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| Teck Resources Quebrada Blanca copper mine |
Operational setbacks at Quebrada Blanca delay Teck’s energy transition goals
Teck Resources has paused major expansion projects to resolve critical issues at its Quebrada Blanca copper mine in Chile. This move underscores growing concerns over project execution risks in Latin America's copper sector. The delay impacts Teck's broader strategy to reposition as a leader in energy transition metals.
Tailings Storage Delays Strain Output Targets
The centerpiece of Teck’s operational review is QB’s tailings facility, where poor drainage has limited production. The mine’s recent expansion came $4 billion over budget and years behind schedule. In July, CEO Jonathan Price slashed production guidance due to these persistent issues. As a result, Teck plans mechanical dam elevation, new rock benches, and accelerated drainage to restore output stability.
Analysts at BMO Capital Markets called the review “a necessary step,” anticipating possible management changes and further revisions to output forecasts. Uncertainty may persist until the review concludes in October. However, BMO expects the reset will enhance investor confidence and improve short-term free cash flow by deferring non-essential growth spending.
Growth Deferral Affects Strategic Projects
Teck has delayed approval of large-scale projects until QB stabilizes. However, sanctioned projects like the $2.4 billion Highland Valley expansion in Canada are expected to continue. Meanwhile, the future of unsanctioned assets—San Nicolás in Mexico and Zafranal in Peru—remains unclear. The timing and scope of near-term capital expenditures for these projects could shift significantly.
This strategic pause marks a shift in Teck’s capital discipline under current market conditions. The company also announced leadership changes, including the retirement of COO Shehzad Bharmal and the appointment of a new senior advisor to guide operational reforms.
Copper Output Cuts Challenge Energy Transition Plans
Quebrada Blanca is vital to Teck’s goal of producing 800,000 tonnes of copper annually by 2030, following the divestment of its coal assets. However, production setbacks are now altering those ambitions. Teck reduced its 2025 forecast for QB to 210,000–230,000 tonnes, down from 230,000–270,000 tonnes. Full-year 2024 guidance was also cut to 470,000–525,000 tonnes.
The company holds a 60% stake in QB, with Japan’s Sumitomo Corporation owning 30% and Chile’s state-owned Codelco holding the remaining 10%. Teck is also exploring potential synergies with Collahuasi, a nearby copper mine operated by Anglo American and Glencore.
ScrapInsight Commentary
Teck’s operational pause at QB reflects the growing technical and regulatory complexities of high-altitude copper mining. While short-term production suffers, the move enhances long-term project discipline. Copper market participants should monitor Teck’s Q3 results closely for revised guidance and clues on capital allocation strategies. In a tightening market for energy transition metals, execution risk is now as critical as resource size.
