Diversified Canadian miner Teck Resources is rebalancing its portfolio towards copper – an essential metal for low-carbon technology and infrastructure – and is evaluating the longer-term fit of its oil sands asset.
In its latest climate change report, senior VP for sustainability and external affairs Marcia Smith states that miners have to play an active role in contributing to solving the challenge of climate change.
Not only is Teck working to reduce the carbon footprint of its operations, it is also rebalancing its portfolio towards copper, she adds.
Teck is adjusting its portfolio to take advantage of copper demand growth. Last year, the miner produced 276 000 t of copper, accounting for 27% of its group revenue. Copper production will double when its QB2 project, in Chile, enters production next year.
Regarding its coking coal operations and oil sands asset, Teck states that it is reducing the revenue from fossil fuels as a proportion of its total business. However, the miner will continue to produce the high-quality steelmaking coal required for the low-carbon transition.
It concedes that abatement technology in the steelmaking sector is required to reduce emissions in the steel industry - including Teck's Scope 3 emissions - alongside scrap recycling and the use of hydrogen-based steelmaking.
Regarding the Fort Hills oil sands asset, in Alberta, Teck states that it shares the widely held view that demand for oil will plateau and decline as the world pushes to decarbonise, but that oil is still forecast to play an integral role in the global economy for some time to come.
“Fort Hills is well positioned to consistently deliver the oil that the world will need in a responsible, low-carbon manner with a lower carbon intensity than 50% of the oil currently refined in North America,” the report notes.
Consequently, in the short term, Teck’s strategic focus for Fort Hills is on supporting the ramp-up to full production, and on capital efficiency and operational excellence to reduce operating costs while operating safely and sustainably. At full production, Fort Hills is capable of generating strong earnings over a range of oil prices.
Despite the high initial capital associated with the initial years of an oil sands mining operation, Fort Hills should be competitive with other oil production in North America over its life including in situ, offshore and tight oil, given its lower resource decline rates, sustaining costs and reservoir risks, as well as a high recovery factor.
In light of the longer-term risks to the oil sands business generally, Teck states that its board continues to monitor the situation closely, and is evaluating the fit of oil sands assets within its portfolio over the longer term.
In 2020, the miner set a long-term goal to become a carbon-neutral operator by 2050, with a shorter-term goal to reduce the carbon intensity of its operations by 33% by 2030. To realise this vision, the company set an initial roadmap with corresponding 2025 and 2030 goals, including procuring 50% of its electricity demand in Chile from clean energy by 2025 and 100% by 2030.
Teck notes that it is among the world’s lowest carbon intensity producers for copper, steelmaking coal and zinc and lead production and has taken steps to further reduce carbon emissions. In 2020, the company switched to 100% renewable power at its Carmen de Andacolla operation and entered into a power purchase agreement to procure over 50% of operational power needs at QB2 from renewable sources. In total, these will avoid about one-million tonnes a year of greenhouse-gas emissions.