Teck Resources Earnings: Metallurgical Coal Dominates Again, but the Future Is All About Copper

No-moat Teck’s metallurgical coal business, EVR, accounted for roughly 75% of 2023 fourth-quarter EBITDA and 70% of 2023 adjusted EBITDA of CAD 6.4 billion. The latter was down one-third on last year, driven by lower metallurgical coal and zinc prices and higher unit cash costs, partially offset by increased metallurgical coal sales volumes. However, after selling a minority stake in EVR in January 2024, the sale of its remaining 77% stake to no-moat Glencore means Teck will mainly be a copper business along with some zinc. The sale is likely to close in the third quarter of 2024. We forecast the copper division to account for roughly 85% of EBITDA in 2025. Once its new 60%-owned Quebrada Blanca 2 mine in Chile ramps up to full production of around 180,000 metric tons (Teck’s share), likely in 2025, QB2 will drive an increase in Teck’s attributable copper production by approximately 75% to about 470,000 metric tons.