Teck Resources Limited Class A · TSX:TECK.A
Teck Resources Limited Class A — 2018 Whistler Institutional Investor Conference
114 slides from Teck Resources Limited Class A's conference presentation, Jan 25, 2018
Slide 1: 2018 Whistler Institutional Investor Conference
2018 Whistler Institutional Investor Conference January 25, 2018
Slide 2: Forward Looking Information
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 Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario)
Slide 3: Forward Looking Information
Forward Looking Information Management’s expectations of mine life are based on the current planned production rates and assume that all resources described in this presentation are developed. Certain forward-looking statements are based on assumptions disclosed in footnotes to the relevant slides.
Slide 4: Our Value Proposition
Our Value Proposition Superior Strong Financial Disciplined Capital Execution Position Allocation • World class operating • Significant liquidity • Debt reduction assets • Record cash flow • Asset portfolio • Proven track record • The right commodities at management • Enhancing profitability the rig
Slide 5: Consistent Long-Term Strategy
Consistent Long-Term Strategy Diversification Long life assets Low cost Appropriate scale Low risk jurisdictions Organic growth 5
Slide 6: Record Cash Flow Over Past 12 Months
Record Cash Flow Over Past 12 Months Q3 2017 Revenue $ 3.1 billion Gross profit $ 1.5 billion before depreciation & amortization* Adjusted Profit $ 621 million attributable to shareholders Adjusted EBITDA* $ 1.4 billion Generated $6.1 billion in Adjusted EBITDA over the past 12 months1, with an aver
Slide 7: Outstanding Valuation Thesis
Outstanding Valuation Thesis Teck vs. Global Diversifieds Teck vs. Global Diversifieds Dividend Adjusted Share Pricing EV/EBITDA (NTM) 700% 12x 10x 500% 8x 300% 6x 100% 4x -100% 2x Anglo American plc (LSE:AAL) - Dividend Adjusted Share Pricing Vale S.A. (BOVESPA:VALE5) - TEV/Forward EBITDA BHP Billi
Slide 8: Strong Financial Position
Strong Financial Position Current Debt Portfolio1 Public Notes Outstanding 8 Public notes outstanding US$4.8B 7 Average coupon 5.7% 6 US$ Billions Weighted average term to maturity ~15 years 5 4 Debt to debt-plus-equity ratio2,4 24% 3 Net debt to debt-plus-equity ratio4 21% Net debt to EBITDA (LTM)
Slide 9: Returning Cash to Shareholders
Returning Cash to Shareholders • Increased the dividend ‒ Annualized dividend of $0.20/share, paid quarterly • Shift in dividend policy to align with cyclical nature of our business ‒ Variable component, at the Board’s discretion ‒ First supplemental dividend of $230M paid December 2017 • Received a
Slide 10: Significant Potential Copper Production Growth
Significant Potential Copper Production Growth Teck’s Potential Copper Production Profile1 1000 ~811 800 San Nicolás Zafranal 600 NuevaUnión 400 324 QB2 200 0 2016 Potential Highland Valley Antamina Carmen de Andacollo QB 3 Year Guidance (2018-2020) 1. Illustrative production profile. Quebrada Blanc
Slide 11: Quebrada Blanca 2: Potential Tier 1 Asset
Quebrada Blanca 2: Potential Tier 1 Asset Potential top 15 copper producer globally ‒ 300 ktpa copper equivalent production in first 5 years Well in the low half of the cost curve (C1 cash cost of US$1.33/lb and AISC of US$1.37/lb) 1 ‒ Exceptionally low strip ratio of 0.54:11 Initial mine life
Slide 12: Insufficient Copper Projects to Fill Gap
Insufficient Copper Projects to Fill Gap Copper Mine Production Peaks in 2019 Impending Supply Gap 28 26 Million tonnes 24 22 20 18 16 14 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Mine Production SXEW Scrap Base Demand Teck 12 Source: Wood Mackenzie, CRU, ICSG, Teck
Slide 13: Multiple Signs of Tightness in Zinc Market
Multiple Signs of Tightness in Zinc Market TCs Fall to Historic Lows Chinese Zinc Metal Inventories Declining 2,000 2017 contract terms with $400 no price participation 1,000 $200 0 $0 2011 2013 2015 2017 2006 2008 2010 2012 2014 2016 Warehouse Inventory SHFE Spot TC Annual TC Bonded Warehouse SRB S
Slide 14: Teck is the Largest Net Zinc Miner
Largest Global Net Zinc Mining Companies Teck is the Largest Net Zinc Miner Provides Significant Exposure to a Rising Zinc Price 400 350 Teck Public Company 300 Private Company Thousand tonnes 250 200 150 100 50 0 14 Source: Wood Mackenzie, 2016.
Slide 15: 10-Year Inflation-Adjusted Average Realized Steelmaking Coal Price
10-Year Inflation-Adjusted Average Realized Steelmaking Coal Price of US$180/t1 Coal Price Assessment 350 300 250 US$ / tonne 200 150 100 50 HCC Price Ten Year Average Realized Price US$164/t Ten Year Inflation Adjusted Average Realized Price US$180/t Source: Argus Plotted to January 2, 2018 15 1. A
Slide 16: Fort Hills – Preparing for First Oil
Fort Hills – Preparing for First Oil • >80% of plant is now operational and has run safely at full capacity • All 3 secondary extraction trains are mechanically complete, with the first train in its final commissioning stage • First oil is expected mid-January • Fort Hills remains on track to reach
Slide 17: Lower Carbon Intensity Product
Lower Carbon Intensity Product 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 Basis* 600 Total carbon intensity (kgCO2e per barrel of refined products) Carbon intensity of average 550 barrel refined in the US = 502 500
Slide 18: Energy Sales & Logistics Strategy Based On Diverse Market Access
Energy Sales & Logistics Strategy Based On Diverse Market Access & Risk Mitigation Sales Mix Market Profile Long term Pipelines: Monthly basis 10 kbpd Contracted capacity on existing Keystone pipeline contracts at at Hardisty to the US Gulf Coast Hardisty 5 kpbd +12 kbpd Contracted capacity on propo
Slide 19: Our Value Proposition
Our Value Proposition Superior Strong Financial Disciplined Capital Execution Position Allocation • World class operating • Significant liquidity • Debt reduction assets • Record cash flow • Asset portfolio • Proven track record • The right commodities at management • Enhancing profitability the rig
Slide 20: Appendix
Teck Appendix
Slide 21: Attractive Portfolio of Long-Life Assets In Low Risk Jurisdictions
Attractive Portfolio of Long-Life Assets In Low Risk Jurisdictions Steelmaking Coal Copper Zinc Energy 21
Slide 22: Global Customer Base
Global Customer Base Exposure to Growing Emerging Markets & Recovery in Developed Markets Revenue Contribution from Diverse Markets* North Europe China America ~19% ~14% ~22% Asia excl. China ~42% Latin America ~3% 22 * Based on 2016 revenue.
Slide 23: Production Guidance
Production Guidance 2016 Results 2017 3 Year (2018-2020) Steelmaking Coal 27.6 Mt Low end 27-27.5 Mt 27-28 Mt1 Copper Concentrate 324 kt 275-290 kt 280-300 kt Highland Valley Concentrate 119.3 kt 95-100 kt 115-135 kt2 Antamina3 Concentrate 97 kt 88-92 kt 95-100 kt Carmen de Andecollo4 Concentrate 69
Slide 24: Sales Guidance
Sales Guidance Q3 2017 Results Q4 2017 Steelmaking Coal 7.54 Mt ~6.5 Mt Zinc Red Dog - Zinc in Concentrate 163.6 kt 180 kt 24 * As at October 25, 2017.
Slide 25: Cost Guidance
Cost Guidance 2016 Results 2017 Guidance* Steelmaking Coal Site costs $43/t High end $49-53/t Capitalized stripping $10/t $16/t1 Transportation costs $34/t $35-37/t Total cash costs2, 3 $89/t $100-106/t US$67/t US$80-85/t Copper C1 unit costs4 US$1.35/lb US$1.30-1.40/lb Capitalized stripping US$0.17
Slide 26: Capital Expenditure History & Guidance
Capital Expenditure History & Guidance Total Capital Expenditures 2012-2017 $3,000 $2,500 New Mine Development $2,000 Major Enhancements $M $1,500 $1,000 Sustaining Capital $500 Capitalized $0 Stripping 2012 2013 2014 2015 2016 2017 Guidance Investing in growth while strictly managing sustaining & d
Slide 27: Capital Expenditures Guidance
Capital Expenditures Guidance Major New Mine Capitalized 2017 ($M) Sustaining Enhancement Development Sub-total Stripping Total Steelmaking Coal 140 120 - 260 430 690 Copper 130 20 200 350 140 490 Zinc 210 15 20 245 50 295 Energy 50 - 780 830 - 830 TOTAL 530 155 1,000 1,685 620 2,305 Total capex of
Slide 28: Capital Expenditures Year-To-Date
Capital Expenditures Year-To-Date Major New Mine Capitalized 2017 ($M) Sustaining Enhancement Development Sub-total Stripping Total Steelmaking Coal 65 30 - 95 374 469 Copper 66 4 109 179 105 284 Zinc 10 5 30 137 21 158 Energy 22 - 639 661 - 661 Corporate 3 0 0 3 0 3 TOTAL 258 39 778 1,075 500 1,575
Slide 29: Staged Growth/Value Pipeline
Staged Growth/Value Pipeline In Construction Pre-Sanction Medium-Term Future Options Growth Options NuevaUnión Galore Creek Copper HVC D3 Project QB2 HVC Brownfield Schaft Creek Strong platform with substantial Zafranal Mesaba growth options San Nicolás (Cu-Zn) Zinc Trail #2 Acid Plant Antamina Brow
Slide 30: Disciplined Approach to M&A
Disciplined Approach to M&A Recent Transaction History Net Total of C$2.2B Net Proceeds/Cost (C$M) Waneta $1,400 Dam, Antamina $1,200M6 $1,200 Silver $1,000 Stream2, $795M $800 $600 CdA Gold Stream1, Project $400 $206M Corridor/ Osisko Sandstorm Royalty Royalty Wintering Hills, $200 NuevaUnion, 3 Pa
Slide 31: Commodity Price Leverage
Commodity Price Leverage Leverage to Strong Steelmaking Coal & Zinc Markets in 2017 Mid-Point of Effect on Effect on Unit of Production Annual Estimated Annual Estimated Change Guidance Profit3 EBITDA1 $C/$US C$0.01 C$42M /$0.01∆ C$68M /$0.01∆ Coal 27.25 Mt US$1/tonne2 C$20M /$1∆ C$31M /$1∆ Copper 2
Slide 32: Tax Efficient Earnings in Canada
Tax Efficient Earnings in Canada ~$6 billion in available tax pools1, including: • $4.6B in loss carryforwards • $1.3B in Canadian Development Expenses Applies to: • Cash income taxes in Canada Does not apply to: • Resource taxes in Canada • Cash taxes in foreign jurisdictions Multiples should refle
Slide 33: No Substantial Maturities for Five Years
No Substantial Maturities for Five Years Maturity Profile1 1,200 1,000 800 US$M 600 400 200 0 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 Few maturities through potential QB2 construction period 33 1. As at Se
Slide 34: Waneta Dam Sale for $1.2B Cash
Waneta Dam Sale for $1.2B Cash Deal Highlights Teck Impact • Sale of Teck’s 2/3rd interest to BC Hydro, • 16x EBITDA multiple following exercise of right of first offer • Closing now expected 1H 2018 • Commercial terms unchanged: • No cash tax payable on sale ‒ C$1.2 billion cash • Trail a globally
Slide 35: Our Sustainability Strategy
Our Sustainability Strategy Community Water Our People Biodiversity Energy and Air Climate Change 2030: Target date for long- 2020: Target term goals date for short- 2015: term goals Complete first 2011: Launch set of short- strategy with term goals short and long- 35 term goals
Slide 36: Our External Recognition
Our External Recognition Best 50 Corporate Citizens On the Dow Jones Sustainability World in Canada 2017 Index eight years in a row Top 50 Socially Responsible Listed on FTSE4Good Index in 2015 Corporations in Canada 36
Slide 37: Share Structure & Principal Shareholders
Share Structure & Principal Shareholders Teck Resources Limited September 5, 2017 Shares Held Percent Voting Rights Class A Shareholdings Temagami Mining Company Limited 4,300,000 55.3% 31.9% SMM Resources Inc (Sumitomo) 1,469,000 18.9% 10.9% Other 2,008,304 25.8% 14.9% 7,777,304 100.0% 57.7% Class
Slide 38: CIC Remains a Supportive Long-Term Partner
CIC Remains a Supportive Long-Term Partner • July 2009: Acquires 101.3 million shares at ~C$17.21/share for ~C$1.7 billion • September 2017: Divests 42 million shares at ~C$28.97/share for ~C$1.2 billion on a “Bought Block Trade” basis, through J.P. Morgan • Currently: Holds 59.3 million shares, for
Slide 39: Collective Agreements
Collective Agreements Operation Expiry Dates Quintette April 30, 2018 Antamina July 24, 2018 Coal Mountain December 31, 2018 January 31, 2019 Quebrada Blanca March 31, 2019 November 30, 2019 Line Creek May 31, 2019 September 30, 2019 Carmen de Andacollo December 31, 2019 Elkview October 31, 2020 For
Slide 40: Steelmaking Coal Business Unit & Markets
Steelmaking Coal Business Unit & Markets
Slide 41: Good Demand & Healthy Steel Industry Supporting Pricing
Good Demand & Healthy Steel Industry Supporting Pricing Coal Price Assessment Q1 2017 Q3 2016 Increase • Supply response Late-April 2017 350 • Closures globally • Inventory drawdown • Australian supply • Supply disruptions returns 300 • Inventory reduction • Supply response • Chinese policy US$ / to
Slide 42: High Grade Hard Coking Coal Is A Niche Market
High Grade Hard Coking Coal Is A Niche Market Global Coal Production1: 7.7 billion tonnes Steelmaking Coal Production2: ~1,160 million tonnes Export Steelmaking Coal2: ~315 million tonnes Seaborne Steelmaking Coal2: ~280 million tonnes Our Market - Seaborne Hard Coking Coal2: ~190 Million Tonnes 1.
Slide 43: Improving Steel Output Globally
Improving Steel Output Globally GDP and Crude Steel Production Crude Steel Production $120,000 2,000 Crude Steel Production YTD Sep 2017 Global 1,700 YoY $80,000 (Mt) Annualized 1,400 $40,000 1,100 Global 1,695 4.0% 800 $0 500 China 854 5.6% 1986 1991 1996 2001 2006 2011 2016 2021f Ex. China 840 2.3
Slide 44: Emerging Markets Growing Steel Production
Emerging Markets Growing Steel Production India • NMDC: Nagarnar - Greenfield project; Capacity: 3Mtpa ‒ Status: Construction underway; Completion in H1 2018 • SAIL - Expansion; Capacity: 21Mtpa from current 15Mtpa ‒ Status: Construction underway • RINL - Expansion; Capacity: 7Mtpa from current 6Mtp
Slide 45: Capacity Reductions Continue in China
Capacity Reductions Continue in China Steel Capacity Reduction Target Coal Capacity Reduction Target 900 160 800 140 700 120 Million tonnes 600 Million tonnes 100 500 80 400 800 140 60 300 40 200 65 360 50 290 20 100 0 25 128 0 0 22 2016-2020 2016 actual 2017 YTD 2017 target 2018-2020 2016-2020 2016
Slide 46: China Scrap Use to Increase Slowly
China Scrap Use to Increase Slowly China’s Ratio of EAF in CSP Low vs. Other Countries China Steel Use By Sector (2000-2016) 80% 67% 57% 60% 40% 40% 31% 22% 25% 20% Others 5% 15-20% 0% China Japan India United Russia European World Auto States Union average 5-10% Source: WSA Construction Crude Steel
Slide 47: Chinese Seaborne Coal Imports Trending Upwards
Chinese Seaborne Coal Imports Trending Upwards Chinese Steelmaking Coal Imports 80 40 Seaborne 70 35 33.3 Landborne 60 30 28.2 Million tonnes 50 25 19.9 Million tonnes 40 20 15.3 30 15 20 10 10 5 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD YTD YTD YTD Imports from Mongolia rolling 12mo Seab
Slide 48: Large Users Increasing Seaborne Imports
Large Users Increasing Seaborne Imports Zongheng Fengnan Project Seaborne Coking Coal Imports • Inland plant relocating to coastal area 70 • Capacity: crude steel 8Mt, hot metal 8Mt • Status: Construction started in 2017; 60 completion in 2021 39 50 HBIS Project Million tonnes 40 26 • Inland plant r
Slide 49: Growing India Steelmaking Coal Imports
Growing India Steelmaking Coal Imports Seaborne Steelmaking Coal Imports India’s Hot Metal Capacity; Forecasted to Increase by >25% Projects and Operations 90 80 70 60 50 40 30 z Mt 20 10 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Actual HMP (WSA
Slide 50: 2nd Largest Seaborne Steelmaking Coal Supplier
2nd Largest Seaborne Steelmaking Coal Supplier High quality, consistent, reliable, long-term supply North America Europe ~5% ~15% China ~20% Asia excl. China ~55% Latin America ~5% Competitively positioned to supply steel producers worldwide 50
Slide 51: An Integrated Long Life Coal Business
An Integrated Long Life Coal Business British Columbia Prince Rupert Elco Elk Valley Quintette • >1 billion tonnes of reserves Ridley Fording River support ~27 Mt of production Alberta Terminal for many years Prince George Edmonton Greenhills Elkford Cardinal River • Geographically concentrated Line
Slide 52: Five Year Plan: Sustain 27 Million Tonnes
Five Year Plan: Sustain 27 Million Tonnes1 Conceptual Production Profile 28 Objectives 24 • Manage transition from Coal Production (million tonnes) 20 Mountain 16 • Pursue incremental production 12 capacity in remaining Valley mines 8 • Evaluate Cardinal River mine life 4 extension - 2012 2013 2014
Slide 53: High Quality Product
High Quality Product High Quality Hard Coking Coal 80 U.S.A. • Around the world, and especially in China, Canada Other Australia Teck HCC (hard coking) blast furnaces are getting larger and 70 Australia and Canada increasing PCI rates Japan Teck HCC South Africa 60 • Coke requirements for stable bla
Slide 54: Average Realized Steelmaking Coal Prices
Average Realized Steelmaking Coal Prices Historical Average Realized Prices Sales Mix vs. Quarterly Contract Prices3 • 60% Shorter than quarterly pricing mechanisms (incl. “spot”) 350 Averaged 94% 2014-2016 • 40% Quarterly contract price 100% 300 ‒ Index-linked pricing mechanism for premium 250 90%
Slide 55: Steelmaking Coal Cost Discipline Remains
Steelmaking Coal Cost Discipline Remains C$/t 2012 2013 2014 2015 2016 20171 Site $57 $50 $51 $45 $43 $51 • AISC down 28% from 2012 peak to 2016 Inventory Adjustments $0 $1 $3 $2 $0 $0 • Expect higher costs in 2017 Transportation $37 $38 $38 $36 $34 $36 ‒ Efforts to maintain production after Unit Co
Slide 56: Competitive Margins in Steelmaking Coal
Competitive Margins in Steelmaking Coal $160 Operating Margin¹ $140 • High quality hard coking coal & $120 competitive operating costs yield $100 US$ per Tonne strong margins $80 Teck $60 $40 • Operations well positioned in a $20 volatile market $- $(20) $(40) Source: Wood Mackenzie Major US Produce
Slide 57: Coal Strip Ratio Up in 2017
Coal Strip Ratio Up in 2017 11 Clean Strip Ratio • Low strip ratio in 2016 due timing of 10 permitting Clean Strip Ratio 9 • Strip ratio to increase in 2017 8 7 ‒ Catch up 6 ‒ Closure of Coal Mountain 5 • Going forward, strip ratio expected to 40 ~ trend lower 2012 2013 2014 2015 2016 2017 2018 2019
Slide 58: Elk Valley Water Quality Plan Update
Elk Valley Water Quality Plan Update • Successfully tested an additional treatment step to address selenium compounds in effluent from West Line Creek facility ‒ Plant modifications to be completed Q3 2018 • Fording River facility construction to start in 2018 • Spending plans on water treatment del
Slide 59: >75 Mt of West Coast Port Capacity Planned
>75 Mt of West Coast Port Capacity Planned Our Portion is >40 Mt Westshore Terminals • Teck is largest customer at 19 Mt West Coast Port Capacity • Large stockpile area • Currently 33 Mt 40 • $275M project for expansion to 35-36 Mt by 2019 35 2-3 • Contract expires March 2021 30 Million Tonnes (Nomi
Slide 60: Copper Business Unit & Markets
Copper Business Unit & Markets
Slide 61: Chinese Copper Demand to Remain Strong
Chinese Copper Demand to Remain Strong Significant Power Grid Investment Potential Annual Growth in Most Sectors 3.5 282 300 3.0 250 202 200 2.5 150 RMB trillion Ktpa 100 2.0 71 20% 50 48 19 21 -7 -75 1.5 0 23% 37% -50 1.0 25% -100 0.5 43% 52% 0.0 11th - 5yr Plan 12th - 5yr Plan 13th - 5year Plan Co
Slide 62: China Demand Supported by Renewable Energy & Environmental Protection
China Demand Supported by Renewable Energy & Environmental Protection Copper Distribution Within De-Carbonization/ Renewables Electrical Generation Sector Positive for Copper Demand • Copper intensity is 4–12 x higher in renewable over non-renewable energy • Wind & solar require more copper per inst
Slide 63: China Electric Vehicle Demand Outpaces ROW
China Electric Vehicle Demand Outpaces ROW China will Leap Frog US & Europe China Electric Car Sales 47% of World With Electric Vehicles China Electric Car Registrations (December 2016) • China sold 351,800 electric cars in 2016, of which only 76,200 were sold by Tesla • China will replace all 67,00
Slide 64: Copper Scrap Spreads Incentivize Availability
Copper Scrap Spreads Incentivize Availability Scrap to Comex Copper Arbitrage Global Copper Scrap Use 350 100 330 75 310 50 290 25 270 0 US¢/lb 250 -25 230 -50 210 -75 190 -100 170 -125 150 -150 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Spread Copper #1 Heavy Copper Cathode Scrap arbitrage has widen
Slide 65: China Switching to Copper Concentrates
China Switching to Copper Concentrates Net Copper Imports 1,200 1,000 000’s tonnes (content) 800 600 400 200 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Cathode Concs Scrap Blister/Semis Source: NBS Plotted to July 2017 Total copper unit imports climb in 2015 & 2016, but
Slide 66: Copper Mine Production Disappoints
Copper Mine Production Disappoints Significant Disruptions in Q1 2017, Disruptions Exceeding 5% With Effects Through Q2-Q3 2017 200 2005 2007 2009 2011 2013 20152017 (October) 0 180 160 Disruptions could total >800 kmt -200 140 120 -400 100 Thousand tonnes 80 2.8% 60 Thousands Tonnes -600 40 20 -800
Slide 67: Copper Stock Decline Supports Price Increase
Copper Stock Decline Supports Price Increase Copper Stocks 1,800 500 • Stocks falling since 1,600 450 beginning of the year 1,400 400 350 • Total stocks (including Thousand tonnes 1,200 300 bonded), in days of global US¢/lb 1,000 250 800 consumption: 200 600 150 ‒ Today: 16.8 days ‒ Early 2013: ~45
Slide 68: Long-Term Copper Mine Production Still Needed
Long-Term Copper Mine Production Still Needed • At 2.0% global demand growth, Forecast Copper Refined Balance 515 kt new supply needed annually 1,000 • Mine production falls ~160 kt per 0 year after 2019 Thousand tonnes -1,000 • Market finely balanced through 2019 -2,000 ‒ Could materially change wi
Slide 69: Insufficient Copper Projects to Fill Gap
Insufficient Copper Projects to Fill Gap Uncommitted Projects Insufficient 5,000 4,000 Thousand tonnes 3,000 2,000 1,000 0 2018 2019 2020 2021 2022 2023 2024 2025 Highly Probable Mill Projects Probable Mill Projects (WM Market Adjustment) SXEW Projects Less than 1.8 Mt likely to be delivered of the
Slide 70: QB2: Robust Economics & Expansion Optionality
QB2: Robust Economics & Expansion Optionality NI 43-101 Case Copper Price (US$ per pound) $2.75 $3.00 $3.25 $3.50 Net present value at 8% (US$ millions) 565 1,253 1,932 2,604 Internal rate of return (%) 9.7% 11.7% 13.5% 15.2% Payback from first production (years) 6.8 5.8 5.0 4.4 Annual EBITDA First
Slide 71: QB2: Large Resource Base
QB2: Large Resource Base Large Resource Base Projects1 40 35 Billions of Recoverable Pounds 30 25 20 15 10 5 0 Source: Wood Mackenzie Great potential to significantly extend mine life 71 1. Shows reserves only for uncommitted projects.
Slide 72: QB2: Bottom Half of C1+Sustaining Cost Curve
QB2: Bottom Half of C1+Sustaining Cost Curve C1+Sustaining Cost Curve 2017 400 350 QB2: First 5 Years 300 250 QB2: First 10 Years 200 US¢/lb 150 100 Escondida 50 Antamina 0 -50 -100 0% 25% 50% 75% 100% Source: Wood Mackenzie Expected to generate significant economic returns 72
Slide 73: QB2: Competitive Capital Intensity
QB2: Competitive Capital Intensity Projects With >200 kmt/yr Copper 50,000 45,000 40,000 US $/tpa Cu Equiv 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Completed Greenfield Completed Brownfield Project Greenfield Project Brownfield Source: Wood Mackenzie 73
Slide 74: NuevaUnión: A New Approach to Project Development
NuevaUnión: A New Approach to Project Development Teck and Goldcorp have combined Relincho & El Morro projects and formed a 50/50 joint venture company • Committed to building strong, mutually beneficial relationships with stakeholders & communities Capital smart partnership • Shared capital, common
Slide 75: NuevaUnión: Before (Duplicate infrastructure)
NuevaUnión: Before (Duplicate infrastructure) Pipelines Power Line Port Pipelines: Water & Desalination Concentrate El Morro Tailings Port Site Desalination Power Tailings Power Pipelines : Relincho Water Site Mine and Mill Mine and Mill Source: “Project Location.” -28.395839, -70.486738, 4679ft. Go
Slide 76: NuevaUnión: After (Common infrastructure)
NuevaUnión: After (Common infrastructure) Pipeline Power Line Conveyor & Utilities Road Desalination Tailings Port Power Pipelines : Water Mine and Mill Conveyor & Utilities Mine Source: “Project Location.” -28.395839, -70.486738, 4679ft. Google Earth. February 8, 2015. April 23, 2015. 76
Slide 77: NuevaUnión Project Overview
NuevaUnión Project Overview Initial Project Capital Copper Production1 Gold Production1 US$3.5 190,000 315,000 billion tonnes per year ounces per year Mine Life Copper in Reserves2 Gold in Reserves2 32+ 16.6 8.9 years billion pounds million ounces • Copper equivalent production of 250 kt per year •
Slide 78: Project Satellite: Overview
Project Satellite: Overview Galore Creek (Cu-Au) Schaft Creek (Cu-Mo-Au) • Five substantial base metal growth options largely invisible to the market. Objective is Mesaba (Cu-Ni-PGM) to surface value over the next 3-5 years • Multiple potential routes to value realization San Nicolás (Cu-Zn) at each
Slide 79: Project Satellite: Five Quality Base Metal Assets
Project Satellite: Five Quality Base Metal Assets With Substantial Resources in Mining Friendly Jurisdictions Galore Creek (50%) • Large high grade copper-gold-silver deposit in developing district • Potential for first quartile C1 costs • Substantial design, engineering and drilling Mesaba (100%) c
Slide 80: Project Satellite: Update
Project Satellite: Update Zafranal • Feasibility and Environmental Impact Assessment Studies underway in support of submitting a permit application in Q3 2018. Substantial field program, including >36,000m drilling, detailed water and environmental studies, and community roundtable discussions, well
Slide 81: Zinc Business Unit & Markets
Teck Zinc Business Unit & Markets
Slide 82: Metal Inventories Close to Historical Lows
Metal Inventories Close to Historical Lows Daily Zinc Prices & Stocks 250¢ 1,800 180¢ 1,800 1,600 160¢ 1,600 200¢ 1,400 140¢ 1,400 1,200 120¢ 1,200 Stocks 150¢ US¢/lb 1,000 100¢ 1,000 800 80¢ 800 100¢ 600 60¢ 600 50¢ 400 40¢ 400 200 20¢ 200 0¢ 0 0¢ 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 83: Available LME Zinc Stocks Almost Exhausted
Available LME Zinc Stocks Almost Exhausted NOLA Cancelled Metal • 88% of LME stocks in New Orleans (NOLA) 900,000 • LME metal is slab zinc 800,000 – 70% of US demand is from steel mills 700,000 demanding customized jumbos 600,000 • Majority of NOLA zinc is: 500,000 – European origin 400,000 – Duty u
Slide 84: Pinch Point Reached in Zinc
Pinch Point Reached in Zinc Zinc Prices vs. Days of Reported Stocks 250¢ 200¢ US₵/lb 150¢ November 22, 2017 100¢ 2013-2017 50¢ 2003-2007 0¢ 0 10 20 30 40 50 60 70 Source: LME, SHFE, Wood Mackenzie Days of stocks Data plotted from 2000 to November 22, 2017 84
Slide 85: Zinc Concentrate Deficit Since 2015
Zinc Concentrate Deficit Since 2015 Mine Production Growth Imported Spot TCs at Historical Lows Insufficient to Balance Market 2,000 250 1,500 thousand tonnes contained 1,000 200 Imported TC, $/dmt 500 150 0 (500) 100 (1,000) (1,500) Projected Deficit 50 (2,000) 2015 2016 2017 2018 2019 2020 0 Other
Slide 86: Planned Zinc Projects Won't Meet Long-Term Demand
Planned Zinc Projects Won’t Meet Long-Term Demand Zinc Mine Production Peaks in 2020 Uncommitted Projects Insufficient 18 Existing and Fully Committed Mines 5 16 4 14 3 Mt Mt 12 2 10 1 8 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2017 2018 2019 2020 2021 2022 2023 2024 2025 Mehdiabad O
Slide 87: China is Important to the Zinc Market
China is Important to the Zinc Market China Has a Significant Impact Globally 8,000 Supply 7,000 • 40% of global mine production 6,000 • 45% of global smelter production 5,000 • 32% of global coated sheet production 4,000 kt ‒ Grew from 20% in 2010 3,000 2,000 Demand 1,000 • 48% of global refined de
Slide 88: Chinese Mined Zinc Production at 5-Year Low
88 Thousands DMT Source: CNIA 100 200 300 400 500 600 0 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 May-14 Oct-14 Monthly Chinese Mined Zinc Production Mar-15 Chinese Mined Zinc Production at 5-Year Low A
Slide 89: Limited Chinese Response to Higher Zinc Prices
Limited Chinese Response to Higher Zinc Prices Environmental/Safety Inspections Estimated Mine Growth Rarely Achieved Constraining Zinc Mine Production 600 1,200 1,000 400 360 350 270 300 800 250 200 200 180 150 600 100 60 0 400 -50 -200 200 0 -400 -600 -630 -800 2013 2014 2015 2016 2017 2018E Jan-A
Slide 90: Chinese Zinc Concentrate Imports Below Previous Highs
Chinese Zinc Concentrate Imports Below Previous Highs Chinese Zinc Concentrate Imports 180 Zinc contained thou Mt 160 140 120 100 80 60 40 20 0 May-13 Nov-13 Jul-13 Sep-13 May-14 Nov-14 Jul-14 Sep-14 May-15 Nov-15 Jan-13 Mar-13 Jul-15 Sep-15 May-16 Nov-16 Jan-14 Mar-14 Jul-16 Sep-16 May-17 Jan-15 Ma
Slide 91: Chinese Zinc Concentrate Supply Declining
Chinese Zinc Concentrate Supply Declining Concentrate Supply Shrinking Spot and Benchmark TCs Tighten 800 $300 Spot 600 $200 kt 400 $100 200 0 $0 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 2011 2012 2013 2014 2015 2016 2017 Mine production Concs imports Annualized Monthly
Slide 92: Zinc Concentrate Stocks at Chinese Ports Near Historical Lows
Zinc Concentrate Stocks at Chinese Ports Near Historical Lows Monthly Stocks of Zinc Concentrate 450 400 Zhanjiang port: Beihai port: 350 Yunyuejiang port 300 Fangcheng port: Thousand Tonnes 250 Nanjing port: 200 Qinzhou port: Huludao port: 150 Dalian port: 100 BaYuQuan port: 50 QHD port: 0 Jinzhou
Slide 93: Chinese Zinc Metal Inventories Also Declining
Chinese Zinc Metal Inventories Also Declining China’s Refined Zinc Inventory 2,000 1,800 1,600 1,400 1,200 1,000 kt 800 600 400 200 0 SRB SHFE Other Warehouse Inventory (excl SHFE) Bonded warehouse inventory Smelter Inventory Consumer Inventory 93 Source: NBS, SHFE, SMM
Slide 94: Chinese Smelter Production Constrained
Chinese Smelter Production Constrained Chinese Smelter Production 600 Zinc contained thou Mt 550 500 450 400 350 300 May-13 Nov-13 Jul-13 Sep-13 May-14 Nov-14 Jul-14 Sep-14 May-15 Nov-15 Jan-13 Mar-13 Jul-15 Sep-15 May-16 Nov-16 Jan-14 Mar-14 Jul-16 Sep-16 May-17 Jan-15 Mar-15 Jul-17 Jan-16 Mar-16 J
Slide 95: Chinese Smelter Constraints Increasing Demand for Imports
Chinese Smelter Constraints Increasing Demand for Imports Smelter Utilization Rates Declining Demand for Zinc Metal Imports Increasing 100 9,000 8,000 80 1,295 1,237 7,000 1,131 1,201 60 754 6,000 kt % 40 5,000 4,000 20 3,000 0 2,000 May-12 Sep-12 May-13 Sep-13 May-14 Sep-14 May-15 Sep-15 May-16 Sep
Slide 96: Chinese Zinc Demand to Remain Strong
Chinese Zinc Demand to Remain Strong China Zinc Demand Galvanized Steel as % Crude Production 20% Other 18% 5% USA 16% 20% Construction 14% 15% Infrastructure 12% 30% 10% Transportation 20% 8% 6% Consumer Goods 4% 30% China 2% 5% 0% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Source: Teck Source
Slide 97: Building a Quality Zinc Inventory
Building a Quality Zinc Inventory Potential New GIANT system 30 30 Contained Zn+Pb (Mt) 25 25 Aktigiruq ExplorationTarget1 Grade Zn + Pb % 20 80-150 Mt 20 16-18% Zn+Pb 15 15 10 10 GIANT ZINC DEPOSITS +6 Mt Zn+Pb 5 5 0 0 Sources: S&P Global Market Intelligence, SNL Metals & Mining Database, Teck Publ
Slide 98: Global Context of Teck's Zinc Resources
Global Context of Teck’s Zinc Resources 30 Qanaiyaq Well Positioned; World Class 25 Red Dog Past Production Aktigiruq Exploration Target1 20 Aqqaluk 80-150 Mt Grade Zn+Pb % Anarraaq 16-18% Zn+Pb 15 Paalaaq Rampura Broken Hill Agucha McArthur River Teena 10 Su-Lik Hermosa 5 GIANT ZINC DEPOSITS (+6 Mt
Slide 99: Very Competitive Zinc Cost Position
Very Competitive Zinc Cost Position Low cost zinc production… …with significant quarterly variation at Red Dog1 0.60 Unit Costs (US$/lb) 0.40 0.20 - Q1 Q2 Q3 Q4 • Seasonality of unit costs largely due to lead sales during the shipping season • Zinc is a by-product credit at Antamina and accounted fo
Slide 100: Red Dog is a Consistent Performer
Red Dog is a Consistent Performer • 2017 guidance updated to 525-550 kt zinc Throughput to Help 5 20 metal contained in concentrate Offset Grade Decline − Mine sequencing changes at Aqqaluk Throughput (Mt) Grade (%) 4 15 − Additional feed of higher grade but complex Qanaiyaq ore 3 10 • Improvement a
Slide 101: Red Dog Seasonality
Red Dog Seasonality Zinc Sales1 • Operates 12 months 40% 34% 31% 30% • Ships ~ 4 months 21% 20% 14% 10% • Shipments to inventory in Canada 0% and Europe; Direct sales to Asia Q1 Q2 Q3 Q4 • ~65% of zinc sales in second half Lead Sales1 of year 60% 55% 50% 44% 40% • ~100% of lead sales in second 30% 2
Slide 102: Stable Operating Costs at Red Dog
Stable Operating Costs at Red Dog US$/lb $0.60 2016 0.22 0.20 0.19 0.45 • Low total cash costs, at $0.40 US$0.45/lb in 2016 0.09 0.26 0.19 $0.20 • C1 cash costs down $0.00 US$0.09/lb in 2016 vs. 2015 Operating Costs Transportation Treatment Costs Charges By-Product Credits C1 Cash Costs Royalty Tota
Slide 103: Rising Zinc Production at Antamina
Rising Zinc Production at Antamina Copper & Zinc Production Quarterly Zinc Production 120 25 100 Production (kt) 20 Production (kt) 80 15 60 40 10 20 5 - - Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 2012 2013 2014 2015 2016 2017 2018-
Slide 104: Driving Continuous Improvement at Trail
Driving Continuous Improvement at Trail • Annual production records set in 2016 Solid Production Performance − Zinc: 312 kt 120 % Compared with 2012 Base − Lead: 99 kt − Silver: 24 Moz 110 • Red Dog is an important long term feed source 100 • Investing in second new acid plant − Improved reliability
Slide 105: Teena: Significant Undeveloped Resource
Teena: Significant Undeveloped Resource In Construction Trail #2 Acid Plant Pre-Sanction Red Dog VIP2 Red Dog Medium-Term Satellite Deposits Growth Options Antamina Brownfield Teena Future Options San Nicolás (Cu-Zn) Cirque Tonnes Zn Pb Zn+Pb Lens (Mt) (%) (%) (%) Main 45 12.0 1.8 13.7 Lower 14 8.2
Slide 106: San Nicolás: Near Term Development Potential
San Nicolás: Near Term Development Potential In Construction Trail #2 Acid Plant Pre-Sanction Red Dog VIP2 Santa Barbara 500 km Red Dog Gulf of Pitarrilla Platosa Mexico Medium-Term Satellite Deposits Growth Options Antamina Brownfield Torreon Velardena Teena Tayahua Nuestra Senora Future Options Sa
Slide 107: Energy Business Unit & Markets
Energy Business Unit & Markets
Slide 108: Energy Market Moving Towards Balance
Energy Market Moving Towards Balance World Liquid Fuels Production & Consumption 100 Forecast • Production cuts & demand growth 96 expected to balance market in 2017 mbpd mbpd 2 92 88 • Price upside limited by US production 84 -3 growth in short term Implied stock change and balance (right axis) • E
Slide 109: Heavy Oil Benchmark Differentials
Heavy Oil Benchmark Differentials WTI - Western Canadian Select Differential Western Canadian Select (WCS) Is The Benchmark Price For Canadian Heavy Oil At Hardisty, Alberta Constrained Sufficient Export • Contract settled monthly as a differential to Nymex WTI $50 Export Capacity* Capacity* • Based
Slide 110: Recent Pipeline Announcements Constructive
Recent Pipeline Announcements Constructive Western Canada Heavy Supply/Demand Balance 5,500 5,500 5,000 5,000 4,500 4,500 Keystone XL 4,000 4,000 Enbridge Line 3 (New) & TMX 3,500 Enbridge Line 3 (Existing) 3,500 3,000 3,000 2,500 2,500 2,000 2,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2
Slide 111: Comprehensive Sales & Logistics Strategy In Place For Blended Bitumen
Comprehensive Sales & Logistics Strategy In Place For Blended Bitumen Teck’s Commercial Activities1 Bitumen production 36 kbpd +Diluent acquisition 11 kbpd =Bitumen blend sales 47 kbpd 111 Secondary Extraction. Source: Fort Hills Energy Limited Partnership, September 2017. 1. Annualized average at f
Slide 112: Lower Carbon Intensity Product
Lower Carbon Intensity Product 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 Basis* 600 Total carbon intensity (kgCO2e per barrel of refined products) Carbon intensity of average 550 barrel refined in the US = 502 500
Slide 113: Alberta Distribution Network Ready to Receive Product
Alberta Distribution Network Ready to Receive Product Fort Hills Mine Terminal Northern Courier • Hot bitumen pipeline East Tank Farm • Capacity: ~40 kbpd • Bitumen blending w/condensate • Capacity: ~58 kbpd Norlite Wood Buffalo • Diluent pipeline • Heavy blend pipeline • Capacity: ~18 kbpd • Capaci
Slide 114: Energy Sales & Logistics Strategy Based On Diverse Market Access
Energy Sales & Logistics Strategy Based On Diverse Market Access & Risk Mitigation Sales Mix Market Profile Long term Pipelines: Monthly basis 10 kbpd Contracted capacity on existing Keystone pipeline contracts at at Hardisty to the US Gulf Coast Hardisty 5 kpbd +12 kbpd Contracted capacity on propo
Teck Resources — 2018 Whistler Institutional Investor Conference on 6ix