QB2 delays won't halt Teck's expansion plans for Chile

Delays in Vancouver-based Teck Resources' phase II expansion of its Quebrada Blanca copper mine (QB2) in Chile's Tarapacá region have led the firm to reduce its copper production guidance for this year and raise its estimated investment in the project, but the company remains steadfast on its expansion plans.

Adjustments to Quebrada Blanca's concentrate filtration plant and in the pipes to transport the mined material pushed Teck to update the mine's production guidance for this year to 80,000t-100,000t copper equivalent from the previous 150,000t-180,000t, it confirmed in its 2Q23 report.

The delay and the change in plans, along with foreign exchange impacts, meant that Teck increased its capital cost guidance for QB2, "which could increase total capital costs for the project to US$8.0 to $8.2bn" from US$7.75bn, it said.

“We had to adjust the start-up of all the equipment … but everything is working well now thanks to the changes made in the second quarter,” Harry Conger, president and COO, said in a call with investors on Thursday.

Production guidance for the mine for 2024-26 is unchanged at 285,000t-315,000t of copper equivalent, as is its strategy to double production and expand the useful life of this operation, which is estimated at 27 years.

In 2Q23, QB2 made its first sale of copper concentrate, after having achieved first production in March, and it is currently in the process of commissioning until it reaches maximum capacity around the end of the year.

The Vancouver-based miner also aims to continue expanding this operation. It plans to increase milling capacity at QB2 and raise the ore processing rate with a focus on producing more copper and molybdenum concentrate. The feasibility study for this will be concluded in the second half of this year, while progress is being made in obtaining the corresponding permits, according to the company.

With this project, Teck would add another 140,000t/y of copper equivalent to output during the first five years.

Due to the changes in the scaling of QB2, the company does not expect to report a significant profit this quarter and it also expects an increase in operating costs.

In this regard, Teck highlighted the tax stability agreements it has with the Chilean government for its Quebrada Blanca and Carmen de Andacollo operations, which allow it to remain subject to the specific tax regime for mining until 2037 and 2027, respectively. This exempts it from having to comply with the new mining royalty tax scheme that will go into force in 2024 for large-scale copper mining.

Teck aims to become one of the top five copper producers globally.