Teck flags Chile cost pressure amid fuel squeeze

Teck Resources (TSX: TECK.A TECK.B)(NYSE: TECK) warned rising diesel and freight costs could increase expenses at its Chilean copper operations through the second quarter as global supply tightens.

The Canadian miner said its Chile operations, which depend on imported diesel, face higher fuel and shipping costs following supply disruptions tied to the Strait of Hormuz, though it does not expect significant shortages.

“We anticipate higher freight costs through Q2 2026, plus a flow-through increase in explosives costs, and we continue to actively monitor the situation for changes that could further disrupt markets, such as product export bans from key supply countries,” the company said.

The warning underscores broader supply-chain strain and the risk of government intervention tightening metals markets, potentially spurring renewed corporate and strategic stockpiling of copper and zinc as demand strengthens.

The cost warning came alongside a strong first quarter that beat analyst expectations, driven by higher copper prices, record sales and increased output at its flagship Quebrada Blanca (QB) mine in northern Chile. 

The newly expanded mine’s production rose 31.2% to 55,500 tonnes, up from 42,300 tonnes a year earlier when the operation faced an extended shutdown. The results were in line with the prior quarter despite a maintenance outage early in the year. 

QB remains central to Teck’s planned tie-up with Anglo American (LON: AAL), where it is expected to integrate with the nearby Collahuasi operation to form a larger complex capable of adding 175,000 tonnes annually from 2030 to 2049.

Total copper production reached 140,000 tonnes in the first quarter compared with 106,100 tonnes in the same period last year. The company continues to target output of 455,000 to 530,000 tonnes in 2026 and 505,000 to 580,000 tonnes in 2027, compared with 453,500 tonnes in 2025, with QB expected to contribute 200,000 to 235,000 tonnes next year.

Teck and its peers stand to benefit from an anticipated 50% surge in global copper demand by 2040, driven by rising power needs from data centres, artificial intelligence and defence, alongside broader investment in power grids and electronics infrastructure.

Zinc in concentrate production fell to 120,300 tonnes, down 17,000 tonnes from a year earlier.

Teck reported adjusted earnings of C$1.75 per share for the quarter, beating analyst expectations of C$1.15, as average realized copper prices rose to $5.83 per pound from $4.24 a year earlier. Benchmark copper prices climbed about 36.7% year over year in the first quarter and hit record highs in late January amid tight supply, low inventories and strong demand.

Teck’s US-traded shares were up 3.3% in pre-market trading at $61.2 each, giving the miner a market capitalization of $29 billion.