Mining Conference. December 2, 2014

Transcription

1 Mining Conference December 2, 2014

2 Forward Looking Information Both these slides and the accompanying oral presentation contain certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario) and comparable legislation in other provinces. Forward-looking statements can be identified by the use of words such as plans, expects or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate, or believes, or variation of such words and phrases or state that certain actions, events or results may, could, should, would, might or will be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Teck to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements include statements relating to management s expectations with respect to our diversification and the benefits of diversification, production, costs and sales targets and guidance, mine lives, costs for our projects, timing of production at our Pend Oreille and Fort Hills projects, anticipated economic benefits of our Pend Oreille and Fort Hills projects, including, but not limited, free cash flow, the anticipated results of our cost reduction program, dividend policy, our investment rating, capital expenditure guidance, demand and market outlook for commodities. These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially. These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general business and economic conditions, interest rates, the supply and demand for, inventories of, and the level and volatility of prices of coal, zinc, copper and gold and other primary metals and minerals produced by Teck as well as steel, oil, natural gas and petroleum, the outcome of engineering studies currently underway in connection with Teck s development projects, the timing of receipt of regulatory and governmental approvals for Teck s development projects and other operations, receipt of permits to mine, Teck s costs of production and production and productivity levels, as well as those of its competitors, power prices, market competition, the accuracy of Teck s reserve and resource estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, the assumption that our board will approve dividends, the resolution of environmental and other proceedings, our ongoing relations with our employees and partners and joint venturers, the availability of financing for development projects and the future operational and financial performance of the company generally. The foregoing list of assumptions is not exhaustive. 2

3 Forward Looking Information Events or circumstances could cause actual results to differ materially. Factors that may cause actual results to vary include, but are not limited to: unanticipated developments in business and economic conditions in the principal markets for Teck s products or in the supply, demand, and prices for metals and other commodities to be produced, changes in power prices, changes in interest or currency exchange rates, inaccurate geological or metallurgical assumptions (including with respect to the size, grade and recoverability of mineral or oil and gas reserves and resources), changes in taxation laws or tax authority assessing practices, legal disputes or unanticipated outcomes of legal proceedings, unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of permits or government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), decisions made by our partners or co-venturers, political events, social unrest, lack of available financing for Teck or its partners or co-venturers, and changes in general economic conditions or conditions in the financial markets. Our Fort Hills project is not controlled by us and construction, sanction and production schedules may be adjusted by our partners. Credit agencies set our credit rating. Certain of these risks are described in more detail in Teck s annual information form available at and in public filings with the SEC at Teck does not assume the obligation to revise or update these forwardlooking statements after the date of this document or to revise them to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws. 3

4 Agenda Teck Overview Commodity Market Observations Teck Update 4

5 About Us Canada s Largest Diversified Natural Resources Company # 1 Producer of steelmaking coal in North America # 2 Seaborne exporter of steelmaking coal globally Top ten copper miner in the Americas #3 zinc miner in the world Building an energy business Implementing a comprehensive Sustainability Strategy Safety is our core value 5

6 Attractive Portfolio Of Long-Life Assets & Resources Focused on the Americas & Low Risk, Stable Jurisdictions Strong Resource Position With Sustainable Long-Life Assets Coal Resources >100 years Copper Resources Zinc Resources Energy Resources >30 years >20 years > 50 years Producing through multiple price cycles after capital is recovered, enhancing returns 6

7 The Value of Our Diversified Business Model Coal Cash Operating Profit 2014E Base Metals Copper Zinc Teck has good leverage to stronger copper and zinc markets Copper Zinc Base Metals EBITDA Sensitivity $7M per $0.01 $10M per $0.01 Base metals are expected to generate around two-thirds of cash operating profit in Source: Analysts Consensus Estimates

8 Agenda Teck Overview Commodity Market Observations Teck Update 8

9 China s Growth Is Strong In Absolute Terms In absolute terms, China s GDP growth is ~50% greater than 10 years ago Rmb (billions) 3,500 3,000 2,500 2,000 1,500 1,000 Real GDP Growth % = RMB2.84trn % = RMB2.95trn 14% 12% 10% 8% 6% 4% F Increment of GDP, Rmb bn (lhs) GDP real growth (rhs) 2% 0% Lower GDP growth rate on a higher base = strong absolute growth 9 Source: NBS&CEIC

10 Further Cuts Needed in the Steelmaking Coal Market Seaborne Metallurgical Coal Margin Curve at Spot Price of US$115/t ~30 Mt of production cuts announced - Lag to full implementation - Market imbalance ~10 Mt Teck Margin curve shows around one third of seaborne met coal is operating at negative margin 1 - Implies further cuts are warranted Market balance dependent on additional production cuts Brackets indicate producers closed or still supplying but due to close or deplete inventory 10 Source: Wood Mackenzie, Platts, TEX Report, AME, company & news reports and Teck Resources estimates 1. On an operating basis, excluding sustaining capital costs

11 Growing Steelmaking Coal Imports to China China Rolling 12-Month Coking Coal Imports Mt Average Wood Mackenzie and CRU 90~100Mt in 2018 Seaborne Mongolia Average forecast (Wood Mackenzie & CRU) 11 Source: McCloskey, Wood Mackenzie, CRU

12 Copper Surplus Shrinking; Deficit Beyond 2016 Reported Metal Stocks 1 (LME, SHFE, Producer, Consumer & Merchant) 2, Quantum of the Copper Surplus Forecasts Continually Shrinking , kt 1, kt , (200) (400) Risk to downside 5 (600) F 15F 16F 17F Reported Stocks Days of Consumption 0 (800) f 15 f 16 f 17 f WoodMac CRU Macquarie G.Sachs Source: ILZSG, LME, SHFE & Teck Resources Limited 2. Source: Wood Mackenzie, CRU, Macquarie, Goldman Sachs. The view portrayed in this chart is the net market balance of the concentrate balance and the metal balance.

13 Zinc Deficit Developing; Inventory Declining Reported Metal Stocks 1 (LME, SHFE, Producer, Consumer & Merchant) 2, Developing Deficit is A Consensus View 2 2, kt 1, kt 0 (200) 1, (400) 20 (600) (800) (1,000) F 15F 16F 17F Reported Stocks Days of Consumption 0 (1,200) f 15 f 16 f 17 f WoodMac CRU Macquarie G. Sachs Source: ILZSG, LME, SHFE & Teck Resources Limited 2. Source: Wood Mackenzie, CRU, Macquarie, Goldman Sachs. The view portrayed in this chart is the net market balance of the concentrate balance and the metal balance.

14 Agenda Teck Overview Commodity Market Observations Teck Update 14

15 Continuing to Execute Well Updated 2014 guidance ranges - Higher zinc mine production - Higher mid-points for coal & copper production - Lower mid-points for coal & copper costs Planned 2014 capex reduced by ~$375M Cost reduction program continuing to deliver results Solid financial position with ~$5B in liquidity 15

16 Declining Steelmaking Coal Cash Costs from E Steelmaking Coal All-In Site Cost Profile C$/tonne Updated Guidance - Mid Operating Capitalized Stripping With our intense focus on cost reduction, site costs are expected to be down ~9% over the past two years ( E) 16

17 Copper Costs Declining Copper Cash Costs* $2.25 $2.00 US$/lb $1.75 $1.50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q By-product credits currently reduce costs by ~$0.30 per pound 17 * Before by-product credits

18 Disciplined Project Execution Highland Valley Mill Optimization Program Throughput has exceeded design capacity of 130 ktpd by ~10 kptd on average since commissioning in Q Trail acid plant replacement Completed in May 2014; by June was operating at design rates Highland Valley Mill Optimization Project 18

19 Increasing Zinc Exposure Pend Oreille Restart Low capital / high return project - Capex: US$41M - ROI >30% assuming zinc price of $1/lb - Payback period: ~ 2.5 years Corporate synergies enhance project economics - e.g. transportation, germanium, iron balance, t/c differential Expect first ore in December 2014 Annual production ~44 ktpa 10 km 19

20 Minimizing Execution Risk In The Fort Hills Project Suncor has completed 4 projects of ~$20 billion over last 5 years, all at or under budget Cost-driven schedule - Cheaper rather than sooner Disciplined engineering approach Shovel Ready Global sourcing of engineering and module fabrication Balanced manpower profile Benefiting from Suncor s operational and project development experience 20

21 Fort Hills Economics Robust Potential Contribution from Fort Hills at US$100 WTI* Fort Hills Free Cash Flow Yield 1 Sensitivity to WTI Price Teck s share of annual production (36,000 bpd) Estimated netback Estimated operating margin Alberta oil royalty Phase 1 (prior to capital recovery) Estimated net margin Annual pre-tax cash flow 13 Mbpa ~$65/bbl ~$40/bbl ~$5/bbl ~$35/bbl ~$455 M 40% 35% 30% 25% 20% 15% 10% 5% Teck s share of go-forward capex ~$2,940 M Free cash flow yield 1 ~15% 0% WTI Price US$/bbl The Fort Hills project is expected to have significant free cash flow yield at a range of WTI prices 21 Source: Teck Resources Limited 1. Pre-tax free cash flow yield during capital recovery period. * Estimates are based on $1.05 CAD / USD example exchange rate, expected bitumen netbacks, and operating costs of C$25-28 per barrel, including sustaining capital of C$3-5 per barrel. Gross revenue is project revenue based on the expected product transfer price at point of transfer from project facilities. Go-forward capital is the go-forward amount from the date of the Fort Hills sanction decision (October 30, 2013), denominated in Canadian dollars and on a fully-escalated basis.

22 Strong Balance Sheet* Investment Grade Credit Rating of Mid-BBB US$M $3,000 $2,000 $1,000 ~US$1.7B* Liquidity of ~$5 Billion Weighted average maturity ~15 years Weighted average coupon (interest rate) 4.8% Note maturities average <US$600M US$300M of notes due to end of 2016 Unused US$3B line of credit $0 Cash position Debt Maturity 22 * All figures as at September 30, 2014

23 Returning Cash To Shareholders Aim to pay a sustainable dividend that grows commensurate with growth in earnings and cash flow - Current dividend: semi-annual payment $0.45; annualized $0.90 Normal Course Issuer Bid in place for up to 20M shares $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $- Annualized Dividend Payout Dividend paid Dividend announced 23

24 Summary Good leverage to strong zinc & copper markets Attractive portfolio of long-life assets & resources Focus on cost reduction delivering results Prudent capital management Cash being returned to shareholders 24

25 Mining Conference December 2, 2014

26 Additional Information

27 Diversified Global Customer Base China ~25% North America ~20% Europe ~17% Asia excl. China ~35% Latin America ~3% Diversified portfolio of key commodities Coking coal Zinc Moly Germanium Copper Lead Silver Indium 27 Source: Teck Resources Limited; 2013 revenue

28 Leverage to Strong Commodities Gross Profit (Before Depreciation & Amortization); 2013 By Business Unit Zinc 15% Copper 38% Coal Copper Production Guidance 2014 (Mid-Pt) Change Profit EBITDA 26.5 Mt 330 kt Sensitivities 1 US$1 /tonne US$0.01 /lb $19 M / $1 $29 M / $1 $5 M / $.01 $7 M / $.01 Steelmaking Coal 47% Zinc kt US$0.01 /lb $7 M / $.01 $10 M / $.01 $C/$US C$0.01 $40 M / $.01 $62 M / $.01 Exposure to an attractive basket of commodities The effect on our profit attributable to shareholders and EBITDA of commodity price and exchange rate movements varies from quarter to quarter depending on sales volumes. 2. Zinc includes approximately 285,000 tonnes of refined zinc and 607,500 tonnes of zinc contained in concentrates.

29 Diversified Portfolio Reduces Margin Volatility Stable Margins Through Diversification* 100% Gross margin before depreciation and pricing adjustments 75% 50% 25% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q * 2014 Copper Coal Zinc Overall 29 * 2013 reflects deferred stripping accounting change, Q restated for deferred stripping and pension IFRS adjustments

30 2014 Outlook UPDATED (October 29, 2014) Production & Site Cost Guidance Guidance Steelmaking Coal Coal production Mt Coal site costs C$52-55 /t Coal transportation costs C$37-39 /t Coal costs combined* US$79-84 /t Copper Copper production kt Copper cash unit costs (net of by-product margins) US$ /lb Zinc Zinc in concentrate production kt Refined zinc production kt Including co-product zinc production from our copper business unit. * At current exchange rates

31 2014 Outlook UPDATED (October 29, 2014) Capital Expenditures Guidance START OF YEAR GUIDANCE ($M) Sustaining Major Enhancement New Mine Development* Capitalized Stripping Copper Coal Zinc Energy Corporate Total , ,605 Total CURRENT GUIDANCE ($M) Major New Mine Capitalized Sustaining Enhancement Development* Stripping Total Copper Coal Zinc Energy Corporate Total , Planned 2014 capex reduced by ~$375M

32 Investment Grade Credit Rating Our long-term targets are consistent with maintaining mid-bbb credit rating Ratios may vary from targets periodically, reflecting commodity price cycles and corporate activity Our debt to debt+equity target is more conservative than our financial covenant - Bank credit facility requires <50% Ratio Long-Term Target Debt to Debt+Equity ~30% Debt to EBITDA EBITDA to Interest ~2.5x ~6.0x Committed to maintaining investment grade credit rating 32

33 Our Sustainability Strategy In 2011, we reached an important milestone by launching a sustainability strategy that guides our work Our Six Focus Areas: 1. Community 2. Our People 3. Water 4. Biodiversity 5. Energy 6. Materials Stewardship These focus areas represent the most significant sustainability challenges and opportunities facing our company Set short-term (2015) goals, and notably set a long-term vision to Our HSEC Management system incorporates global external standards and provides a framework for implementing sustainability at Teck 33

34 Sustainability Leadership Best 50 Corporate Citizens in Canada 2014 One of top 100 most sustainable companies in the world and one of Canada s most sustainable companies On the Dow Jones Sustainability World Index five years in a row Top 50 Socially Responsible Corporations in Canada Received the PDAC 2014 Environmental and Social Responsibility Award Received the Globe Foundation Environment Award in

35 Collective Agreements Operation Expiry Dates Line Creek May 31, 2014 Coal Mountain December 31, 2014 Antamina July 23, 2015 Carmen de Andacollo September 30, 2015 December 31, 2015 Elkview October 31, 2015 October 30, 2015 Quebrada Blanca November 30, 2015 January 31, 2016 Fording River April 30, 2016 Highland Valley Copper September 30, 2016 Trail May 31, 2017 Cardinal River June 30, 2017 Quintette April 30,

36 Share Structure & Principal Shareholders Teck Resources Limited March 3, 2014 Shares Held Percent Voting Rights Class A Shareholdings Temagami Mining Company Limited 4,300, % 28.62% SMM Resources Inc (Sumitomo) 1,469, % 9.78% Caisse de depot et placement du Quebec 1,587, % 10.57% Public 1,996, % 13.29% 9,353, % 62.26% Class B Shares Temagami Mining Company Limited 860, % 0.06% SMM Resources Inc (Sumitomo) 295, % 0.02% Caisse de depot et placement du Quebec 7,715, % 0.51% China Investment Corporation 101,304, % 6.74% Public 456,745, % 30.40% 566,921, % 37.74% Total Shares Temagami Mining Company Limited 5,160, % 28.68% SMM Resources Inc (Sumitomo) 1,764, % 9.80% Caisse de depot et placement du Quebec 9,303, % 11.08% China Investment Corporation 101,304, % 6.74% Public 458,741, % 43.70% 576,274, % % 36 Note: Based on public filings

37 Family-Controlled Public Issuers Common corporate structure in Canada May not confirm to typical governance expectations, but can still have strong governance practices Family-controlled issuers can benefit from a longerterm outlook and unique governance structure Cumulative Average Growth Rate Canadian family-controlled issuers outperformed peers over the past 15 years, greatly benefitting minority shareholders 37 Source: The Impact of Family Control on the Share Price Performance of Large Canadian Publicly-Listed Firms ( ) by Clarkson Centre for Board Effectiveness (Rotman School of Management, University of Toronto)

38 Family-Controlled Public Issuers; Teck Share Price Performance Teck has been a strong investment in recent years Long-term investments in Teck have outperformed non-family and materials firms 38 Source: The Impact of Family Control on the Share Price Performance of Large Canadian Publicly-Listed Firms ( ) by Clarkson Centre for Board Effectiveness (Rotman School of Management, University of Toronto)

39 Economic Outlook

40 Substantial Economic Growth Requires Decades to Achieve Per Capita GDP Relative to the US at PPP % China s GDP is ~20% of the US s on a per capital basis Japan Taiwan Korea China 10 India With the right policies, China still has the potential to boost incomes 40 Source: Dragonomics

41 Substantial Potential For Continuous Robust Growth in China Other Asian economies show that China could still grow at 8% for the next 15 years Country 20-Year Period Beginning When Country s Per Capital GDP Was 21% of US s Average Annual GDP Growth Rate Over a 20-Year Period Japan Singapore Taiwan Korea China* Source: Lin Yifu s prediction for China

42 Global Urbanization China and India Leading the Way Despite China s rapid urbanization over the past decade (to 53.7% in 2013), it is still lower than the Western world who are all ~80% - China s current urbanization rate is comparable to Japan s in the 1950s - China was previously a drag on Asia s urbanization statistics. Today, it is the driving force, with room for further urbanization India s urbanization was 32% in 2013, up from 26% in It is expected to grow to 33% by 2015, 35% by 2020 and 37% by % 80% 70% 60% 50% 40% 30% 20% 10% 0% Urbanization Rates China India Asia Europe S.America N.America 42 Source: United Nations, World Bank

43 Steelmaking Coal Business Unit & Markets

44 Global Hot Metal Production A Look Back and Forward China s hot metal production continues to grow production: 214 Mt production: 709 Mt, which is 3x the 2003 level and ~60%+ of global output - CRU International 2014E production ~748 Mt (+6% YoY) - CRU International 2018E production: ~830 Mt Global ex. China hot metal production remains significant at ~40% (Mt) 1,350 1, Hot Metal Production Growth China Global ex. China Growth from 2014 to 2018 (CRU Aug 2014) 44 Source: WSA based on data reported by countries monthly, CRU International

45 Steel Production Growing Globally Monthly Steel Production Traditional Steel Markets China slower growth 75 China Europe 15 Japan improving 10 Japan South Korea up YTD Outside of Asia Europe up YTD Million Tonnes USA South Korea US growing update to Aug, Source: WSA, based on data reported by countries monthly

46 Chinese Steel Industry Moving to the Coast Mt Xinjiang Total Coastal Provinces Coastal % Tibet WISCO Fangchenggang Project Major infrastructure in place. WISCO Fangchenggang Steel Company established in Sep to wholly manage the project. Cold roll line to be commissioned in H Other lines are scheduled to start successively within the year. Blast furnaces (BFs) in the originally approved plan. Billet rolling line only at this time. No timeline for BFs currently. Targeting 5 Mt steel products in 2016 and 10 Mt in % 65% 60% 55% 50% 45% 40% Qinghai Qinghai Inner Mongolia Ningxia Gansu Sichuan Sichuan Yunnan Guizhou Shaanxi Guangxi Shanxi Hunan Henan Hubei Guandong Beijing Hebei Shandong Jiangxi Jiangsu Anhui Fujian Heilongjiang Ansteel Baiyunquan Project Phase 1 (~ 5.4 Mt pig iron, 5.2 Mt crude steel and 5 Mt steel products) in Jilin Phase 2 (5.4 Mt BF) planned but no Laioning progress yet. Zhejiang Capital Steel Caofeidian Project Planned 20 Mtpa steel capacity. Phase 1 (10 Mt) completed in Phase 2 (10 Mt) under preparation but no progress yet. Shandong Steel Rizhao Project Planned Mt crude steel. Phase 1 (8.5 Mt) approved in Feb 2013 Construction started in Sep 2014 and scheduled to commission by the end of Ningde Steel Base Proposed but no progress yet. Baosteel Zhanjiang Project #1 BF (4.3 Mt) to be completed by the end of Preparation for raw material procurement in progress. #2 BF (4.3 Mt) to start construction in Jun 2014 and complete in Sep Relocation to China s coastline facilitates access to seaborne raw materials 46 Sources: NBS, CISA

47 We Are a Leading Steelmaking Coal Supplier To Steel Producers Worldwide High quality, consistency, reliability, long-term supply China ~25% Asia excl. China ~50% North America ~5% Europe ~15% Latin America ~5% 47 Source: Teck Resources Limited; 2013

48 Premium Steelmaking Coal Product Average realized price discount to benchmark is a function of: 1. Product mix: >90% is hard coking coal 2. Carry over sales volumes 3. Direction of quarterly benchmark prices and spot prices - Q benchmark for premium products is US$119 per tonne US$ / tonne Hard Coking Coal Benchmark Price 0 Average realized price discount of 7% since 2010 Teck Realized Price Benchmark Price 48

49 Coking Coal Strength U.S.A. Canada Other Teck HCC Australia Japan South Africa Australia (hard coking) and Canada Teck HCC Around the world, and especially in China, blast furnaces are getting larger and increasing PCI rates CSR Japan (Sorachl) Japan (Yubarl) Australia (soft coking) U.S.A. Coke requirements for stable blast furnace operation are becoming increasingly higher Teck coals with high hot and cold strength are ideally suited to ensure stable blast furnace operation 10 South Africa Drum Strength Dl 30 (%) Produce some of the highest hot strengths in the world 49

50 Capacity Grown to 28 Mt Material Moved Quarterly Coal Production 80 8 Millions of BCM Million Tonnes Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 0 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Capacity grew from 24 Mt to 28 Mt clean production Not currently operating at full capacity due to market conditions Quintette on care and maintenance; available when market conditions improve 50

51 Potential for Further Capacity Growth Given Teck s large resource base, there are a number of options available or under study to allow production growth as the market requires: Quintette restart (up to 4 Mtpa) Coal Mountain Phase 2 with options from 2 to 4Mt to extend operations Brownfields expansions Elkview expansion Fording River expansion Production (Mt) Potential Production Increase Scenarios Greenhills expansion Capital efficiency and operating cost improvements will be key drivers - Time Conceptual FRO GHO CMO EVO LCO CRO QCO 28 Mt 40 Mt 51

52 >75 Mt of West Coast Port Capacity Planned Teck Portion at 40 Mt Westshore Terminals Teck is largest customer at 19 Mt Large stockpile area Recently expanded to 33 Mt 40 West Coast Port Capacity Planned growth to 36 Mt 35 3 Neptune Coal Terminal Ridley Terminals Exclusive to Teck Recently expanded to 12.5 Mt Planned growth to 18.5 Mt Current capacity: 12 Mt Expandable to 25 Mt Teck contracted at 3 Mt Million Tonnes (Nominal) Neptune Coal Terminal Current Capacity 7 18 Ridley Terminals 33 Westshore Terminals Planned Growth 52 Teck s share of capacity exceeds current production plans, including Quintette

53 LNG for Haul Trucks Project Pilot project underway to evaluate running Teck haul trucks on a blend of diesel and LNG - Expected to be running early 2015 Has the potential to reduce our haul truck fleet fuel bill by $27M annually and lower our CO 2 emissions by 35,000 tonnes per year Comparison of Fuel Cost Comparison of Emissions $ % Price per Liter $1.00 $0.80 $0.60 $0.40 $0.20 % of Diesel Emissions 80% 60% 40% 20% $- LNG / Diesel Liter Diesel / Liter Gas Cost Liquifaction Carbon Tax Delivery Diesel 0% CO2 NOx Particulate SOx Diesel Natural Gas 53

54 Copper Business Unit & Markets

55 Base Metals Markets in Deficit* US/lb US/lb US/lb LME COPPER Prices Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Thousands 800 LME COPPER Stocks Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Copper ICSG forecasts a deficit of 307 kt for US/lb US/lb US/lb 2014 LME ZINC Prices Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Thousands 1,500 LME ZINC Stocks 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Zinc ILZSG forecasts a deficit of 403 kt for US/lb US/lb US/lb LME LEAD Prices 75 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Thousands 400 LME LEAD Stocks Jan Feb Mar Apr May Jun Jul AugSep Oct NovDec Lead ILZSG forecasts a deficit of 38 kt for Source: LME, ICSG, ILZSG * Charts as of October 24, 2014.

56 Copper Production Disruptions Continue Copper Disruptions F thousand tonnes contained copper , , Source: ICSG, Wood Mackenzie Teck, Company Reports

57 Copper Prices & Stocks LME Daily Copper Prices & Stocks US /lb thousand tonnes plotted to LME Stocks Price October 24, Source: LME

58 Copper Concentrate TC/RC Copper Concentrate TC/RC TC/RC Nominal US /lb plotted to Spot Realised TC/RC September Source: CRU

59 China s Copper Imports Remain Strong China now accounts for >49% of global copper consumption 1, s tonnes (content) Cathode Concs Scrap Blister/Semis 59 Source: Antaike

60 China Copper Imports Continue to Grow Copper Concentrates Net Imports Refined Copper Net Imports 350 3, , ,500 2,000 1,500 1, ,000 2,500 2,000 1,500 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 Copper Anodes Net Imports Scrap Copper Net Imports Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2,000 1,500 1, Total contained copper imports up 8.4% YTD 60

61 Copper Cash Costs Should Include Sustaining Capital 2013 Copper Cost Curve C1 vs. C1+ Sus. Capex vs. C3 On average, including sustaining capital would increase the cost curve by approximately 14-18% Sustaining capital adds ~14% to cash cost curve Current production levels require sustaining capital US$/lbs Considering the full spectrum of costs (C3), the increase would be closer to 30-35% % 20% 40% 60% 80% 100% Cumulative Pounds C1 C1 + Sus C3 61 Source: Wood Mackenzie

62 Teck s Copper Mine Lives Teck s Mine Lives Years Highland Valley Antamina Carmen de Andacolla Quebrada Blanca Quebrada Blanca Phase 2 Weighted Average Reserves Resources Teck has in excess of 30 years of resources in copper 62

63 Zinc Business Unit & Markets

64 Zinc Market Positioned for Change LME Zinc Stocks - 11 Years 250 1,400 LME Zinc Stocks Since Dec ,240 US /lb ,200 1, thousand tonnes US /lb ,140 1, thousand tonnes Stocks Price plotted to Oct 24, Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Stocks Price 640 plotted to Oct 24, 2014 LME stocks down about 458 kt over 20 months Large inventory position to work down Large, sudden increases in indicate there are significant off-market inventories as well Mine closures to alter supply / demand balance 64 Source: LME

65 Zinc Prices & Stocks LME Daily Zinc Prices & Stocks 250 1,400 US /lb ,200 1, thousand tonnes Stocks Price plotted to Oct 24, Source: LME

66 Zinc Treatment Charges $600 Zinc Spot TCs vs. Realized Annual TCs $500 $400 US$/dmt $300 $200 $100 $ plotted to Spot Annual Realised September Source: Teck, CRU

67 Energy Business Unit & Markets

68 Long-Term Picture For Energy / Oil Sands DEMAND Primary Energy Demand New Forms of Energy Supply Playing an Increasingly Significant Role Primary energy demand increases 41% from (averaging 1.5% p.a.) 95% of the projected energy consumption growth is in the non-oecd New energy forms growing at 6.2% p.a. in aggregate, contributing 43% of the increment in energy production to Source: BP Energy Outlook 2035, January 2014

69 The Real Value of Long-Life Assets Significant value created over long term 60% of PV of cash flows beyond year 5 IRR of 50-year project is only ~1% higher than a 20-year project Options for debottlenecking and expansion Fort Hills Project Indicative Rolling NPV 1 50-year assets provide for superior returns operating through many price cycles Indicative NPV assumes US$95 WTI, $1.05 Canadian/US dollar exchange rate, and costs as disclosed with the Fort Hills sanction decision (October 30, 2013).

70 Building An Energy Business Strategic diversification Large truck & shovel mining projects World-class resources Long-life assets Mining-friendly jurisdiction Competitive margins Minimizing execution risk Tax effective Mined bitumen is in Teck s sweet spot 70

71 Fort Hills Is Expected to Provide Long-Life Cash Flow* 50-years of strong, stable cash flow Extends duration of corporate portfolio, reducing reinvestment risk. Provides long-term exposure to potentially higher oil prices. Illustrative Annual Cash Flow Profiles 1 for peak production of 180,000 b/d Tight Oil Offshore Fort Hills years 71 * Slide content provided by Suncor Energy. 1. Annual cash flow profiles are based on representative project economics (development capital, operating and sustaining costs) for U.S. tight oil plays, deep-water oil platforms and the Fort Hills mine using a consistent set of assumptions for future oil prices (including adjustments for quality, transportation and marketing costs), tax and royalty rates.

72 World Class Energy Reserves & Resources Bitumen Reserves Teck s Share World-Class Energy Reserves & Resources (million bbl) Proved Probable Proved Plus Probable Fort Hills Contingent Bitumen Resources 2 Project Teck s Share (million bbl) Low Best High Low Best High Fort Hills Frontier 3 2,360 3,047 3,465 2,360 3,047 3,465 Lease 421 Still to be declared Total 2,360 3,175 4,217 2,360 3,073 3,615 No Exploration Risk No Large Finding Costs GLJ Petroleum Consultants, December There is no certainty that it will be commercially viable to produce any portion of the contingent bitumen resources. For more information about contingent bitumen resources, see Teck s annual information form dated March 3, 2014 available at 3. Sproule, December 2013

73 Fort Hills Is One of the Best Undeveloped Oil Sands Mining Leases 13 Frontier 12 Strip Ratio vs. Ore Grade 11 Fort Hills TV:BIP Ore grade is a function of the bitumen quantity in the deposit TV:BIP is a ratio of the total volume of bitumen in place to the total volume of material required to be moved (like a strip ratio) Ore Grade (wt% bitumen) 3.3 billion bbls of contingent resources* - Production 180,000 barrels per day (bpd) of bitumen - Teck s share is significant at 36,000 bpd; equivalent to 13 million barrels per year (Mbpy) World-class resource - Average ore grade of 11.4% - Strip ratio of 1.5:1 and TV:BIP of 10.5 Consistent production year-over-year through multiple decades - Scheduled to produce first oil as early as Q Expect 90% of planned production capacity within 12 months 73 Source: Teck * Best estimate of recoverable barrels of bitumen.

74 Fort Hills Is Part Of A New Breed Of Mineable Oil Sands Projects Legacy Oil Sands Mining Projects (~30 Years Ago) Naphtha froth treatment process Diluted Bitumen (Doesn t meet commercial pipeline specs) Synthetic Oil Mine & Extraction On-Site Upgrader ($10-15B) Simple Refinery Oil Sands Mining Projects Today Paraffinic froth treatment PFT process PFT Diluted Bitumen (Meets commercial pipeline specs) Mine & Extraction Export Pipeline Heavy Crude Conversion Refinery With Coker New mining projects produce clean, high-quality bitumen and receive a heavy oil price (discounted), but don t have to invest in an upgrader 74

75 Fort Hills Project Operator Has A Proven Track Record Suncor is the largest operator in the oil sands and has been developing projects in close proximity to Fort Hills for 50 years Suncor has demonstrated strong project execution with Firebag 4, Extraction Plant 300, TRO TM, and North Steepbank Extension completed at or below initial projected costs Project Bitumen Capacity 1 Millennium/North Steepbank Mine Firebag In Situ Stages 1-4 MacKay River In Situ Fort Hills kb/d 180 kb/d 30 kb/d 180 kb/d Leveraging Suncor s project execution experience and deep contractor relationships Experience in managing large workforces of comparable size in this region Deploying existing, proven technology 75 Source: Suncor 1. Capacity targets provided above do not necessarily equate to daily production.

76 Competitive Costs 1 for Fort Hills Project Capital: ~C$13.5 billion Teck Capital: Fully Escalated Go-Forward Capital 2 Fully-escalated capital investment: ~C$2.94B over four years ( ), including remaining earn-in of C$240M Estimated spending in 2014: C$800M, incurred costs, based on Suncor s planned project spending of C$3.16B Operating & Sustaining Costs: C$25 to $28/bbl total Sustaining C$3-5/bbl (included in above) Excludes diluent purchase Costs in C$ Thousands per Barrel/day $140 $120 $100 $80 $60 $40 $20 $0 Capital Cost Per Flowing Barrel Full project cost including spent to date: C$84 Project 1 Project 2 Fort Hills To be financed by a combination of cash balance, free cash flow over the four-year period and $3B unused line of credit All costs and capital are based on Suncor s estimates. 2. Go-forward capital is the go-forward amount from the date of the Fort Hills sanction decision (October 30, 2013), denominated in Canadian dollars and on a fully-escalated basis.

77 Fort Hills Bitumen Netback Calculation Typical Diluted Bitumen (Dilbit) Blend Bitumen Netback Calculation Example* Western Canadian Select (WCS) at Hardisty ~25% Diluent ~75% Bitumen $120 $100 $80 $60 $40 $20 $100 $86 $65 $0 Sensitivity to WTI Bitumen Netback US$80 C$50 US$100 C$65 US$120 C$80 Teck seeks to secure dedicated transportation capacity for Fort Hills volumes to key markets to minimize WCS discount 77 Source: Alberta Energy bitumen valuation methodology ( * Based on example exchange rate of $1.05 CAD/USD

78 Competitive Bitumen Margins* Typical Bitumen Producer Low Quartile Cost Copper Mine Netback $65/bbl LME Price $3.25/lb Cash Margin $40 62% Margin Cash Margin $ % Margin Cash Costs $25 Cash Costs $1.25 Fort Hills cash margins are expected to be comparable to the lowest cost mining operations 78 * Excludes royalties.

79 Logistics Solutions Planned Between Fort Hills, Edmonton and Hardisty Fort Hills Mine Terminal Pipeline/Terminal Operator Nominal Capacity (kbpd) Teck Capacity (kbpd) Northern Courier Hot Bitumen Pipeline Northern Courier Hot Bitumen East Tank Farm- Blending Wood Buffalo Blend Pipeline TransCanada Suncor Enbridge East Tank Farm Blending w/condensate Wood Buffalo Blend Pipeline Extension Enbridge Norlite Diluent Pipeline Enbridge Wood Buffalo Pipeline Norlite Diluent Pipeline Waupisoo Pipeline Cheecham Terminal Wood Buffalo Pipeline Extension Hardisty Blend Tankage Athabasca Pipeline Teck Hardisty Terminal TBD Options Export Pipe Rail Local Market 79 Edmonton Terminal Existing Pipeline Legend New

80 Multiple Options To Reach International Markets From Western Canada Western Canada Common Carriage Pipeline No take or pay commitments When pipe capacity is constrained, access to capacity may be apportioned and netback prices are discounted Contract Carriage Pipeline Typically requires year take or pay commitments Firm, secure access to capacity, and netbacks are linked to international benchmark related prices Rail More expensive (may require additional capital) Has the flexibility to alter destinations based on market conditions Firm, secure access to capacity, and netbacks are linked to international benchmark related prices Markets US Mid- Continent US Gulf Coast Eastern Canada / US East Coast West Coast Exports East Coast Exports 80 Teck has the capacity to enter into long-term take-or-pay pipeline agreements