend Tankage Gibsons 425 kbbls 425 kbbls Tank completed
86%85%
100%
100%81%
98%
100%
60%
84%
*As of December 2016.89
top related