Teck Resources Limited Class A · TSX:TECK.A
Teck Resources Limited Class A — Non-Deal Roadshow (August 2019)
167 slides from Teck Resources Limited Class A's roadshow presentation, August 2019
Slide 1: Investor Meetings
Investor Meetings August 2019
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements Both these slides and the accompanying oral presentations contain certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securit
Slide 3: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements disturbances, interruption in transportation or utilities, adverse weather conditions, and that there are no material unanticipated variations in the cost of energy or supplies. Statements regarding anticipated steelmaking coal sales volumes and average s
Slide 4: A Transformational Time for Teck
A Transformational Time for Teck Milestones Solid Future Value Achieved Foundation Catalysts • QB2 permit received, • Quality operating assets • Positioned for cash returns sanctioning announced in stable jurisdictions to shareholders and partnership closed • Strong financial position • QB2/QB3 • Fo
Slide 5: Recent Highlights
Recent Highlights • Updated capital allocation framework and increased share buyback by $600 million to $1 billion • BC Government has endorsed the use of saturated rock fills for water treatment at our steelmaking coal operations • Implementing our RACE21TM innovation-driven efficiency program to g
Slide 6: Capital Allocation Framework
Capital Allocation Framework SUSTAINING SUPPLEMENTAL BASE CAPEX SHAREHOLDER DIVIDEND (including stripping) DISTRIBUTIONS The balance of remaining cash is available to finance further enhancement or growth opportunities. Available Cash Flow1 plus at least 30% If there is no immediate need for this ca
Slide 7: Strong Track Record of Returning Cash to Shareholders
Strong Track Record of Returning Cash to Shareholders ~$6.1 billion returned from January 1, 2003 to June 30, 20191 Dividends1 • $4.3 billion since 2003 • ~27% of free cash flow in the last 15 years Share Buybacks1 • $1.8 billion since 2003 • ~11% of free cash flow in the last 15 years 7
Slide 8: Disciplined Approach to M&A
Disciplined Approach to M&A Recent Transaction History (Net Proceeds (Cost) in C$M) $1,500 Waneta Dam, QB2 Divestment $1,200M (30%)6 Antamina $1,072M $1,000 Silver Stream2 $795M CdA Gold Osisko $500 Stream1, Royalty Sandstorm Royalty $206M Project Corridor Package, Package3 Wintering Hills, /Nueva U
Slide 9: Accelerating Our RACE21 Innovation-Driven Efficiency Program
Accelerating Our RACE21TM Innovation-Driven Efficiency Program RACE21TM • Looks across the full value chain, from mine to port • Leverages existing, proven technology to improve productivity and lower costs • Focused on delivering significant value by 2021 - 2019: Expansion of programs such as predi
Slide 10: Steelmaking Coal Market Remains Balanced
Steelmaking Coal Market Remains Balanced • Growing demand, especially in India and Declining Coal Price Volatility1 (US$/t) Southeast Asia Steelmaking coal price averaged US$182/t, • Capital markets are rationing capital to coal, which or US$200/t on an inflation-adjusted basis, is directed at therm
Slide 11: Strong Fundamentals in Copper and Zinc
Strong Fundamentals in Copper and Zinc Copper Zinc • Market fundamentally in deficit for next 2 years • Global concentrate market in surplus, under • Global macro concerns impacting demand constrained smelter production assumptions and prices • Smelter bottleneck constraining refined • Concentrate m
Slide 12: Quality Long Life Operating Assets
Quality Long Life Operating Assets In stable jurisdictions Copper Antamina in Peru Steelmaking Coal Zinc Highland Valley in B.C. Energy Elk Valley Mines in B.C. Red Dog in Alaska Carmen de Andacollo in Chile Fort Hills in Alberta • High quality • Bottom quartile of • Competitive cost • Higher qualit
Slide 13: Low Cost, Low Carbon Producer
Low Cost, Low Carbon Producer • Among world’s lowest GHG intensity for GHG Emissions Intensity Ranges Among ICMM steelmaking coal and copper production Members1 (kgCO2e per tonne of product) • Fort Hills – one of the lowest carbon Copper Coal intensities among North American oil sands producers on a
Slide 14: Responsible Tailings Management
Responsible Tailings Management Teck has a comprehensive systems and procedures in place Further Tailings Governance Steps based on six pillars: 1. Special review by external experts 1. Surveillance 4. Internal Review Technology 5. Detailed Third-Party - Confirmed no immediate or emerging 2. Staff I
Slide 15: QB2 Value Creation
QB2 Value Creation Delivers on Copper Growth Strategy Low Strip Ratio2 • Rebalances Teck's portfolio over time to make QB2 (0.7:1) the contribution from copper similar to steelmaking coal • World class, low cost copper opportunity in an excellent geopolitical jurisdiction Antamina (2.9:1)3 • First p
Slide 16: A Transformational Time for Teck
A Transformational Time for Teck Future Value Catalysts Positioned For Transformation Growth Through Cash Returns Through Innovation: QB2/QB3 Execution to Shareholders RACE21TM Compelling Value 16
Slide 17: Appendix
Appendix Teck
Slide 18: Notes
Notes Slide 7: Strong Track Record of Returning Cash to Shareholders 1. From January 1, 2003 to June 30, 2019. Free cash flow is a non-GAAP financial measure. See “Non-GAAP Financial Measures” slides. Slide 8: Disciplined Approach to M&A 1. Carmen de Andacollo gold stream transaction occurred in USD
Slide 19: Quebrada Blanca
Quebrada Blanca Teck = ae ae =
Slide 20: QB2 Project Disclosure
QB2 Project Disclosure All economic analysis with respect to the QB2 project based on a development case which includes inferred resources within the life of mine plan, referred to as the Sanction Case, which is the case on which Teck is basing its development decision for the QB2 project. Inferred
Slide 21: QB2 Project Update
QB2 Project Update1 Engineering1 Capital Costs1 US$330M2 Expenditures year-to-date ~92% ~60%3 Of total capital committed Procurement1 Progress1 ~88% 14.4% Overall Contracting1 Workforce4 ~96% ~3,100 Concentrator - Grinding Area. June 2019. 21
Slide 22: QB2 Transaction Terms
QB2 Transaction Terms Upfront • Total contribution of US$1.2 billion into the QB2 project for a 30% interest - US$800 million earn-in contribution Consideration - US$400 million matching contribution Contingent • US$50 million to Teck on QB2 achieving mill throughput optimization target of 154 ktpd
Slide 23: QB2 Rebalances Teck's Portfolio
QB2 Rebalances Teck’s Portfolio Delivers on copper growth strategy • Rebalances Teck's portfolio over time to make the Teck's Annual Copper Production (kt Cu) contribution from copper similar to steelmaking coal 584 • On a consolidated basis copper production is 116 doubled • On an attributable basi
Slide 24: QB2 Project Highlights
QB2 Project Highlights World class development • Vast, long life deposit in favourable Reserve and Resource Tonnage (Mt) jurisdiction +40% <25% of current 3,393 • Will be a top 20 producer Reserve and Resource 2,141 Inferred Tonnage • Very low strip ratio 1,325 1,472 M&I (Exclusive) 199 P&P • Low al
Slide 25: QB2 is a World Class Copper Opportunity
QB2 is a World Class Copper Opportunity Project Metrics1 US$2.4-$4.2B 14%-18% After-Tax NPV8%2,3 Unlevered After-Tax IRR2,3 (100%) US$1.1-$1.4B 316 kt First 5 Full Years Annual EBITDA2 First 5 Full Years Annual CuEq Production4 US$1.28/lb US$1.38/lb First 5 Full Years C1 Cash Cost (net of by-product
Slide 26: Prudent Balance Sheet Management Through QB2
Prudent Balance Sheet Management Through QB2 Maintaining Solid Financial Position QB2 Development Funding • Teck intends to fund its share of required equity QB2 Capital Costs Before Escalation2 (US$M) capital through cash on hand and free cash flow After transaction proceeds and − No cash requireme
Slide 27: Increasing Teck's Returns on QB2
Increasing Teck's Returns on QB2 Enhancing IRR Reducing Teck's Equity Contributions • Transaction with Sumitomo and US$2.5 billion • Transaction proceeds and project financing project financing significantly enhances Teck's reduce Teck's equity contributions to ~US$693 IRR million3 with no contribut
Slide 28: QB2's Competitive Cost Position
QB2’s Competitive Cost Position Competitive Operating Cost & Capital Intensity Low Cash Cost Position • Given the exceptionally low strip ratio, consistent grade C1 Cash Cost3 & AISC4 Curve1 (US$/lb, 2023E) profile, compact site layout, and high level of automation, QB2 is expected to have attractiv
Slide 29: Vast, Long Life Deposit at QB
Vast, Long Life Deposit at QB QB2 Uses Less than 25% of R&R Extension Potential • Resource exclusive of Reserve increased 40% since Reserve and Resource Tonnage (Mt) 2017 • Initial 28 year mine life processes <25% of the currently +40% defined Reserve and Resource Tonnage • Deposit is capable of sup
Slide 30: QB3 – Long-Term Growth
QB3 – Long-Term Growth Expansion potential to realize full potential of the orebody • QB2 utilizes less than 25% of resource Copper Mineralization from 2018 Drilling1 • QB3 evaluating options to exploit the full value of the • 2018 drilling returned long intervals of +0.5% Cu, with resource through
Slide 31: Clear Path to Production at QB2
Clear Path to Production at QB2 Construction Approach Operational Readiness • Key project elements are segregated by area and can be managed more • Early focus on operational readiness and commissioning to ensure a efficiently reducing risk: seamless transition to operations – Open pit mine (120 Mtp
Slide 32: Execution Readiness at QB2
Execution Readiness at QB2 Experienced project team including Bechtel, a leading EPCM company Teck Owner's Team Name Title Years of Experience Major Project Experience Karl Hroza Project Director 25+ Sturgeon Refinery, El Morro, Koniambo, Fort Hills, Ravensthorpe Sergio Vives Director, Environment a
Slide 33: QB2 Project Economics Comparison
QB2 Project Economics Comparison Changes Since Feasibility Study1 Sensitivity Analysis1 2016 FS Reserve Sanction RESERVE CASE8 US$3.00 US$3.25 US$3.50 (Reserves) Case 7 Case 8 Mine Life years 25 28 28 Annual EBITDA (US$B) Throughput ktpd 140 143 143 First 5 Full Years $1.0 $1.2 $1.3 General LOM Mill
Slide 34: QB2 Reserves and Resources Comparison
QB2 Reserves and Resources Comparison Reserve Case (as at Nov. 30, 2018)1,2 Sanction Case (as at Nov. 30, 2018)2,4 Cu Mo Silver Cu Mo Silver RESERVES Mt Grade % Grade % Grade RESERVES Mt Grade % Grade % Grade ppm ppm Proven 476 0.51 0.018 1.40 Proven 409 0.54 0.019 1.47 Probable 924 0.47 0.019 1.25
Slide 35: ENAMI Interest in QB
ENAMI Interest in QB Organizational Chart • The government of Chile owns a 10% non-funding interest in Compañía Minera Teck Quebrada Blanca Teck SMM SC S.A. (CMTQB) through its state-run minerals company, Empresa Nacional de Minería (ENAMI) 100% 83.33% 16.67% • ENAMI has been a partner at QB since 1
Slide 36: Quebrada Blanca Accounting Treatment
Quebrada Blanca Accounting Treatment Balance Sheet Cash Flow • 100% of project spending included in property, plant and • 100% of project spending included in capital equipment expenditures • Debt includes 100% of project financing • In 2019, Sumitomo1 contribution will recorded within • Total share
Slide 37: Notes - Appendix: Quebrada Blanca
Notes - Appendix: Quebrada Blanca Slide 21: QB2 Project Update 1. Project progress as at the end of June 2019 . 2. Expenditures are quoted in millions of U.S. dollars at spot currency exchange rates from January 1, 2019. 3. Commitments to total budget based on the project exchange rate of 625 CLP:US
Slide 38: Notes - Appendix: Quebrada Blanca
Notes - Appendix: Quebrada Blanca Slide 26: Prudent Balance Sheet Management Through QB2 1. Assumes US$1.2 billion of Sumitomo contributions associated with purchase price spent before first draw of project finance facility. Thereafter, project finance facility used to fund all capital costs until t
Slide 39: Notes - Appendix: Quebrada Blanca
Notes - Appendix: Quebrada Blanca Slide 34: QB2 Reserves and Resources Comparison 1. Mineral reserves are constrained within an optimized pit shell and scheduled using a variable grade cut-off approach based on NSR cut-off US$13.39/t over the planned life of mine. The life-of-mine strip ratio is 0.4
Slide 40: Strategy and Overview
Strategy and Overview Teck
Slide 41: Consistent Long-Term Strategy
Consistent Long-Term Strategy • Diversification • Long life assets • Low cost • Appropriate scale • Low risk jurisdictions 41
Slide 42: Attractive Portfolio of Long-Life Assets
Attractive Portfolio of Long-Life Assets Low risk jurisdictions 42
Slide 43: Global Customer Base
Global Customer Base Revenue contribution from diverse markets (2018) 43
Slide 44: Diverse Pipeline of Growth Options
Diverse Pipeline of Growth Options In Construction Medium-Term Future Options Growth Options QB2 QB3 Galore Creek HVC D3 Project Zafranal Schaft Creek Copper Strong platform HVC Brownfield Mesaba with substantial growth options NuevaUnión San Nicolás (Cu-Zn) Zinc Red Dog VIP2 Project Antamina Brownf
Slide 45: Production Guidance
Production Guidance 2018 RESULTS 2019 GUIDANCE1 3 YEAR (2020-2022) GUIDANCE1 Steelmaking Coal 26.2 Mt 25.5-26.0 Mt 26.5-27.5 Mt Copper2,3,4,6 Highland Valley Concentrate 100.8 kt 115-120 kt 135-155 kt Antamina Concentrate 100.4 kt 95-100 kt 90-95 kt Carmen de Andecollo Concentrate + Cathode 67.2 kt
Slide 46: Sales and Unit Cost Guidance
Sales and Unit Cost Guidance Sales Q2 2019 RESULTS Q3 2019 GUIDANCE1 Steelmaking Coal 6.4 Mt 6.3-6.5 Mt Zinc - Red Dog Zinc in Concentrate 86 kt 165-170 kt Unit Costs 2018 RESULTS 2019 GUIDANCE1 Steelmaking Coal Adjusted site cost of sales2 C$62/t C$62-65/t Transportation costs2 C$37/t C$37-39/t Uni
Slide 47: Capital Expenditures Guidance
Capital Expenditures Guidance Sustaining, Major Enhancement, New Mine Development Quebrada Blanca 2 (TECK’S SHARE 2019 (TECK’S SHARE 2019 IN CAD$ MILLIONS) 2018 GUIDANCE1 IN CAD$ MILLIONS) 2018 GUIDANCE1 Sustaining QB2 Capital Expenditures $ 414 $ 1,450 Steelmaking coal2 $ 232 $ 515 Total capex, bef
Slide 48: Commodity Price Leverage
Commodity Price Leverage1 MID-POINT OF 2019 PRODUCTION ESTIMATED EFFECT ON ESTIMATED EFFECT ON GUIDANCE2 CHANGE ANNUALIZED PROFIT3 ANNUALIZED EBITDA3 $C/$US C$0.01 C$45M /$0.01∆ C$72M /$0.01∆ Coal 26.25 Mt US$1/tonne C$20M /$1∆ C$31M /$1∆ Copper 300 kt US$0.01/lb C$5M /$0.01∆ C$8M /$0.01∆ Zinc4 942.
Slide 49: Tax-Efficient Earnings in Canada
Tax-Efficient Earnings in Canada ~C$3.8 billion in available tax pools1 • Includes: ‒ $2.9 billion in net operating loss carryforwards ‒ $0.7 billion in Canadian Development Expenses (30% declining balance p.a.) ‒ $0.2 billion in allowable capital loss carryforwards • Applies to cash income taxes in
Slide 50: Share Structure & Principal Shareholders
Share Structure & Principal Shareholders Teck Resources Limited1 VOTING SHARES HELD PERCENT RIGHTS Class A Shareholdings Temagami Mining Company Limited 4,300,000 55.4% 32.1% SMM Resources Inc (Sumitomo) 1,469,000 18.9% 11.0% Other 1,999,304 25.7% 14.9% 7,768,304 100.0% 58.0% Class B Shareholdings T
Slide 51: Notes: Appendix – Strategy and Overview
Notes: Appendix – Strategy and Overview Slide 43: Global Customer Base 1. Gross profit before depreciation and amortization is a non-GAAP financial measure. See “Non-GAAP Financial Measures” slides. Slide 45: Production Guidance 1. As at July 24, 2019. See Teck’s Q2 2019 press release. 2. Metal cont
Slide 52: Notes: Appendix – Strategy and Overview
Notes: Appendix – Strategy and Overview Slide 47: Capital Expenditures Guidance 1. As at July 24, 2019. See Teck’s Q2 2019 press release 2. For steelmaking coal, sustaining capital includes Teck’s share of water treatment charges of $57 million in 2018. Sustaining capital guidance includes Teck’s sh
Slide 53: Sustainability
Sustainability Teck
Slide 54: Sustainability Strategy
Sustainability Strategy • Strong sustainability performance enabled by a strategy built around developing opportunities and managing risks Community Water Our People • Implementing a sustainability strategy with short-term, five-year goals and long-term goals stretching out to 2030 Biodiversity Ener
Slide 55: Teck's Performance on Top ESG Ratings
Teck’s Performance on Top ESG Ratings ESG EVALUATION TECK’S PERFORMANCE • Named to 2019 Global 100 Most Sustainable Corporations list by Corporate Knights • Ranked 37th globally; only mining company listed • 2nd in metals and mining universe out of ~60 companies • “A” rating since 2013 (scale of CCC
Slide 56: Why Sustainability Matters
Why Sustainability Matters • Reduced risk of operations disruption • Increased access to capital at a lower cost • Efficient project and permit approvals • Increased cost savings and productivity • Meet rising supply chain and societal expectations • Higher financial returns • Employee retention and
Slide 57: Health and Safety Performance
Health and Safety Performance • Safety performance in 2018 Incident Frequency (per 200,000 hours worked) - 28% reduction in High-Potential 0.6 Incidents 0.5 - 21% decrease in Lost-Time Injury 0.4 Frequency 0.3 • Conducted Courageous Safety 0.2 Leadership training with 97% of 0.1 employees 0 • Two fa
Slide 58: Leading Practices in Tailings Management
Leading Practices in Tailings Management Transparency • Details on all tailings facilities available online • Dam Safety Inspections publically available on our website Collaboration • Actively engaged on the International Council on Mining and Metals (ICMM) Tailings Position Statement and Governanc
Slide 59: Responsible Tailings Management
Responsible Tailings Management 100% Comprehensive systems and procedures in place based on six pillars: 1. Surveillance 4. Internal Review of tailings Technology 5. Detailed Third-Party facilities 2. Staff Inspections Reviews independently verified to meet 3. Annual External 6. Independent Review e
Slide 60: Reducing Freshwater Use
Reducing Freshwater Use Teck in top 10 of 50+ companies ranked by DJSI • Water recycled average of 3 times at DJSI Water Related Risk Assessment mining operations in 2018 2018 Percentile Rankings2 100 • Target to reduce freshwater use at Teck 90 (84th percentile) Chilean operations by 15% by 2020 80
Slide 61: Taking Action on Climate Change
Taking Action on Climate Change Teck in top 5 of 50+ companies ranked by DJSI • Goal to reduce GHG emissions by DJSI Climate Strategy Assessment 450,000 tonnes by 2030 and have 2018 Percentile Rankings2 100 Teck already reduced 289,000 tonnes of (95th percentile) 90 emissions as a result of projects
Slide 62: Lower-Risk Jurisdictions, Comprehensive Assessments
Lower-Risk Jurisdictions, Comprehensive Assessments Teck in top 5 of 50+ companies ranked by DJSI • All operations in countries with DJSI Human Rights Assessment well-developed mining industries: 2018 Percentile Rankings2 100 Teck Canada, United States, Chile, Peru (95th percentile) 90 • Robust regu
Slide 63: Strengthening Relationships with Indigenous Peoples
Strengthening Relationships with Indigenous Peoples • Agreements in place at all mining operations within or adjacent to Indigenous Peoples’ territories • Achieved agreements with all Indigenous communities near the QB2 project ‒ 8 of 8 agreements with Indigenous communities ‒ 7 of 7 agreements with
Slide 64: Employee Relations and Diversity
Employee Relations and Diversity 18% • 57% of our employees are unionized and there were zero strikes in 2018 • Collective agreements at Quebrada women in our workforce Blanca, Line Creek and Carmen de 20% Andacollo operations set to expire in 2019; collective agreement at Antamina currently expired
Slide 65: Collective Agreements
Collective Agreements OPERATION EXPIRY DATES November 30, 2019 Quebrada Blanca January 31, 2022 March 31, 2022 Line Creek May 31, 2019 September 30, 2019 Carmen de Andacollo December 31, 2019 Elkview October 31, 2020 Fording River April 30, 2021 Antamina July 31, 2021 Highland Valley Copper Septembe
Slide 66: Notes: Sustainability
Notes: Sustainability Slide 59: Responsible Tailings Management 1. Sustainability Accounting Standards Board Standards. https://www.sasb.org/ Slide 60: Reducing Freshwater Use 1. Sustainability Accounting Standards Board Standards. https://www.sasb.org/ 2. SAM Corporate Sustainability Assessment 201
Slide 67: Innovation
Innovation Teck
Slide 68: Changing Landscape in the Mining Sector
Changing Landscape in the Mining Sector While technology has In most industries, With the expansion in been a driving force of companies that move analytics, automation improvement in mining, slowly to seize digital and digital tools, we can the basic operating and analytics now transform mining, sy
Slide 69: Teck is Actively Pursuing a Transformation Of Our Business Through Technology
Teck is Actively Pursuing a Transformation Of Our Business Through Technology RACE21TM RENEW AUTOMATE CONNECT EMPOWER Modernize Teck’s Accelerate and Develop Design future technology scale autonomy digital platform operating model foundation program for sensing and to empower our analytics employees
Slide 70: RACE21
RACE21TM Moving to a manufacturing model Our conviction is that the potential exists to transform mining, adopt a manufacturing model to unlock significant economic value and competitive advantage 70
Slide 71: Why Pursue a Technology Transformation?
Why Pursue a Technology Transformation? Technology leadership could create multiple opportunities WITHIN BEYOND THE INTERNALLY THE INDUSTRY MINING INDUSTRY A new operating model and A source of strategic We could leverage our capabilities to extract more advantage to identify capabilities to explore
Slide 72: Significant Value To Be Captured
Significant Value To Be Captured SAFETY PROFITABILITY PRODUCTIVITY COST Transformational Step-change Increased Reduced safety impact with impact to productivity through operational costs fewer people in profitability new technologies by achieving high risk and internal manufacturing environments inn
Slide 73: Steelmaking Coal Business Unit & Markets
Steelmaking Coal Business Unit & Markets
Slide 74: Steelmaking Coal Facts
Steelmaking Coal Facts Global Coal Production1: 7.5 billion tonnes Steelmaking Coal Production2: ~1,140 million tonnes Export Steelmaking Coal2: ~330 million tonnes Seaborne Steelmaking Coal2: • ~0.7 tonnes of steelmaking coal is used to ~290 million tonnes produce each tonne of steel3 • Up to 100 t
Slide 75: Chinese Steel Margins
Chinese Steel Margins Margins have declined but remain positive China Hot Rolled Coil (HRC) Margins and Steelmaking Coal (HCC) Prices1 (US$/t) 350 300 250 200 150 100 50 0 -50 China HRC Gross Margins China Domestic HCC Price Argus Premium HCC CFR China 75
Slide 76: Capacity Reductions in China Support Pricing
Capacity Reductions in China Support Pricing Steel Capacity Reduction Achieved1 (Mt) Coal Capacity Reduction Achieved1 (Mt) 160 900 140 800 120 700 600 100 500 80 140 400 800 60 300 40 200 65 20 50 290 250 270 35 100 0 0 0 0 2016-2020 2016 2017 2018 Remaining 2016-2020 2016 2017 2018 Remaining targe
Slide 77: Large Users in China Increasing Imports
Large Users in China Increasing Imports ~2/3 of China crude steel produced on coast; projects support imports Seaborne Coking Coal Imports1 (Mt) ZONGHENG FENGNAN PROJECT • Inland plant relocating to coastal area 70 • Capacity: crude steel 8 Mt 60 • Status: Construction started in 2017; 2 of 5 BFs 50
Slide 78: Chinese Scrap Use to Increase Slowly
Chinese Scrap Use to Increase Slowly EAF share in crude steel production to recover only to 2016’s level China’s Scrap Ratio was ~1/2 of World Average China Steel Use By Sector in 20171 (%) (2000-2018)2 100% 78% 80% 72% 55% Others 60% 40% 39% Construction 35% 32% 37% 15-20% 40% 23% 18% 55-60% 20% 0%
Slide 79: Chinese Steelmaking Coal Imports
Chinese Steelmaking Coal Imports Seaborne H1 2019 imports up by +3 Mt Chinese Crude Steel Production (CSP), Hot Metal Production (HMP) and Coal Production (Mt)1 Chinese Coking Coal Imports2 (Mt) 1200 520 80 70 16 1000 500 60 15 26 34 800 480 50 28 24 19 13 40 15 600 460 20 30 60 400 440 48 44 20 34
Slide 80: Indian Steelmaking Coal Imports
Indian Steelmaking Coal Imports Imports supported by secular demand and government growth targets Indian Crude Steel Production1 (Mt) Indian Seaborne Coking Coal Imports2 (Mt) 140 60 120 50 100 40 80 30 60 20 40 20 10 0 0 2019E is June year-to-date annualized for crude steel production and April yea
Slide 81: US Coal Producers are Swing Suppliers
US Coal Producers are Swing Suppliers Australian Steelmaking Coal Exports1 (Mt) US Steelmaking Coal Exports1 (Mt) 200 70 180 60 160 140 50 120 40 100 30 80 60 20 40 10 20 0 0 2019E is May year-to-date annualized. 81
Slide 82: Canadian & Mozambique Steelmaking Coal Exports
Canadian & Mozambique Steelmaking Coal Exports Canadian Exports1 (Mt) Mozambique Exports1 (Mt) 40 8 35 7 30 6 25 5 20 4 15 3 10 2 5 1 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2019E is May year-to-date annualized. 82
Slide 83: Steelmaking Coal Supply Growth Forecast
Steelmaking Coal Supply Growth Forecast Most growth comes from Australia Seaborne Steelmaking Coal Exports1 (Mt) Change 2019 vs. 2018 330 1 4 312-316 320 6 1 316 1 310 310 300 290 280 2018 Australia Canada 2019, ex. Mozambique Indonesia USA 2019 Mozambique, Indonesia & Includes: USA • Australia: Gro
Slide 84: Steelmaking Coal Supply / Demand Balance
Steelmaking Coal Supply / Demand Balance Coal gap is developing unless projects progress Supply & Demand from Existing Mines1 (Mt) Possible Restarts and Projects1 (Mt) 375 ~30-55 Mt needed from 60 355 restarts and projects by 2024 50 Additional 40 gap to 335 high case 30 315 20 Gap to 295 10 base ca
Slide 85: 2nd Largest Seaborne Steelmaking Coal Supplier
2nd Largest Seaborne Steelmaking Coal Supplier Competitively positioned to supply steel producers worldwide Sales Distribution CHINA 2013: ~30% NORTH AMERICA EUROPE 2017: ~15% ~5% 2013: ~15% INDIA 2017: ~20% 2018: ~10% 2013: ~5% 2018: ~15% 2017: ~10% 2018: ~15% ASIA EXCL. CHINA & INDIA 2013: ~40% LA
Slide 86: An Integrated Long Life Coal Business
An Integrated Long Life Coal Business ELK VALLEY British Columbia Prince Rupert Elco Quintette Ridley Fording • 940 million tonnes of reserves Terminal Alberta River support ~27 Mt of production Prince George Edmonton for many years Greenhills Elkford Cardinal River • Geographically concentrated Lin
Slide 87: Long Life With Growth Potential in Steelmaking Coal
Long Life With Growth Potential in Steelmaking Coal 26.0-26.5 million tonnes in 2019 Annual Production Capacity1 (Mt) • Advancing production in new areas to fully 29 28 offset Coal Mountain closure 27 27-28 million tonnes in 2020 and beyond 26 25 • Investment in plant throughput capacity at 24 Elkvi
Slide 88: Maximizing Cash Flow in Any Steelmaking Coal Market
Maximizing Cash Flow in Any Steelmaking Coal Market High Price Environment Cost of Sales and Realized Sales Price ($/t) $243 • Production focus to capture high margins $250 $226 $224 and maximize free cash flow1 $194 ‒ Utilize higher cost equipment, contractor $200 $153 labour, internal overtime, &
Slide 89: Setting Up for Strong Long-Term Cash Flows In Steelmaking Coal
Setting Up for Strong Long-Term Cash Flows In Steelmaking Coal Strip ratio increase planned in 2019 to Clean Strip Ratio1 12 advance clean coal expansion 10 • Future strip ratio on par with historical 8 average 6 Elkview Operations driving the increase in clean coal strip ratio to advance ability 6
Slide 90: Reinvesting to Maintain Productivities And Manage Costs in Steelmaking Coal
Reinvesting to Maintain Productivities And Manage Costs in Steelmaking Coal Maintaining historical dollar per tonne Cost ofSustaining Sales and Capital, RealizedExcluding Sales Price ($/t) 1 Water Treatment ($/t) sustaining investment levels $14 $12 2010-2016: Average spend of ~$6 per tonne1 • Reinv
Slide 91: Investing In Production Capacity in Steelmaking Coal
Investing In Production Capacity in Steelmaking Coal Major enhancement projects increasing long-term Major Enhancement Capital Expenditures1,2 ($M) production capacity: • SWIFT at Fording River Operations 400 • Baldy Ridge Extension at Elkview Operations 350 • 9 Million project at Elkview Operations
Slide 92: Progress on Reducing Long-Term Water Treatment Costs
Progress on Reducing Long-Term Water Treatment Costs Saturated Rock Fills (SRF) demonstrated Use and Enhancement of Biological Process to be a direct replacement for current Present in Backfill Pits Active Water Treatment Facilities (AWTF), subject to regulatory approval SRF strategy could reduce wa
Slide 93: Water Treatment Capital
Water Treatment Capital Water Capital ($M) Water Capital ($M) Water Capital ($M) Best Case1,2 Previous Guidance1,2 Worst Case1,2 400 400 400 300 300 300 200 200 200 100 100 100 - - - 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 SRF permitted would reduce Previous guidan
Slide 94: Teck's Pricing Mechanisms
Teck’s Pricing Mechanisms Coal sales book generally moves with the market SALES MIX Pricing Mechanisms (%) • ~40% quarterly contract price • ~60% shorter than quarterly pricing mechanisms (including “spot”) 20% Index Linked PRODUCT MIX 80% Fixed • ~75% of production is high-quality HCC Price • ~25%
Slide 95: Quality and Basis Spreads
Quality and Basis Spreads Impact Teck’s average realized steelmaking coal prices HCC / SHCC Prices and Spread1 (US$/t) HCC FOB / CFR Prices and Spread2 (US$/t) 350 100 350 40 300 300 75 20 250 250 200 200 0 50 150 150 -20 100 100 25 -40 50 50 0 0 0 -60 HCC FOB Australia (LHS) HCC CFR China (LHS) HCC
Slide 96: ~75 Mtpa of West Coast Port Capacity Planned
~75 Mtpa of West Coast Port Capacity Planned Teck port capacity exceeds current production plans, including Quintette WESTSHORE TERMINALS West Coast Port Capacity (Nominal Mt) • Current capacity 33 Mtpa 40 • ~$275 million upgrade to 35 Mtpa by 2019 • Teck is largest customer at 19 Mtpa 30 • Contract
Slide 97: Notes: Appendix – Steelmaking Coal
Notes: Appendix – Steelmaking Coal Slide 74: Steelmaking Coal Facts 1. Source: IEA. 2. Source: CRU. 3. Source: World Coal Association. Assumes all of the steel required is produced by blast furnace-basic oxygen furnace route. 4. Source: The Coal Alliance. Assumes all of the steel required is produce
Slide 98: Notes: Appendix – Steelmaking Coal
Notes: Appendix – Steelmaking Coal Slide 84: Steelmaking Coal Supply / Demand Balance 1. Source: Wood Mackenzie, AME. High case demand is based on AME for India’s imports and Wood Mackenzie for imports by other countries. Exports include disruption allowance that is based on the difference between W
Slide 99: Copper Business Unit & Markets
Copper Business Unit & Markets
Slide 100: Global Copper Mine Production Increasing Slowly
Global Copper Mine Production Increasing Slowly Mine Production Set To Increase 1.8 Mt By 2023 Global Copper Mine Production1 (kt contained) Includes: 22,000 Mine kmt Glencore’s African mine restarts 400 20,000 Cobre Panama 330 18,000 Escondida 390 Quellaveco 350 16,000 Quebrada Blanca 300 China 490
Slide 101: Copper Disruptions Return To Impact Mines
Copper Disruptions Return To Impact Mines TC/RCs Spot and BM Falling1 (US$/lb) Disruptions (kt)2; $120 Q2 2005 2007 2009 2011 2013 2015 2017 2019 $110 0 $100 $90 -200 $80 $70 -400 $60 -600 3.0% 2.8% $50 $40 -800 4.5% 3.4% $30 YTD $20 -1,000 Annual/Mid Year Spot -1,200 101
Slide 102: Rapid Growth in Chinese Copper Smelter Capacity
Rapid Growth in Chinese Copper Smelter Capacity Limited domestic mine projects and lots of delays Chinese Copper Mine Growth1 +2.8 Mt of Smelting Projects in the Pipeline2 (kt) (kt blister) 400 400 2019 2020 2010 – 2022 2018/2019 2020 2010 – 2022 48 kt 62 kt 212 kt 1,142 kt 981 kt 739 kt 300 300 200
Slide 103: Copper Supply
Copper Supply Mine production rising and scrap availability falling Sanctioned Projects Since 20171 (kt) China Copper Scrap Imports Decline2 New mines commissioned will (Copper content, kt) 2,000 add 2.5 Mt from 2017-2025 3,000 1,500 2,500 1,000 2,000 500 1,500 0 2013 2014 2015 2016 2017 2018 1,000
Slide 104: Copper Metal Stocks
Copper Metal Stocks Better than expected demand; smelter disruptions • Production cuts at Asian smelters combined with Daily Copper Prices1,2 (US$/mt) lower scrap availability contributed to a drawdown and Stocks1,2 (kmt) in cathode stocks $12,000 1,800 • Exchange stocks have fallen 455,000 tonnes 1
Slide 105: Copper Supply / Demand Balance
Copper Supply / Demand Balance Projects available to fill low demand scenario gap Probable Projects Sufficient Only To Fill Existing and Fully Committed Supply1 (kt) Low Gap Scenario2 (kt) 28,000 3,500 27,000 3,000 Additional gap to high 26,000 2,500 demand 25,000 2,000 Additional gap to 24,000 1,50
Slide 106: Long Life and Stable Assets in Copper
Long Life and Stable Assets in Copper Antamina Highland Valley Carmen de Andacollo Quebrada Blanca • C1 costs in the 1st quartile1 • Copper production rising • Consistent near term • Mining equipment and • Record combined with higher grades and production profile workforce successfully concentrate p
Slide 107: Cost Discipline and Improvement Focus in Copper
Cost Discipline and Improvement Focus in Copper Operating Expenses & Productivity Focused Investment Priorities • Cross site sharing in asset management • Numerous projects finishing in 2019 and continues to improve availabilities and early 2020 reduce costs - D3 Ball Mill at HVC, QB1 water • Robust
Slide 108: Major Extension Projects in Copper
Major Extension Projects in Copper Strong brownfield pipeline for value creation Antamina • Debottlenecking and extension studies ongoing - Increase mill throughput >15% - Relocation of crushing and conveying system - Increasing waste rock and tailings storage capacity HVC 2040 • Advancing HVC Mine
Slide 109: Notes: Appendix – Copper
Notes: Appendix – Copper Slide 100: Global Copper Mine Production Increasing Slowly 1. Source: Wood Mackenzie, AME, Teck. Slide 101: Copper Disruptions 1. Source: Wood Mackenzie, AME, Teck, Company Reports. 2. Source: Wood Mackenzie, CRU, Metal Bulletin. Slide 102: Rapid Growth in Chinese Copper Sme
Slide 110: Zinc Business Unit & Markets
Zinc Business Unit & Markets Teck
Slide 111: Environmental Policy Decreasing Chinese Production
Environmental Policy Decreasing Chinese Production Chinese Mine Production Down 2.4% in 20181 Chinese Refined Production Down 2.6% in (Kmt Contained) 20182 (Thousand Tonnes) 5,000 6,500 4,500 6,000 5,500 4,000 5,000 3,500 4,500 3,000 4,000 2,500 3,500 2,000 3,000 2012 2013 2014 2015 2016 2017 2018 2
Slide 112: Increasing Demand for Zinc Metal Imports
Increasing Demand for Zinc Metal Imports De-stocking Continues More Imported Zinc Metal Chinese Stocks at Record Lows1,2 (kt) Required to Fill the Gap3 (kt) 1,600 1,600 1,507 1,512 1,467 1,425 1,400 1,400 1,200 1,200 1,000 1,000 924 770 800 800 652 600 600 503 400 400 200 200 0 0 2015 2016 2017 2018
Slide 113: Zinc Supply
Zinc Supply Mine production missed forecast in 2018 • Teck originally forecast global mine production Zinc Mine Production1 (kt contained) would grow 7.9% or over 800,000 tonnes in 2018 16,000 ‒ Due to start up of large mines, Dugald River, Gamsberg, New Century and restarts by Glencore 14,000 • Glo
Slide 114: Chinese Zinc Mine Projects Delayed
Chinese Zinc Mine Projects Delayed Impacted by inspections and low zinc ore grades Estimated Chinese Zinc Mine Growth Chinese Mine Growth 2019-2021 Heavily Rarely Achieved1 (Kmt Contained) Dependent On Single Project2 (Kmt contained) 600 600 400 200 400 360 0 350 270 300 250 237 200 200 180 100 60 6
Slide 115: Zinc Concentrate Treatment Charges
Zinc Concentrate Treatment Charges Treatment Charges1 (USD/dmt) 350 300 250 200 150 100 50 0 Spot TC Benchmark TC 115
Slide 116: Zinc Metal Stocks
Zinc Metal Stocks Consecutive deficits decreasing zinc inventories • Deficits in past 5 years have driven down stocks Daily Zinc Prices1,2 (US$/mt) • LME refined zinc stocks have decreased 50,800 and Stocks1,2 (kmt) tonnes year-to-date in 2019 5,000 2,500 • Less than 80,000 tonnes of refined zinc re
Slide 117: Zinc Supply / Demand Balance
Zinc Supply / Demand Balance Zinc mine production peaks in 2021 Existing and Fully Committed Supply1 (kt) Probable Projects Sufficient To Fill Gap2 (kt) 17,000 2,500 Additional gap to 2,000 high 16,000 demand 1,500 Additional gap to 15,000 base 1,000 demand 14,000 Gap to 500 low demand 13,000 0 2019
Slide 118: Largest Global Net Zinc Mining Companies
Largest Global Net Zinc Mining Companies Teck is the Largest Net Zinc Miner1(kt) Provides significant exposure to a rising zinc price 400 Public Company 350 Teck Private Company 300 250 200 150 100 50 0 118
Slide 119: Integrated Zinc Business
Integrated Zinc Business Red Dog Trail Pend Oreille • Cash costs in bottom 1st quartile1 • Strong zinc production in 2019 with • Low iron feed and transport • Optimized stockpiling strategy to improving outlook for TC/RC’s advantage for Trail increase mill throughput • KIVCET lead furnace shutdown •
Slide 120: Cost Discipline and Improvement Focus in Zinc
Cost Discipline and Improvement Focus in Zinc Operating Expenses & Productivity Focused Investment Priorities • Cross site sharing in asset management • Numerous projects finishing in 2019 and continues to improve availabilities and early 2020 reduce costs - VIP2 at Red Dog, Acid Plant #2 at Trail •
Slide 121: Red Dog Sales Seasonality
Red Dog Sales Seasonality • Operates 12 months Zinc Sales 1 (%) 40% 34% 31% • Ships ~ 4 months 30% 21% • Shipments to inventory in Canada 20% 14% and Europe; Direct sales to Asia 10% • ~65% of zinc sales in second half 0% of year Q1 Q2 Q3 Q4 • ~100% of lead sales in second half Lead Sales1 (%) 58% o
Slide 122: Red Dog Operating Cost Seasonality
Red Dog Operating Cost Seasonality Significant quarterly variation Red Dog Net Cash Unit Costs1 (US$/lb) 0.60 0.40 0.20 - Q1 Q2 Q3 Q4 • Seasonality of Red Dog unit costs largely due to lead sales during the shipping season • Zinc is a by-product credit at Antamina and accounted for in the Copper Bus
Slide 123: Red Dog in Bottom Quartile of Zinc Cost Curves
Red Dog in Bottom Quartile of Zinc Cost Curves C1+Sustaining Cost Curve 20181 (US¢/lb) 180 160 140 120 100 80 60 RED DOG 40 20 0 -20 -40 0% 25% 50% 75% 100% 123
Slide 124: Red Dog Extension Project
Red Dog Extension Project Long Life Asset • Aktigiruq exploration target of 80-150 Mt @ 16-18% Zn + Pb1 • Anarraaq Inferred Resource2: 19.4 Mt @14.4% Zn, 4.2% Pb Quality Project • Premier zinc district • Significant mineralized system • High grade Stable Jurisdiction • Operating history • ~12 km fro
Slide 125: Building a Quality Zinc Inventory
Building a Quality Zinc Inventory Potential New GIANT System1 (Contained Zn+Pb in Mt and Grade Zn+Pb in %) GIANT ZINC DEPOSITS (+6 Mt Zn+Pb) 125
Slide 126: Global Context of Teck's Zinc Resources
Global Context of Teck’s Zinc Resources Well positioned; world class 30 Teck’s Zinc Resources1 Qanaiyaq (Resource in Mt and Grade Zn+Pb in %) 25 Red Dog Past Production Aqqaluk Aktigiruq Exploration Target1 20 80-150 Mt Grade Zn+Pb % Anarraaq Paalaaq 16-18% Zn+Pb 15 Rampura Broken Hill Agucha McArth
Slide 127: Notes: Appendix – Zinc
Notes: Appendix – Zinc Slide 111: Environmental Policy Decreasing Chinese Production 1. Source: BGRIMM. 2. Source: BGRIMM. Slide 112: Increasing Demand for Zinc Metal Imports 1. Source: SHFE, MyMetal, SMM, Industrial sources, Teck. 2. ”Smelter + consumer stocks” refers to zinc metal held in the plan
Slide 128: Notes: Appendix – Zinc
Notes: Appendix – Zinc Slide 118: Largest Global Net Zinc Mining Companies 1. Source: Wood Mackenzie, 2018. Slide 119: Integrated Zinc Business 1. Source: Wood Mackenzie. Slide 121: Red Dog Sales Seasonality 1. Average sales from 2010 to 2018. Slide 122: Red Dog Operating Cost Seasonality 1. Average
Slide 129: Energy Business Unit & Markets
Energy Business Unit & Markets
Slide 130: Energy Benchmark Pricing
Energy Benchmark Pricing Calendar NYMEX WTI Price1 and WTI/WCS Basis Differential2 (US$/bbl) $80 $50 $70 $40 $60 $30 $50 $40 $20 $30 $10 $20 $0 $10 $0 -$10 Feb-17 Aug-17 Sep-17 Feb-18 Aug-18 Sep-18 Feb-19 Aug-19 Jul-17 Jul-18 Jul-19 Jan-17 Oct-17 Apr-17 Jun-17 Jan-18 Apr-18 Jun-18 Oct-18 Jan-19 Apr-
Slide 131: US Midwest and US Gulf Coast are Key Markets
US Midwest and US Gulf Coast are Key Markets Blended Bitumen Pipelines Edmonton Hardisty TransCanada Keystone, Keystone XL Superior Enbridge/Line 3 Asia Vancouver Montreal TransMountain/TMX In Service Pipeline Steele City Flanagan Proposed Pipeline California Market Hub Cushing Deep Water Port Asia
Slide 132: Export Capacity Needed To Meet Global Demand
Export Capacity Needed To Meet Global Demand Near term (2019-2021): Western Canada Supply & Markets1 (Mbpd) • Canadian export capacity lagging Reliant on rail 2019-2020 • Reliant on rail (400-500 Kbpd) 7.5 7.0 Pipeline development progressing: 6.5 TransMountain • Enbridge: 370 Kbpd (2020-2021) 6.0 T
Slide 133: Lower Carbon Intensity Product at Fort Hills
Lower Carbon Intensity Product at Fort Hills Comparable to the average barrel refined in the U.S. PFT Diluted Bitumen has a Lower Carbon Intensity Than Around Half of the Barrels of Oil Refined in the US, on a Wells-to-Wheels Basis1 (Total carbon intensity - kgCO2e per barrel of refined products) 60
Slide 134: Fort Hills Blend Widely Accepted In Market
Fort Hills Blend Widely Accepted In Market We produce a high quality refinery feedstock Delivery Location (Kbpd) • Low GHG intensity: <50% of US crude supply Teck Blend: • Including in-situ and upgraded synthetic 49.5 Kbpd Our sales mix provides diverse market access 10.0 US Gulf Coast: monthly basi
Slide 135: Diverse Portfolio of Sales in Energy
Diverse Portfolio of Sales in Energy Blend Sales By Delivery Point (%) Revenue (US$/bbl) LOCATION NYMEX WTI WESTERN CANADIAN SELECT DIFFERENTIAL BASIS 20% (Pipeline) US Gulf Coast Calendar average Monthly contracted (Pipeline) monthly WTI spot differential at US 60% Gulf Coast 20% (Pipeline) Hardist
Slide 136: Quality Barrels in a Progressive Jurisdiction
Quality Barrels in a Progressive Jurisdiction 4th largest oil sands mining portfolio Fort Hills in operation Alberta, Canada • Teck 21.3% = 0.6 billion barrels1 Frontier in the regulatory phase • Teck 100% = 3.2 billion barrels2 Lease 421: future growth • Teck 50% CNRL Horizon Imperia l Kearl • High
Slide 137: Our Energy Strategy
Our Energy Strategy Maximizing value of Fort Hills • Start-up complete, increase production volumes, lower costs De-risking Frontier & Lease 421 • Frontier regulatory hearing completed in 2018, decision in early 2020 Driving business results through technology & innovation • Safe & reliable producti
Slide 138: Fort Hills is a Modern Mine
Fort Hills is a Modern Mine Built for low cost operations Fort Hills 2018 Production @100% (Barrels per day) 201,000 bpd 250,000 Exit 2018 December 2018 @ 201,000 bpd 200,000 <$23/bbl 150,000 Great start-up adjusted operating costs1 December 2018 100,000 50,000 PFT Product low GHG emissions - Jan Fe
Slide 139: Attractive Debottlenecking Opportunities at Fort Hills
Attractive Debottlenecking Opportunities at Fort Hills To be implemented in two phases Potential capacity increase of PFT Process 20 kbpd to 40 kbpd • Teck’s share of annual production could increase from 14.0 Mbpa to 15.5-17.0 Mbpa • Near term opportunities require little to no capital (phase 1) •
Slide 140: Significant EBITDA Upside Potential in Energy
Significant EBITDA Upside Potential in Energy Providing the basis for strong and steady cash flow for decades Assumptions EBITDA1 Potential – Teck’s share ($ millions) 800 WTI @ WTI @ ASSUMPTIONS 700 US$70/BBL US$60/BBL 600 +$150M WTI-WCS differential US$10.00 US$14.75 500 400 +$100M C$/US$ exchange
Slide 141: Teck's Energy Outlook
Teck’s Energy Outlook $70 million in EBITDA1 generated at Fort Hills in Q2 2019 • Government of Alberta curtailments effective January 1, 2019 • Fort Hills: PRODUCTION ADJUSTED OPERATING COSTS2 CAPITAL 2019 • Expect to be at the low end of our • With the lower production, we expect • C$11.50-$13.50
Slide 142: Notes: Appendix – Energy
Notes: Appendix – Energy Slide 130: Energy Benchmark Pricing 1. Source: CME Group. As at July 23, 2019. 2. Sources: Net Energy, CalRock and Link. As at July 23, 2019. Slide 132: Export Capacity Needed to Meet Global Demand 1. Sources: IHSMarkit, Lee & Doma, Teck Energy. Slide 133: Lower Carbon Inten
Slide 143: Energy Business Unit Modelling
Energy Business Unit Modelling
Slide 144: Operating Netback – Q2 2019
Operating Netback – Q2 2019 • Operating netback is a non-GAAP measure, presented on a product and sales barrel basis on page 25 of the Q2 2019 news release. • Derived from the Energy segmented information (P&L), after adjusting for items not directly attributable to the revenues and costs associated
Slide 145: Operating Netback – Q2 2019
Operating Netback – Q2 2019 Fort Hills Mine Terminal Bitumen Price Realized FHELP Managed Transportation Operating Costs East Tank Farm Blending Facility (-) Wood Buffalo Pipeline Norlite Pipeline(-) Wood Buffalo Pipeline Extension Teck Fort Saskatchewan Hardisty Terminal Cavern Storage & Sales – Ha
Slide 146: Operating Netback Reconciliation – Q2 2019
Operating Netback Reconciliation – Q2 2019 Non-GAAP Financial Measures on page 55 of Q2 2019 news release Energy Operating Netback, Bitumen and Blended Bitumen Price Realized Reconciliations1 Three months ended Three months ended (C$ in millions, except where noted) June 30, 2019 June 30, 2019 Reven
Slide 147: Operating Netback Reconciliation – Q2 2019
Operating Netback Reconciliation – Q2 2019 Non-GAAP Financial Measures on page 55 of Q2 2019 news release Blended Bitumen Price Realized Reconciliation Three months ended (C$ in millions, except where noted) June 30, 2019 Revenue as reported $ 295 Less: Non-proprietary product revenue (9) Add back:
Slide 148: Operating Netback Reconciliation – Q2 2019
Operating Netback Reconciliation – Q2 2019 Non-GAAP Financial Measures on page 49 of Q2 2019 news release Energy Business EBITDA by Entity Three months ended Three months ended Three months ended (C$ in millions) June 30, 2019 June 30, 2018 March 31, 2019 Reported as: Reported as: Reported as: Other
Slide 149: Energy Gross Profit – Q2 2019
Energy Gross Profit – Q2 2019 From Revenue and Gross Profit Table Blended Bitumen Revenue Calculation Q2 2019 news release; page 37 Three months ended CAD$ in millions Three months ended June 30, 2019 CAD$ in millions June 30, 2019 Revenue, as reported (A) $295 Revenue (A) $295 Less: non-proprietary
Slide 150: Modelling Bitumen Price Realized – Q2 2019
Modelling Bitumen Price Realized – Q2 2019 Non-GAAP Financial Measure Bitumen price realized = (blend salesA – diluent expenseB) / bitumen bbls soldC A. Blend sales = blend sales @ Hardisty + blend sales @ U.S. Gulf Coast (USGC) = $290 per “Blended Bitumen Price Realized Reconciliation” and “Reconci
Slide 151: Energy EBITDA Simplified Model
Energy EBITDA Simplified Model Illustrative EBITDA Calculation - Teck Attributable @ 21.3% (14 Mbpd)1 ASSUMPTION TOTAL PER BARREL WTI price US$70.00 Less: Weighted average WTI-WCS differential (US$10.00) Multiplied by: C$/US$ exchange rate @ $1.25 WCS price (WTI price less WTI-WCS differential x C$/
Slide 152: Notes: Appendix – Energy Business Unit Modelling
Notes: Appendix – Energy Business Unit Modelling Slide 151: Energy EBITDA Simplified Model 1. EBITDA is a non-GAAP financial measure. This model is being provided to illustrate how Teck calculates EBITDA for its Energy business unit. The figures included are not forecasts of projected figures of Tec
Slide 153: Non-GAAP Financial Measures
Non-GAAP Financial Measures
Slide 154: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is profit attributable to shareholders before net finance expense, income and resource taxes, and depreciation and amortization. Adjusted EBITDA is EBITDA before the pre- tax effect of certain types of transactions that in our judgment are not indicative of our nor
Slide 155: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Basic Earnings Per Share Reconciliation of Diluted Earnings Per Share to Adjusted Basic Earnings Per Share to Adjusted Diluted Earnings Per Share Three months ended Three months ended (C$ in millions) June 30, 2019 (C$ in millions) June 30, 2019 Basic ea
Slide 156: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Net Debt-to-Adjusted EBITDA Ratio & Net Debt-to-Debt-Plus-Equity Ratio (A) (B) (C) (A-B+C) Twelve months ended Six months ended Six months ended Twelve months ended (C$ in millions) December 31, 2018 June 30, 2018 June 30, 2019 June 30, 2019 EBITDA $ 6,1
Slide 157: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of EBITDA and Adjusted EBITDA Three months ended (C$ in millions) June 30, 2019 Profit attributable to shareholders $ 231 Finance expense net of finance income 62 Provision for income taxes 120 Depreciation and amortization 395 EBITDA $ 808 Add (deduct): De
Slide 158: Non-GAAP Financial Measures
Non-GAAP Financial Measures Energy Business EBITDA by Entity Three months ended Three months ended Three months ended (C$ in millions) June 30, 2019 June 30, 2018 March 31, 2019 Reported as: Reported as: Reported as: Other Other Other Energy Fort Hills Energy Energy Fort Hills Energy Energy Fort Hil
Slide 159: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Gross Profit Reconciliation of Gross Profit Margins Before Depreciation and Amortization Before Depreciation Three months ended Three months ended (C$ in millions) June 30, 2019 (C$ in millions) June 30, 2019 Gross profit $ 1,051 Revenue Depreciation and
Slide 160: Non-GAAP Financial Measures
Non-GAAP Financial Measures Steelmaking Coal Unit Cost Reconciliation Three months ended (C$ in millions, except where noted) June 30, 2019 Cost of sales as reported $ 868 Less: Transportation (250) Depreciation and amortization (199) Adjusted cash cost of sales $ 419 Tonnes sold (millions) 6.4 Per
Slide 161: Non-GAAP Financial Measures
Non-GAAP Financial Measures Copper Unit Cost Reconciliation Three months ended Three months ended (C$ in millions, except where noted) June 30, 2019 June 30, 2019 Revenue as reported $ 646 US$ AMOUNTS1 By-product revenue (A) (90) Average exchange rate (C$/US$) $ 1.34 Smelter processing charges (B) 4
Slide 162: Non-GAAP Financial Measures
Non-GAAP Financial Measures Zinc Unit Cost Reconciliation (Mining Operations)1 Three months ended Three months ended (C$ in millions, except where noted) June 30, 2019 (C$ in millions, except where noted) June 30, 2019 Revenue as reported $ 609 Payable pounds sold (millions) (E) 177.3 Less: Trail Op
Slide 163: Non-GAAP Financial Measures
Non-GAAP Financial Measures Energy Operating Netback, Bitumen and Blended Bitumen Price Realized Reconciliations1 Three months ended Three months ended (C$ in millions, except where noted) June 30, 2019 June 30, 2019 Revenue as reported $ 295 Blended bitumen barrels sold (000’s) 4,221 Less: diluent
Slide 164: Non-GAAP Financial Measures
Non-GAAP Financial Measures Blended Bitumen Price Realized Reconciliation Three months ended (C$ in millions, except where noted) June 30, 2019 Revenue as reported $ 295 Less: Non-proprietary product revenue (9) Add back: Crown royalties 4 Blended bitumen revenue (A) $ 290 Blended bitumen barrels so
Slide 165: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of EBITDA Margin (C$ in millions) Six months ended June 30, 2019 Coal Copper Red Dog Other1 Teck Earnings before taxes per segmented note 1,168 243 287 (345) 1,353 Adjust non-controlling interest (NCI) for earnings attributable to shareholder (23) (10) - -
Slide 166: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Coal Business Unit Reconciliation of Free Cash Flow Adjusted EBITDA 2003 to (C$ in millions) Q2 2019 Cash Flow from Operations $44,743 October 1, 2008 (C$ in millions) to June 30, 2019 Debt interest and finance charges paid (5,290) Gross Profit $ 18,492
Slide 167: Investor Meetings
Investor Meetings August 2019