Name of the Project
Quebrada Blanca Phase 2 (QB2) copper project.

Location
Tarapacá region, in northern Chile.

Project Owner/s
Teck Resources has announced that it will proceed with the QB2 project and that Japan’s Sumitomo will be its 30% project partner.

Sumitomo was among the companies mooted as potential partners in the project, the others being Rio Tinto and Mitsubishi.

Sumitomo Metal Mining Co and Sumitomo Corporation will pay $1.2-billion for a 30% indirect interest in Compañia Minera Teck Quebrada Blanca, which owns the QB2 project, $800-million of which is an earn-in contribution and the balance a matching contribution.

The companies have also agreed to make supplemental payments to Teck.

Following the transaction, Teck will own 60% of QB2, Sumitomo 30% and Chilean State miner Enami 10%. Bringing on board Sumitomo significantly derisked Teck’s investment in the project.

The combination of proceeds from the transaction and the proposed project financing has reduced Teck’s share of equity contributions towards the unescalated $4.739-billion estimated capital cost of the QB2 project to $693-million, with Teck’s first contributions not required until late 2020.

The Canadian major has said that the board will consider an additional return of capital to shareholders following closing of the transaction, considering the significant reduction in QB2 funding required.

Project Description
QB2 is one of the world’s largest undeveloped copper resources.

The project proposes to develop the hypogene resource at Quebrada Blanca to increase yearly copper production and extend the mine’s production life by more than 25 years.

The project is expected to include the construction of a 140 000 t/d concentrator, tailings storage facility, concentrate pipeline, water supply pipeline, desalination plant, concentrate filtration plant and port to produce copper and molybdenum concentrates.

QB2 is expected to produce 316 400 t/y of copper equivalent for the first five years of mine life.

Potential Job Creation
About 15 000 people are working on the QB2 project with 2 000 ongoing direct and indirect jobs during operation.

Net Present Value/Internal Rate of Return
Not stated.

Value
$5.2-billion.

Duration
First production is expected in mid-2022.

Latest Developments
Construction activities at the QB2 copper project remain suspended, in line with the Chilean government’s efforts to curb the spread of coronavirus.

The project was initially on a two-week suspension, however, construction activities are still on hold and Teck Resources has said it cannot say for certain when its workforce will be able to return to site.

Every extra week that the project is on hold will add millions of dollars to its cost and will delay the completion of the copper mine by several more weeks.

At suspension on March 18, 2020, overall progress on the project had reached 29%.

The new capital estimate is based on a detailed review of all aspects of the QB2 project.

When the project was sanctioned in December 2018, the estimated escalated capital cost of the project was $5.2-billion.  The updated estimate remains at $5.2-billion, and the go forward funding requirement from April 1, 2020, is estimated at $3.9-billion, assuming a Chilean peso/dollar rate of 775 over the remainder of the project. After project financing and partner contributions, Teck’s remaining required cash contribution toward project capital is estimated at $880-million.

The revised estimate is based on a schedule that contemplates first production by the second quarter of 2022, and includes a contingency of $400-million. At the current spot exchange rate there will be an additional benefit of about $240-million for the project. The estimate and schedule do not reflect the impact of the temporary suspension on project construction activities announced on March 18, 2020 in response to the Covid-19 pandemic.

Key Contracts and Suppliers
None stated.

Contact Details for Project Information
Teck Resources senior communications specialist Chris Stannell, tel +1604699 4368 or email Chris.Stannell@teck.com.
Teck Resources investor relations, tel +1604699 4257 or email investors@teck.com.