VANCOUVER (miningweekly.com) – International diversified electric utility holding company Fortis has agreed to buy Canadian diversified miner Teck Resources' two-thirds interest in the Waneta Dam and related transmission assets in British Columbia for $1.2-billion in cash, the companies announced Friday.
The public companies have agreed that Teck subsidiary Teck Metals will lease Fortis’s two-third interest in the hydroelectricity facility for 20 years to produce electricity for its industrial operations in Trail.
Under the agreement, yearly payments will start at about $75-million and escalate at 2% a year, equivalent to an initial power price of $40/MWh based on 1 880 GWh/y of energy. Teck Metals will have an option to extend the lease for a further ten years at comparable rates.
Teck expects to realise a net book gain of about $800-million on the closing of the transaction. No cash tax will be payable on the proceeds.
Since 2012, Teck has invested about $525-million at its Trail operations in projects to improve efficiency, productivity and environmental performance. Teck has also committed $174-million for a second new acid plant, which is currently under construction and scheduled to be operational in the summer of 2019.
Teck has also identified, and is currently evaluating, a further $150-million in new projects to improve profitability, productivity and environmental performance over the next five years.
Fortis’s local unit FortisBC has long-standing roots in the area that span more than a century with FortisBC employing about 350 workers in the Kootenay region. It operates four of its own generating facilities on the Kootenay river, and currently operates and maintains Waneta and the Waneta expansion.