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.
All-in Sustaining Costs/All-in Costs
The project has an all-in sustaining cost of $1.38/lb of copper.
Net Present Value/Internal Rate of Return
Not stated.
Value
$4.8-billion.
Duration
Not stated.
Latest Developments
Teck Resources has suspended construction activities at the $4.8-billion QB2 project to support Chile’s efforts to limit the transmission of Covid-19.
The suspension will be for an initial two weeks, at which point Teck will reassess the status of the project.
Prior to the global outbreak of Covid-19, Teck already warned that there could be delays in the schedule of QB2, owing to permitting and social unrest.
The suspension of construction activities is effective immediately, and the workforce will demobilise in due course.
Teck has stressed that there have been no confirmed cases of Covid-19 associated with QB2 employees or contractors to date.
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.