Teck Resources (TSX:TECK.A | TECK.B) (NYSE: TECK), Canada’s largest diversified miner, said this week that while construction of its massive Quebrada Blanca Phase 2 (QB2) expansion project in Chile is two-thirds complete, costs are anticipated to be up to 5% higher than the original $5.3 billion estimate.
Delivering results for the third-quarter, in which Teck recorded an $816 million profit, the Vancouver-based miner said despite challenges faced over the past year, production at QB2 is expected to begin in the second half of 2022.
Teck’s chief executive Don Lindsay cited challenges with “port offshore” and tailings facility construction as the main causes of the cost increase, noting the company will issue updated capital cost guidance on the project in February 2022, when posting Q4 results.
Construction at QB2, slated to produce 300,000 tonnes of copper equivalent per year for the first five years of its life, was suspended in March 2020 when the first cases of covid-19 appeared in the South American nation. The miner originally expected the work halt to last for two weeks, but as the pandemic overtook much of Chile, it was forced to delay the project through August.
In a call with analysts, Lindsay said QB2 remained a key project, as it is expected to double Teck’s copper production by 2023. It is expected to extend the ageing deposit’s life by 28 years and substantially boost production to 300,000 tonnes of copper a year from 23,400 tonnes in 2017.
The Canadian mining giant is already studying a Phase 3 for the mine, which will double its capacity to 600,000 tonnes of copper a year. The potential extension will make the mine Chile’s second-largest copper operation, after Escondida. It will also situate Quebrada Blanca among the world’s top five copper mines.
In terms of costs, Phase 3 would need a $5 billion investment, as it would have to include the installation of a new concentrator.
Copper is one of four business units at Teck, besides steelmaking coal, oil and zinc, and is considered a company priority.
Lindsay and members of the senior management team are hosting a virtual site tour of QB2 on November 1, from 1:00 p.m. to 2:00 p.m. Eastern Time.