Teck Resources (TSX:TECK.A | TECK.B)(NYSE:TCK) has officially withdrawn its application to build the C$20.6-billion ($15.7bn) Frontier oilsands mine, just days before the Canadian government was slated to make a decision on the 260,000-barrel-per-day project in northern Alberta.
As a result, Canada’s largest diversified miner will take a C$1.13-billion ($852.12m) writedown on the project, which it said would have created 7,000 construction jobs, 2,500 operating jobs, and brought in more than C$70 billion in government revenue.
The oilsands operation would have also generated about 4.1 million tonnes of carbon dioxide a year, making it harder for Canada to meet its greenhouse gas reduction targets.
“We are disappointed to have arrived at this point,” president and chief executive, Don Lindsay, wrote in a letter addressed to federal Environment Minister Jonathan Wilkinson.
“Teck put forward a socially and environmentally responsible project that (…) has unprecedented support from Indigenous communities and was deemed to be in the public interest by a joint federal-provincial review panel following weeks of public hearings and a lengthy regulatory process.”
Lindsay noted global capital markets were changing rapidly, with investors and customers increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate change, in order to produce the cleanest possible products.
“This does not yet exist here today,” he wrote. “It is now evident that there is no constructive path forward for the project.”
The missive was posted on Teck’s website Sunday night, just a few hours after the Athabasca Chipewyan First Nation (ACFN) had reached an agreement with the province of Alberta on several environmental areas of concern.
The deal meant that all 14 affected First Nations and Métis organizations in the area had granted their support for the project, first proposed in 2011.
Teck’s unexpected decision frees Ottawa from issuing a ruling on a discussion that has deeply divided Prime Minister Justin Trudeau’s cabinet.
Rejecting the mine would have sparked widespread anger in Alberta for losing a potential massive source of jobs and investment. Approving it would have alienated Trudeau’s environmentalist base and commitment to balance developing Canada’s resources with fighting climate change.
Alberta Premier Jason Kenney blamed the decision on “federal inaction” triggered by ongoing blockades to rail lines and other infrastructure in opposition to the Coastal GasLink pipeline in northern British Columbia.
“Teck’s decision is disappointing,” Kenney said in a news release, “but in light of the events of the past few weeks it is not surprising.“It is what happens when governments lack the courage to defend the interests of Canadians in the face of a militant minority.”
Even if approved, the project would have still faced hurdles as it needed a related pipeline, a strategic partner and favourable oil prices. About 20 other oilsands projects have been given the green light but remain undeveloped for economic reasons, say analysts.
“Teck’s decision underscores our view of no significant near-term rebound in oil-related investments in Alberta,” Adam Hardi, Canada-based analyst at Moody’s, said in an emailed note.
“However, because of uncertainty around project approval, our forecasts for the province have not included incremental revenue and economic growth from the project, and therefore the withdrawal does not alter our view of the fiscal and economic trajectory of the province,” Hardi noted.
Alberta estimates the oilsands industry emits 67-68 megatonnes (MT) of greenhouse gases, although Ottawa uses a higher figure. The former Alberta government legislated a 100 MT cap, but never enforced it.