Teck Resources Limited Class A · TSX:TECK.A
Teck Resources Limited Class A — Investor Day (April 2018)
28 slides from Teck Resources Limited Class A's investor day presentation, Apr 4, 2018
Slide 1: Focus on China: Economic Outlook
Focus on China: Economic Outlook April 4, 2018 Michael Han, Chief Economist
Slide 2: Forward Looking Information
Forward Looking Information Both these slides and the accompanying oral presentation 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 Securities Act (Ontario)
Slide 3: China's Economic Outlook
China’s Economic Outlook China Strives to Become a High-Income Economy • It aims to avoid the middle-income trap • Strong growth drivers remain Steady Growth is Expected in 2018 • Key risks are under control • Coal & steel benefit from supply side reforms 3
Slide 4: China Strives to Become a High-Income Economy
China Strives to Become a High-Income Economy Top 10 Economies in 20161 China’s Gap by GNI Per Capita2 (trn $US) The World Bank classifies high-income economies as 14,000 United States 18.62 those with a GNI per capita of >US$12,236 in 2018 China 11.20 12,000 Japan 4.94 Gap to fill 10,000 Germany 3.
Slide 5: Urbanization Will Continue to be a Growth Driver
Urbanization Will Continue to be a Growth Driver Regional disparity remains Urbanization Rates1 GDP Per Capita, 20162 70% 60.0% 20,000 58.5% in 2020 60% in 2017 50% 15,000 40% 45.0% in 2020 10,000 30% 36.6% in 2014 20% 5,000 10% 0% - 1980 1985 1990 1995 2000 2005 2010 2015 2020 Top 5 Bottom 5 Top 5
Slide 6: A New Megacity Will Be Built: Xiongan
A New Megacity Will Be Built: Xiongan • “A major historic and strategic choice" that would be “crucial for the millennium to come”1 • The decision is an integral part of measures to transfer non-capital functions out of Beijing • Innovation will be the fundamental driver in building and developing t
Slide 7: Xiongan will be Larger than New York
Xiongan will be Larger than New York Xiongan1 2018 7
Slide 8: Xiongan will be of National Significance
Xiongan will be of National Significance Similar to Shenzhen and Pudong Shenzhen Shanghai Special Pudong Economic New Zone1 Area1 Established Established 1980s 1990s 2018 2018 8
Slide 9: "Belt and Road" to Boost Infrastructure Significantly
“Belt and Road” to Boost Infrastructure Significantly • The Asian Infrastructure Investment Bank (AIIB) has 84 approved members • China has invested >US$50 billion in countries along the routes from 2014-20161 • The Asian Development Bank forecasts that “developing Asia will need to invest US$26 tri
Slide 10: China's High Savings Rate Underpins Robust Growth
China’s High Savings Rate Underpins Robust Growth China’s debt is being brought under control Gross Domestic Savings (% GDP)1 Debt-to-GDP Ratio2 60 300% 50 250% Debt as % of GDP 58% 56% 56% 56% %of GDP 58% 40 200% 59% 55% 44% 46% 47% 48% 39% 30 150% 33% 36% 20 100% 154% 164% 167% 166% 166% 10 134% 1
Slide 11: Coal & Steel Benefit from Supply-Side Reforms
Coal & Steel Benefit from Supply-Side Reforms Industrial Profit Gains1 40 % share of total 800 35 700 39% 61% Total profit (USD billion) Total profit (USD billion) 30 600 25 Other 29 500 20 industries 400 15 Coal and 300 Steel 10 200 5 100 - - Coal mining Steel Total secondary sector production with
Slide 12: Summary: China
Summary: China • The will, leadership and growth potential to become a high-income economy in the medium term • Steady growth in 2018; moderately softer than 2017 • Additional financial de-risking but access to credit will remain ample • Supply-side reforms and crackdown on polluters ongoing • Commod
Slide 13: Notes
Notes Slide 4: China Strives to Become a High-Income Economy 1. Source: World Bank. 2. Source: World Bank. Slide 5: Urbanization Will Continue to be a Growth Driver 1. Source: National Bureau of Statistics of China. 2. Source: National Bureau of Statistics, CEIC database. Note: 2016 GDP per capita i
Slide 14: Focus on China: Zinc & Copper Markets
Focus on China: Zinc & Copper Markets April 4, 2018 Michael Schwartz, Manager, Market Research Lily Lei, Senior Market Research Analyst
Slide 15: Forward Looking Information
Forward Looking Information Both these slides and the accompanying oral presentation 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 Securities Act (Ontario)
Slide 16: Zinc
Zinc Teck
Slide 17: Steady Demand Growth & Increasing Zinc Intensity
Steady Demand Growth & Increasing Zinc Intensity Chinese Zinc Demand to Grow ~2-4%1 More Cars Expected to be Galvanized2 8,000 35,000 42% 45% 40% 7,000 37% 40% 30,000 32% 35% 35% 6,000 29% 25,000 24% 30% Thousand Tonnes 21% 5,000 Thousand Units 20,000 25% 4,000 15,000 20% 3,000 15% 10,000 2,000 10%
Slide 18: Environmental/Safety Inspections & Depletions
Environmental/Safety Inspections & Depletions Constraining zinc mine production Most Regions Reporting Negative Growth1 Estimated Zinc Mine Growth Rarely Achieved2 600 400 360 350 270 300 +36kt, 250 Thousand Tonnes -43kt, 200 200 180 +6% 135 -22% 100 60 Huoshaoyun -50kt, 0 -15% -50 -28kt, -33kt, -20
Slide 19: Zinc Mine Projects Increasingly Delayed
Zinc Mine Projects Increasingly Delayed Impacted by inspections and low zinc ore grades Future Mine Growth Heavily Dependent Mine Depletion & Low Grades of Projects2 On One Single Project1 1000 8 2017 2018 2019-2020 7 800 145kt 136kt 886kt Thousand Tonnes 6 600 Ore Grade, Zinc % 5 400 4 200 3 0 2 1
Slide 20: China to Require More Zinc Concentrate Imports
China to Require More Zinc Concentrate Imports Concentrate Stocks Rise, China Will Have to Import Seasonal Build Insufficient1 More Zinc in Concentrate2 500 250 1,561 1,600 1,456 1,452 1,447 Thousand Tonnes, Zinc in Concentrates 1,400 400 200 1,200 1,101 TCs on Imports ($/dmt) Thousand dmt 300 150 1
Slide 21: Increasing Demand for Zinc Metal Imports
Increasing Demand for Zinc Metal Imports De-stocking to Continue More Imported Zinc Metal Despite Seasonal Rebound1 Required to Fill the Gap3 1,600 1,600 Smelter + Consumer Stocks2 1,400 Bonded Stocks 1,382 1,400 1,328 Domestic Commercial Stocks 1,261 1,200 1,200 1,000 Thousand Tonnes 1,000 Thousand
Slide 22: Copper
Copper Teck
Slide 23: Steady Demand Growth & Increasing Copper Intensity
Steady Demand Growth & Increasing Copper Intensity Chinese Copper Demand to Grow ~3-4%1 Increasing Copper Intensity with Booming 1,000 Electric Vehicles2 12,000 10,000 800 7 million EVs in 2025 Thousand Tonnes 8,000 Thousand Tonnes 600 2 million EVs in 2020 6,000 400 4,000 200 2,000 0 0 2011 2012 20
Slide 24: 13th Five-Year Plan Driving Copper Demand (2016-2020)
13th Five-Year Plan Driving Copper Demand (2016-2020) Potential Annual Growth in Most Sectors1 Significant Power Grid Investment2 282 3.5 300 250 202 3.0 Thousand Tonnes / Year 200 150 2.5 100 RMB Trillion 71 60 2.0 50 21 19 -75 20% -7 0 1.5 23% 37% -50 -100 1.0 25% 0.5 43% 52% 0.0 11th - 5yr Plan 1
Slide 25: Rapid Growth in Chinese Copper Smelter Capacity
Rapid Growth in Chinese Copper Smelter Capacity Limited domestic mine growth Chinese Copper Mine Projects1 +2Mt of Smelting Projects in the Pipeline2 2017 2018 2019 2020 400 2017 2018 2019 400 104 kt 36 kt 123 kt 121 kt 280 kt 1,640 kt 230 kt Thousand Tonnes, Blister 300 300 Thousand Tonnes 200 200
Slide 26: China More Important in Global Copper Market
China More Important in Global Copper Market Buying more copper from the rest of the world Substantial Concentrate Imports Growth1 Continuous Growth of Imported Copper Units2 10,000 45% 12,000 40% 37% 40% 10,000 8,000 33% 35% 29% 30% 8,000 30% Thousand Tonnes 6,000 Thousand Tonnes 24% 22% 25% 6,000
Slide 27: Notes
Notes Slide 17: Steady Demand Growth & Increasing Zinc Intensity 1. Source: NBS/CNIA, CAAM, ChinaIOL, Wind, CEIC, Teck. 2. Source: Mysteel, Teck. Slide 18: Environmental/Safety Inspections & Depletions 1. Source: NBS/CNIA. 2. Source: BGRIMM, Antaike, Teck . Slide 19: Zinc Mine Projects Increasingly
Slide 28: Focus on China
Focus on China April 4, 2018 Michael Han, Chief Economist Michael Schwartz, Manager, Market Research Lily Lei, Senior Market Research Analyst