Winning Teck’s Copper Mine Prize May Come Down to More Than Cash – by Danielle Bochove (Bloomberg – November 19, 2018)

With the second round of bids to secure a piece of Teck Resources Ltd.’s $4.7 billion copper expansion expected in the coming weeks, victory may come down to more than price.

Teck, which owns 90 percent of Quebrada Blanca in northern Chile, would like to sell a 30 to 40 percent stake to an outside investor. With the copper market widely forecast to go into deficit as soon as this year and the number of attractive new mine projects limited worldwide, interest in the sale is expected to be high, especially among Asian trading houses and existing mining companies.

“You either want someone with mining experience or potential off-take agreements,” Jeremy Sussman, an analyst at Clarksons Platou Securities Inc., said in a phone interview. “I think the good news for Teck is they’ll have both of those types heavily involved in bidding.”

Key Rationale

The expansion, known as QB2, in northern Chile is the biggest project on Teck’s plate now that its Fort Hills oil-sands project is nearing full production. Extracting top dollar would help Canada’s largest consolidated miner convince investors of the asset’s value, a key rationale behind selling a stake in a prime resource that Chief Executive Officer Don Lindsay has already signaled will be heading for at least one more expansion, and possibly even a ‘QB4.’

“It’s over a 100-year resource in a great country,” Lindsay said in a recent interview. “Right now, we think QB2 is the best thing that we can do to build the company for the long-term.”

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