2015 Sustainability Report Investors' Conference Call
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Transcript of 2015 Sustainability Report Investors' Conference Call
2015 Sustainability Report Investors’ Conference CallJuly 12, 2016
Both these slides and the accompanying oral presentation contain certain forward-looking statements within the meaning of the UnitedStates 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 involve known and unknown risks, uncertaintiesand other factors which may cause the actual results, performance or achievements of Teck to be materially different from any futureresults, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statementsinclude statements relating to management's expectations with respect to our business and sustainability strategies, our sustainabilitygoals and expectation that we will achieve them in the established timeframes.
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 andeconomic conditions, technological solutions, receipt of regulatory approvals and ongoing relations with interested parties. Theforegoing list of assumptions is not exhaustive.
Events or circumstances could cause actual results to differ materially. Factors that may cause actual results to vary include, but arenot limited to: regulatory action, changes in laws and governmental regulations, development and use of new technology, naturaldisasters and adverse weather conditions, changes in commodity prices, general business and economic conditions, and the futureoperation and financial performance of the company generally.
Certain of these risks are described in more detail in Teck’s annual information form available at www.sedar.com and in public filingswith the SEC. Teck does not assume the obligation to revise or update these forward-looking statements after the date of thisdocument or to revise them to reflect the occurrence of future unanticipated events, except as may be required under applicablesecurities laws.
Under no circumstances should the information contained herein be considered an offer to sell or a solicitation of an offer to invest insecurities.
Forward-Looking Information
2
Agenda
About Teck
Our Approach to Sustainability
2015 Sustainability Risks and Opportunities
Performance Summary
Questions
3
About TeckDon LindsayPresident and CEO
4
Company Overview
• Diversified resource company, committed to responsible mining and mineral development
• Major business units focused on copper, steelmaking coal, zinc and energy
• Own or have an interest in 12 mines, one large metallurgical complex, a wind power facility, several major development projects in the Americas
• Over 100 years of experience
5
Our Approach to Business
Sustainability Best people Balance sheet strength
Nimble response to opportunity
Operating excellence
Long life, low cost assets in stable jurisdictions
6
• Zero fatalities in 2015• High Potential Incident Frequency
Reduced by 25% compared to 2014• One-third reduction in Total Reportable
Injury Frequency (TRIF) since 2010• Increase in TRIF in 2015
High Potential Incident Performance
0.0
0.5
1.0
1.5
2010 2011 2012 2013 2014 2015
PFO SHPI HPI
Per 2
00,0
00 h
ours
Focus on High Potential Risks• Risk identification – serious & fatal
injury potential• Reviewing control strategies &
effectiveness• Reducing high potential incidents
New fall protection tower at Trail Operations
2015 Safety Performance
7
2015 Financial Performance
Revenue $ 8.3 billionGross profit(before depreciation & amortization) $ 2.6 billion
Profit (loss)(attributable to shareholders) ($ 2.5 billion)
Adjusted EBITDA* $ 2.0 billion
Adjusted profit* (attributable to shareholders)
$ 188 million$0.33/share
* Non-GAAP financial measure. See ‘Use of Non-GAAP Financial Measures’ in news release for additional information.8
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Existing Notes New Notes
9
Strong Financial Position
1. As at April 25, 2016. Assumes a 1.30 CAD/USD exchange rate.2. Teck issued US$1.25 billion aggregate principal amount of five-year and eight-year senior unsecured notes on June 7, 2016. Teck also purchased US$1.25
billion aggregate principal amount of notes maturing from 2017 to 2019 previously issued by Teck. 3. Assumes current commodity prices and exchange rates, Teck’s 2016 guidance for production, costs and capital expenditures, existing US$ debt levels and
no unusual transactions.
• Strong liquidity of over C$5.1 billion1
o Cash balance of ~C$1.3 billion1
o Undrawn US$3 billion credit facility1
• Recently extended near-term debt maturities2
• 2016 targets:o Year-end cash balance of >C$500 million3
o US$3 billion credit facility to remain undrawn
Debt Maturity Profile
9
2015 Guidance 2015 Results
Steelmaking Coal
Production1 25-26 Mt 25.3 Mt
Site costs C$49-53/t C$45/t
Transportation costs C$37-40/t C$36/t
Combined costs2 C$86-93 /t C$83/t
US$64/t
Copper
Production 340-360 kt 358 kt
Cash unit costs3 US$1.45-1.55 /lb US$1.45/lb
Zinc
Metal in concentrate production4 635-665 kt 658 kt
Refined production 280–290 kt 307 kt
Capital Expenditures5 $2.3B $2.2B
Consistent Delivery Against Guidance
1. Reflects mid-year revision for temporary shutdowns.2. Combined coal costs are site costs, inventory adjustments and transportation costs.3. Net of by-product credits.4. Including co-product zinc production from our copper business unit.5. Including capitalized stripping.
10
2015 Sustainability Highlights
Ranked in top 10% of the world’s largest companies on Dow Jones Sustainability Index
Achieved all 2015 goals and set new short-term goals to 2020
11
Our Focus in 2016
Productivity: Core business cash flow positive; reduce costs
Financial Strength: Targeting $500M or greater year-end cash balance; fund Fort Hills from internal cash
sSafety: Build on HPI program results
Sustainability: Improve performance; work towards 2020 goals
12
Our Approach to SustainabilityMarcia SmithSVP, Sustainability and External Affairs
13
• Six focus areaso Community o Biodiversityo Our Peopleo Watero Airo Energy and Climate
Change
• Working towards short-term 2020 goals and long-term 2030 goals
Our Sustainability Strategy
14
Our Approach to Materiality
• Long-term materiality review to look at global trends and inform strategy
• Annual materiality assessment process to identify risks and opportunities, engage COIs
Reviewing with internal and external
sources
Quantifying impacts
under G4 Guidelines
Soliciting internal
feedback
Developing materiality
matrix
Receiving feedback from COI
panel
Senior Management Review and
Approval
Our Annual Materiality Process
15
Economic Social Environmental• Economic
Performance and Contributions
• Our Workforce
• Business Ethics
• Mine Closure
• Health and Safety of Our Workforce
• Engaging with Indigenous Peoples
• Community Engagement
• Human Rights
• Product Impacts
• Emergency Preparedness
• Tailings and Mine Waste Management
• Water Management
• Air Quality
• Energy and Climate Change
• Biodiversity
• Environmental Management
2015 Material Topics
16
2015 Sustainability Risks and Opportunities
17
Energy and Climate Change
Context • Energy is our 3rd largest operational cost • Potential for increasing costs due to transition
to low-carbon economy; carbon pricing• Demand for commodities likely to shift • Building an emerging oil sands business
Approach• Diversification of products; • Low-cost production• Innovation to reduce our carbon footprint
through efficiency, low-carbon technology, alternative energy
Performance
Energy & Carbon Intensity:Copper Production
Energy & Carbon Intensity: Steelmaking Coal Production
Energy Consumption & GHG Emissions by Type
41,000 41,500 42,000 42,500 43,000 43,500 44,000 44,500 45,000 45,500 46,000
2,650 2,700 2,750 2,800 2,850 2,900 2,950 3,000 3,050 3,100 3,150
2013 2014 2015
Ener
gy C
onsu
mpt
ion
in T
J
GH
G E
mis
sion
s (k
tof C
O2e
)
GHG Emissions Energy Consumption18
Case Study Cutting Costs and Emissions with LNG Truck Pilot
6 haul trucks converted to LNG at Fording River
Upgraded maintenance, installed fueling facilities, implemented safety program
~35,000 tonnes of potential CO2 reductions from LNG use
19
Water and Tailings Management
Context• Majority (10 of 12) of sites in water abundant
regions; water quality key focus• Two Teck sites in water-stressed areas• Seven mines with active tailings storage
facilities
Approach• Implementing comprehensive water
management plans at all our operations, including water reduction targets at sites located in areas where water is scarce
• Engaging water users in our areas of influence
• Maintaining the highest standard of safety and environmental protection
Summary of Management At Active Tailings Storage Facilities at Teck
PerformanceWater Used, Reused and Recycled in 2015*
Regular staff Inspections
Annual External Inspection
Detailed Third-Party Reviews
Tailings Review Boards
Total water use
Down 27%
New water use
Down 15%
Water recycling
Up 7%
*Compared to 2013 data
20
Case Study West Line Creek Active Water Treatment Facility
96% of selenium & 99% of nitrate removed from water
Part of our work to implement the Elk Valley Water Quality Plan
7,500 m3 of water treated per day
Achieving design target for water quality
21
Communities and Indigenous Peoples
Context• Many operations located close to local
communities• Most operations, exploration and development
projects located within or adjacent to Indigenous Peoples’ territories
• Growing expectations of community engagement throughout the mining life cycle to address concerns and define mutual benefits
Approach• Protect human rights and engage with
communities on potential impacts• Build strong relationships and create lasting
mutual benefits• Engage with Indigenous Peoples early and
work to achieve their Free, Prior and Informed Consent for our projects
Spotlight on agreement with Indigenous Peoples
Performance
34 active agreements in place with Indigenous Peoples, including newly signed agreements or agreements already in implementation
7 new agreements were reached with Indigenous Peoples in 2015
In 2016, signed impact management and benefits agreement with Ktunaxa Nation Council covering all Elk Valley mines
Community Investment Categories
Community Investment Types
22
Performance Summary
23
Performance Summary
24
Greg WallerVice President, Investor Relations and Strategic AnalysisTeck Resources LimitedT: 604.699.4014E: [email protected]
Questions?
Marcia SmithSenior Vice President, Sustainability and External AffairsTeck Resources LimitedT: 604.699.4616E: [email protected]
www.teck.com/sustainability25
2015 Sustainability Report Investors’ Conference CallJuly 12, 2016