Canada’s largest diversified miner, Teck Resources, (TSX: TECK.A; TECK.B, NYSE: TECK) will power its Quebrada Blanca phase 2 (QB2) copper project in Chile with 100% renewable energy sources from 2025 onwards.
AES Corp. (NYSE: AES) has agreed to supply the Canadian miner with 1,069 gigawatt hours per year of energy from renewable sources for 17 years. The clean power purchase agreement with a local AES subsidiary builds on the February 2020 QB2 renewable energy announcement to fully power QB2 with clean energy starting in 2025.
AES Andes uses its growing renewable portfolio that includes wind, solar, hydro and battery plants to supply clean energy to QB2. With its “Greentegra” strategy, AES Andes has already signed more than 6,500 GWh per year of renewable agreements with mining companies in Chile.
Teck estimates the clean energy contract will mitigate about 1.6 million tonnes of annual greenhouse gas emissions, equivalent to removing over 340,000 combustion engine passenger vehicles from the road. That is the equivalent of more than the annual emissions of all the cars in Vancouver, where Teck is headquartered, or two and a half times the number of vehicles in the Tarapacá Region of Chile, where QB2 is located.
The terms of the agreement are confidential.
However, it will enable Teck to achieve its goal of net-zero scope two emissions (emissions associated with purchasing power) by 2025, making it one of the first companies in the mining industry to achieve this target. It also contributes to Teck’s 2030 goal of reducing the carbon intensity of operations by 33% and ultimately becoming a net-zero operator by 2050. Teck previously announced switching to 100% renewable power for its Carmen de Andacollo operation in Chile.
In October, Teck announced another budget blowout for the QB2 project, this time adding a minimum of $500 million to bring the total capital cost to between $7.4 billion and $7.8 billion, up from a July 2022 guidance of $6.9 billion to $7 billion, and an earlier estimate of $4.7 billion.
QB2, a critical growth project for Teck, has faced several delays. Initially, it was expected to begin production in 2021. The current timeline points to first copper by the end of the year, but the company has said the start could be delayed into January 2023 if construction delays persist.
Teck’s most traded equity, TECK.B, is up more than 34% over the past 12 months at C$45.63, having tested respective highs and lows of C$57.50 and C$32.05. The company has a market cap of C$23.4 billion ($17.5bn).