BMO Capital Markets 25th Annual Global Metals & Mining Conference
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Transcript of BMO Capital Markets 25th Annual Global Metals & Mining Conference
Forward Looking Information
Both these slides and the accompanying oral presentations contain certain forward-looking statements within the meaning of the United States Private SecuritiesLitigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario). Forward-looking statements involve known andunknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Teck to be materially different from anyfuture results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements include statementsrelating to the long-life our assets and estimated resource life, estimated profit and estimated EBITDA, our expectation regarding market supply and demand inthe commodities we produce, the effect of US dollar oil price changes on our Canadian dollar cost savings, our goal to maintain the core of our business at leastfree cash flow neutral, our expectation that we will end 2016 with at least $500 million in cash, the availability of options to strengthen our liquidity and our abilityto take advantage of any of those options, the expectation that Fort Hills will generate cash flow in 2018, 2016 production and cost guidance, 2016 capitalexpenditure guidance including our expectation that capitalized stripping costs will be reduced by $120 million, our statements regarding the Fort Hills capitalexpenditures and our ability to fund those, our statements regarding our liquidity, 2016 total spending reduction expectations, capital and operating cost savings,our level of liquidity, statements regarding our credit rating, the availability of or credit facilities and other sources of liquidity, forecast 2016 steelmaking coal cashcosts, statements regarding our coal growth potential, the potential benefits of LNG use in haul trucks, all projections for Project Corridor and statements madeon the “Corridor Project Summary” slide, statements regarding the production and economic expectations for the Fort Hills project, including but not limited tooperating and sustaining cost projections, sustaining capital projection, free cash flow projections, netback assumptions and calculations, operating margin,Alberta oil royalty, net margin, Teck’s share of go-forward capex, mine life, capital cost projections, transportation capacity and our ability to secure transport forour Fort Hills production, and management’s expectations with respect to production, demand and outlook in the markets for coal, copper, zinc and energy.
These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially, which are described in Teck’spublic filings available on SEDAR (www.sedar.com) and EDGAR (www.sec.gov). In addition, the forward-looking statements in these slides and accompanyingoral presentation are also based on assumptions, including, but not limited to, regarding general business and economic conditions, the supply and demand for,deliveries of, and the level and volatility of prices of, zinc, copper and coal and other primary metals and minerals as well as oil, and related products, the timingof the receipt of regulatory and governmental approvals for our development projects and other operations, our costs of production and production andproductivity levels, as well as those of our competitors, power prices, continuing availability of water and power resources for our operations, market competition,the accuracy of our reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on whichthese are based, conditions in financial markets, the future financial performance of the company, our ability to attract and retain skilled staff, our ability toprocure equipment and operating supplies, positive results from the studies on our expansion projects, our coal and other product inventories, our ability tosecure adequate transportation for our products, our ability to obtain permits for our operations and expansions, our ongoing relations with our employees andbusiness partners and joint venturers. Management’s expectations of mine life are based on the current planned production rates and assume that all resourcesdescribed in this presentation are developed. Certain forward-looking statements are based on assumptions regarding the price for Fort Hills product and theexpenses for the project, as disclosed in the slides. Our estimated profit and EBITDA statements are based on budgeted commodity prices and a 1.40CAD/USD exchange rate. Our estimated year-end cash balance assumes current commodity prices and exchange rates, our 2016 guidance for production,costs and capital expenditures, existing US$ debt levels and no unusual transactions. Cost statements are based on assumptions noted in the relevantslide. Assumptions regarding liquidity are based on the assumption that Teck’s current credit facilities remain fully available. Assumptions regarding Fort Hillsalso include the assumption that project development and funding proceed as planned, as well as assumptions noted on the relevant slides discussing Fort Hills.Assumptions regarding our potential reserve and resource life assume that all resources are upgraded to reserves and that all reserves and resources could bemined. The foregoing list of assumptions is not exhaustive. Assumptions regarding the Corridor project include that the project is built and operated inaccordance with the conceptual preliminary design from a preliminary economic assessment.
2
Forward Looking Information
Factors that may cause actual results to vary materially include, but are not limited to, changes in commodity and power prices, changes in market demand forour products, changes in interest and currency exchange rates, acts of foreign governments and the outcome of legal proceedings, inaccurate geological andmetallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), unanticipated operational difficulties(including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials andequipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, adverse weather conditions andunanticipated events related to health, safety and environmental matters), union labour disputes, political risk, social unrest, failure of customers orcounterparties to perform their contractual obligations, changes in our credit ratings, unanticipated increases in costs to construct our development projects,difficulty in obtaining permits, inability to address concerns regarding permits of environmental impact assessments, and changes or further deterioration ingeneral economic conditions. We will not achieve the maximum mine lives of our projects, or be able to mine all reserves at our projects, if we do not obtainrelevant permits for our operations. Our Fort Hills project is not controlled by us and construction and production schedules may be adjusted by our partners. TheCorridor project is jointly owned. The effect of the price of oil on operating costs will be affected by the exchange rate between Canadian and U.S. dollars.
Statements concerning future production costs or volumes are based on numerous assumptions of management regarding operating matters and onassumptions that demand for products develops as anticipated, that customers and other counterparties perform their contractual obligations, that operating andcapital plans will not be disrupted by issues such as mechanical failure, unavailability of parts and supplies, labour disturbances, interruption in transportation orutilities, adverse weather conditions, and that there are no material unanticipated variations in the cost of energy or supplies.
We assume no obligation to update forward-looking statements except as required under securities laws. Further information concerning assumptions, risks anduncertainties associated with these forward-looking statements and our business can be found in our most recent Annual Information Form, as well assubsequent filings of our management’s discussion and analysis of quarterly results, all filed under our profile on SEDAR (www.sedar.com) and on EDGAR(www.sec.gov).
3
• Based in Vancouver, Canada, with operations in the Americas
• Strategy focused on long life assets in stable jurisdictions
• Sustainability: Key to managing risks and developing opportunities
Strong Resource Position1
With Sustainable Long-Life AssetsCoal Resources ~100 years
Copper Resources ~30 years
Zinc Resources ~15 years
Energy Resources ~50 years
Attractive Portfolio of Long-Life Assets
1. Reserve and resource life estimates refer to the mine life of the longest lived resource in the relevant commodity assuming production at planned rates and in some cases development of as yet undeveloped projects. See the reserve and resource disclosure in our most recent Annual Information Form, available on SEDAR and EDGAR, for additional detail regarding underlying assumptions.
5
Long-Term Strategy
Diversification to expand opportunity set
Long life assets
Low half of the cost curve
Appropriate scale
Low risk jurisdictions
6
Teck has good leverage to stronger zinc and copper markets, and benefits from the weaker Canadian dollar
The Value of Our Diversified Business Model
Cash Operating Profit 2015
Production Guidance1
Unit of Change
Estimated Profit 2
EstimatedEBITDA2
$C/$US C$0.01 $22M /$.01∆ $34M /$.01∆
Coal 25.5 Mt US$1/tonne $23M /$1∆ $35M /$1∆
Copper 312 kt US$0.01/lb $6M /$.01∆ $9M /$.01∆
Zinc 940 kt US$0.01/lb $9M /$.01∆ $14M /$.01∆
2016 Leverage to Commodities & FX
1. Based on mid-point of 2016 guidance ranges. Zinc includes 645 kt of zinc in concentrate and 295 kt of refined zinc.2. Based on budgeted commodity prices and a 1.40 CAD/USD exchange rate. The effect on our profit and EBITDA will vary with
commodity price and exchange rate movements, and sales volumes.
Coal~30%
Copper 35%
Zinc35%
Base Metals~70%
7
Commodity Market Observations
• Current cycle longest and deepest for decades
• Coal market curtailments reaching point where global demand growth is a factor
• ~Two years for oil market to correct prior to Fort Hills production ramp-up
• Industry costs declining, but still higher than appreciated
• Zinc market poised for change9
• Up cycles in green and down cycles in orange; plotted against duration in years on the right scale• Peak-to-trough price moves during the cycle in blue; plotted against the left axis• Up cycles tend to be longer, with higher percentage gains
Copper Price Cycles –Current Cycle Deepest since 1920’s
YearsP
eak
to T
roug
h C
ycle
% C
hang
e
72%
-37%
132%
-57%
45%
-68%
284%
-13%
115%
-37%
121%
-12%
50%
-15%
54%
-35%
98%
-30%
51%
-45%
333%
-26%
68%
49%
64
64
8
3
16
1
7
2
12
2 24
2
6
3 42
4
8
2 2
5
0
5
10
15
20
25
30
35
40
-500.0%
-400.0%
-300.0%
-200.0%
-100.0%
0.0%
100.0%
200.0%
300.0%
400.0%
Source: Wood Mackenzie, USGS, WBMS, Teck11
Commodity Market Observations
• Current cycle longest and deepest for decades
• Coal market curtailments reaching point where global demand growth is a factor
12
Steelmaking Coal Will Slowly Rebalance
• Excess supply continues to pressure prices & margins• US exports declining but still >1.5 times above historical average levels• Reduced imports into China, although some evidence of destocking• Stronger fundamentals ex-China
Tighter Market ex-ChinaUS Steelmaking Coal Exports (ex. Canada)
-25
-20
-15
-10
-5
0
5
10
China EU LatinAmerica
India JKTSe
abor
nem
et. c
oal i
mpo
rts c
hang
e,
2019
vs.
201
5, M
t
Decline in China offset by growth in other Asian countries and Latin America
38 Mt
0
10
20
30
40
50
60
70
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Mt
2000-2009average at
23Mt
2010-2014average at 55Mt
Source: GTIS, CRU13
Commodity Market Observations
• Current cycle longest and deepest for decades
• Coal market curtailments reaching point where global demand growth is a factor
• Industry costs declining, but still higher than appreciated
14
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
0 10 20 30 40 50 60 70 80 90 100
$/to
nne
Cumulative Production %
2013 Cash Costs 2013 Total Costs 2014 Cash Costs 2014 Total Costs
Copper Costs Higher Than Understood
GFMS Net Cash and Total Cost Curves
2013 Price2014 Price
2015 Price
Current Price (2/10/2016)
Source: GFMS, Thomson Reuters15
Commodity Market Observations
• Current cycle longest and deepest for decades
• Coal market curtailments reaching point where global demand growth is a factor
• ~Two years for oil market to correct prior to Fort Hills production ramp-up
• Industry costs declining, but still higher than appreciated
16
Global Oil Market to Rebalance
World Production & Consumption Balance
Source: Consensus Economics, February 201617
Commodity Market Observations
• Current cycle longest and deepest for decades
• Coal market curtailments reaching point where global demand growth is a factor
• ~Two years for oil market to correct prior to Fort Hills production ramp-up
• Industry costs declining, but still higher than appreciated
• Zinc market poised for change18
$0
$100
$200
$300
$400
$500
$600
Spot Annual
Spot TCs vs. Realized Annual TCs
LME Zinc Stocks – Since Dec 2012
Zinc Market Changing Rapidly
• Supply situation tightening in concentrates
• Growth in zinc demand expected to outpace negative supply growth
• Demand growth still positive, but weaker growth has slowed inventory drawdown
• Terminal Market Stocks continue to decline, market tightness should draw out hidden stocks
4005006007008009001,0001,1001,200
50¢
60¢
70¢
80¢
90¢
100¢
110¢
120¢
Stocks Price
US
¢/lb
thou
sand
tonn
es
plotted to Feb. 12, 2015
US$
/dm
t
plotted to January 2016
Source: Teck, CRU19
Plan to Navigate an Extended Low Price Environment & Emerge Stronger
• Continuing to deliver excellent operating execution− Reduced our cash unit costs at all
operations in 20151
− All major operating mines cash flow positive after sustaining capex2
• Finish building Fort Hills− >50% complete; on schedule and
on budget
• Protecting our strong financial position− Evaluating options to further
strengthen liquidity
• Staying true to our core values− Recognized once again for
sustainability
1. Compared with 2014.2. In the fourth quarter and full year 2015. Major operating mines exclude Quebrada Blanca and Pend Oreille.
21
Guidance Results
Steelmaking CoalProduction1 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/tUS$64/t Lower unit costs at all mines
CopperProduction 340-360 kt 358 kt Record mill throughput at Antamina
Cash unit costs3 US$1.45-1.55 /lb US$1.45/lb Lower unit costs at all mines
ZincMetal in concentrate production4 635-665 kt 658 kt
Refined production 280–290 kt 307 kt Record production at Trail
Capital Expenditures5 $2.3B $2.2B Lower capex
Solid Delivery Against 2015 Guidance
1. Reflects mid-year revision for temporary shutdowns.2. Combined coal costs are site costs, inventory adjustments and transportation costs.3. Net of by-product credits.4. Including co-product zinc production from our copper business unit.5. Including capitalized stripping.
22
46 35
31
1512
35
28
2014 20152014 2015
Significant Unit Cost ReductionsUnit costs reduced at all of our operations1
1. In 2015 as compared with 2014. 2. Steelmaking coal unit cost of sales include site costs, inventory adjustments and transport costs. Total cash costs are unit cost
of sales plus capitalized stripping. 3. Copper C1 unit costs are net of by-product margins. Total cash costs are C1 unit costs plus capitalized stripping.
23%
Total Cash Costs (US$/tonne)2
76
99
Site
Transport
Inventory
Total Cash Costs (US$/lb)3
xx%
14%
Copper3
C1 Unit Costsdown US$0.20/lb
Total Cash Costsdown US$0.27/lb
Total
Capitalized Stripping
Site
Total
Capitalized Stripping
1.661.93
2014 2015
24%
Unit Cost of Sales (US$/tonne)2
64
84
C1 Unit Costs (US$/lb)3
xx%
12%
1.45
1.65
Steelmaking Coal2
Unit Cost of Salesdown US$20/t
Total Cash Costsdown US$23/t
1.65 1.45
0.28 0.21
2014 2015
23
Core Business Free Cash Flow vs. Development Project Cash Flow
Cost management delivering improvements in Free Cash Flow2, despite weakening prices
Target to be at least cash flow neutral
Fort Hills capital expenditures are fully funded1
Development Project Core Business
Potential future free cash flow
Teck’s total share of capital $2.94BRemaining capital (as of February 10th, 2016)
$1.2B
Teck cash balance ~$1.8B
(100)
-
100
200
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15C
$ M
illion
s
Free Cash Flow, Before Fort Hills Capex
1. As of February 10, 2016. Based on Suncor’s planned project spending. Sanction 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.
2. Free Cash Flow is Net Cash from Operations, before changes in Working Capital, less Investing activity excluding Fort Hills capital expenditures, not including proceeds from sales of investments, less interest paid and distributions to minority interests.
24
$0
$250
$500
$750
$1,000
$1,250
$1,500
$1,750
$2,000
$2,250
$2,500
$2,750
$3,000
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
US$
M
251. As at February 10, 2016.2. 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 Financial Position
• Cash balance of ~$1.8B1
− Includes ~$1B in cash generated via two precious metal streaming agreements
− Repaid US$300M of notes in Q4 2015• No debt due until 2017
2017Q1: US$300MQ3: US$300M
Expect to achieve year-end cash balance of >$500M2
Options to Strengthen Liquidity
• Further cost & capital reductions• Additional precious metal
streaming transactions• Asset value realization
opportunities− Infrastructure assets− Non-operating assets
• Minority interests in assets• Royalties on future cash flows
26
Near-Term Priorities
• Keeping operations cash flow positive
• Funding Fort Hills from internal sources
• Maintaining a strong financial position− Target for US$3B credit facility
to remain undrawn in 2016− Expect year-end cash balance
of >$500M1
• Evaluating opportunities to further strengthen liquidity
27 1. Assumes current commodity prices and exchange rates, Teck’s 2016 guidance for production, costs and capital expenditures., existing US$ debt levels and no unusual transactions.
Plan to Navigate an Extended Low Price Environment & Emerge Stronger
Attractive portfolio of long-life assets & resources
Good leverage to base metals markets
Fort Hills capital fully funded
Target for core business to remain at least free cash flow neutral
Solid liquidity & opportunities to strengthen further
28
• In 2011, we launched our formal sustainability strategy
• Organized around 6 focus areas representing our most material sustainability challenges and opportunities
• Set short-term (2015) and long-term (2030) goals and vision for each area
• On track to achieve all of our 2015 goals
Our Sustainability Strategy
30
Received the PDAC 2014 Environmental and Social Responsibility Award
Best 50 Corporate Citizens in Canada 2015
On the Dow Jones Sustainability World Index six years in a row
One of top 100 most sustainable companies in the world and one of Canada’s most sustainable companies
Top 50 Socially Responsible Corporations in Canada
Received the Globe Foundation Environment Award in 2014
31
External Recognition
Diversified Portfolio of Key Commodities
NorthAmerica
~23%Europe~15%
LatinAmerica
~2%
China~20%
Asia excl. China~40%
32
Diversified Global Customer Base
Coking coal CopperZinc LeadMoly SilverGermanium Indium
Source: Teck; 2015 revenue
2015 Results 2016 GuidanceSteelmaking Coal
Production 25.3 Mt 25-26 MtSite costs $45/t $45-49/tCapitalized stripping $16/t $11/t1
Transportation costs $36/t $35-37/t
Total cash costs2 $99/tUS$76/t
$91-97/tUS$65-69/t
CopperProduction 358 kt 305-320 ktC1 unit costs3 US$1.45/lb US$1.50-1.60/lbCapitalized stripping US$0.21/lb US$0.21/lb1
Total cash costs4 US$1.66/lb US$1.71-1.81/lbZinc
Metal in concentrate production5 658 kt 630-665 ktRefined production 307 kt 290-300 kt
2016 Production & Site Cost Guidance
1. Approximate, based on capitalized stripping guidance and mid-point of production guidance range.2. Steelmaking coal unit cost of sales include site costs, inventory adjustments and transport costs. Total cash costs are unit cost
of sales plus capitalized stripping. 3. Net of by-product credits.4. Copper total cash costs Include cash C1 unit costs (after by-product margins) and capitalized stripping. 5. Including co-product zinc production from our copper business unit.
33
($M) SustainingMajor
EnhancementNew Mine
Development Sub-totalCapitalized
Stripping Total
Coal $50 $40 $ - $90 $290 $380
Copper 120 5 80 205 190 395
Zinc 130 10 - 140 60 200Energy 5 - 1,000 1,005 - 1,005
TOTAL $305 $55 $1,080 $1,440 $540 $1,980
Total capex of ~$1.4B, plus capitalized stripping
2015A $397 $64 $1,120 $1,581 $663 $2,244
2016 Capital Expenditures Guidance
34
Operation Expiry DatesCoal Mountain In Negotiations - December 31, 2014Elkview In Negotiations - October 31, 2015Fording River April 30, 2016Highland Valley Copper September 30, 2016Trail May 31, 2017Cardinal River June 30, 2017
Quebrada BlancaOctober 30, 2017
November 30, 2017December 31, 2017
Quintette April 30, 2018Antamina July 31, 2018Line Creek May 31, 2019
Carmen de Andacollo September 30, 2019December 31, 2019
Collective Agreements
35
Credit Ratings
S&P Moody’s Fitch DBRS
BBB Baa2 BBB BBB
BBB- Baa3 BBB- BBB (low)
BB+ Ba1 BB+negative
BB (high)negative
BB Ba2 BB BB
BB- Ba3Negative BB- BB (low)
B+negative B1 B+ B (high)
B B2 B B
B- B3 B- B (low)
Inve
stm
ent
Gra
deN
on-In
vest
men
t G
rade
Supported by:• Diversified business model• Low risk jurisdictions• Low cost assets• Conservative financial policies• Significant cost reductions• Capital discipline• Achieving production guidance• Production curtailments in coal• Dividend cut• Streaming transactions
Constrained by:• Debt-to-EBITDA metric, due to weak prices
Ratings reflect the current economic environment
As at February 18, 2016.36
Teck Credit Ratings vs. London Metal Exchange Index
Credit Ratings Reflect Commodity Prices
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000Ja
n-05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Moody's S&P Fitch London Metal Exchange Index (Right Axis)
BBB/Baa2
BBB-/Baa3
BB+/Ba1
BB/Ba2
BB-/Ba3
BBB+/Baa1
B+/B1
B/B2
B-/B3
A+/A1
A/A2
A-/A3
Inve
stm
ent G
rade
Non
-Inve
stm
ent G
rade
37
Substantial Credit Facilities1
Amount (M) Commitment Maturity
Letters of Credit Limit
($M)
Letters of Credit Drawn
($M)
Total Available
($M)
US$3,000 Committed July 2020 US$1,000 Undrawn US$3,000
US$1,200 Committed June 2017 None US$740 US$460Expect to keep available for letter of credit requirements
~C$1,700 Uncommitted n/a n/a ~C$1,500 ~C$200
Total1 ~C$2,500 ~C$5,000
• Unsecured; any borrowings rank pari passu with outstanding public notes• Only financial covenant is debt to debt-plus-equity of <50%; excludes issued letters of credit• Availability not affected by commodity price changes or credit rating actions• Available for general corporate purposes
1. As of December 31, 2015. Assumes a 1.38 CAD/USD exchange rate.2. Includes cash and US$3B credit facility. Excludes US$1.2B credit facility and uncommitted bilateral credit facilities.
Ample liquidity for remaining Fort Hills capital expenditure of ~$1.2B
38
Relative Commodity Price Changes
Relative Price Changes
0.00
0.20
0.40
0.60
0.80
1.00
1.20
Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Zn CuAg AuGSCI WTIHot Rolled Coil Plotted to
Feb 2, 2016
Peak Since 2014
SinceOctober 2015
Oil $108/bbl -71% -37%
GSCI 5,185 -60% -23%
Zinc $1.10/lb -33% -12%
Copper $3.37/lb -39% -15%
Gold $1,385/oz -19% -2%
Silver $22/oz -35% -10%
Steel $690/st -42% -2%
Source: LME, GSCI, BEA, LBMA, Teck 39
$0
$10
$20
$30
$40
$50
$60
$70
50
70
90
110
130
150
170
190
210
230
250
Bloomberg Commodity Index (Left Axis) Teck (Right Axis)
Teck Stock Price vs. Bloomberg Commodity Price Index (2000-present)
Commodity Prices Impact Stock Price
Plotted to February 10, 2016
40
• Up cycles in green and down cycles in orange; plotted against duration in years on the right scale• Peak-to-trough price moves during the cycle in blue; plotted against the left axis• Up cycles tend to be similar in duration but with higher percentage gains
Source: CRU, Teck
Steelmaking Coal Price Cycles -Current Cycle Long and Deep
-2%
1%
-26%
13%
-12%
19%
-25%
17%
-0.1%
146%
-13%
144%
-31%
68%
-72%
1 12 2
43 3
21
3
1 1 12
5
0
3
6
9
12
15
-250%
-200%
-150%
-100%
-50%
0%
50%
100%
150%
200%
250%
Pea
k to
Tro
ugh
Cyc
le %
Cha
nge
Years
42
AUS$
Stronger US dollar favours producers outside of the US
Source: Argus, Bank of Canada
• >60 Mt cutbacks announced with over 55% implemented by the end of 2015
• Require additional cutbacks to achieve market balance
• US coal production high end of cost curve and no currency benefit
Coal Prices By CurrencyArgus FOB Australia
CDN$
US$
Met Coal Market Slowly Rebalancing; FX Assisting Producers Outside USA
plotted to February 10, 2016
70
80
90
100
110
120
130
140
150
$ / t
onne
43
Traditional Steel Markets
• China slowing
• JKT slowing
• EU slowing
Rest of the World
• India good growth
• Brazil stable
• US slowing
Monthly Hot Metal Production
Source: WSA, based on data reported by countries monthly; NBS
Mt
Update to December 2015
Global Hot Metal Production
JKT
India
Europe
USA
Brazil
0
3
6
9
12
15
Jan-
10A
pr-1
0Ju
l-10
Oct
-10
Jan-
11A
pr-1
1Ju
l-11
Oct
-11
Jan-
12A
pr-1
2Ju
l-12
Oct
-12
Jan-
13A
pr-1
3Ju
l-13
Oct
-13
Jan-
14A
pr-1
4Ju
l-14
Oct
-14
Jan-
15A
pr-1
5Ju
l-15
Oct
-15
45 55 65 75
China
44
Source: WSA, NBS, Wood Mackenzie, CRU1. Europe includes 12 countries.
Crude steel production to grow at 1.3% CAGR between 2015 and 2020
Ex-China seaborne demand for steelmaking coal is forecasted to increase
by ~3% CAGR in the same period
Crude Steel Production 2014-2020Crude Steel Production (Mt) 2015
Global 1,623 (-2.8% YoY)
China 804 (-2.3% YoY)
Global, ex-China 819 (-3.4% YoY)
JKT 196 (-4.4% YoY)
Europe 202 (-2.5% YoY)
India 90 (+2.6% YoY)
Crude Steel Production Continues to Grow
45
Relocation to China’s coastline facilitates access to seaborne raw materials
Sources: NBS, CISA
Chinese Steel Industry Moving to the Coast
46
Xinjiang
Tibet
Qinghai
Sichuan
InnerMongolia
Henan
Shanxi
Guangxi Guangdong
Fujian
Zhejiang
Jiangsu
Shandong
Liaoning
Jilin
Heilongjiang
GuizhouHunan
Hubei
Jiangxi
Anhui
ShaanxiGansu
Ningxia
Qinghai
Sichuan
Yunnan
BeijingHebei
WISCO Fangchenggang Project• Planned capacity: hot metal 8.5Mt, crude steel
9.2Mt, steel products 8.6Mt• Cold roll line (2.1Mt) commissioned in Jun 2015.• No timeline for BFs yet.
Baosteel Zhanjiang Project• Capacity: hot metal 8.2Mt, crude steel 8.7Mt,
steel products 8.2Mt, coke 3.2Mt. • BF #1 commissioned in Sep 2015• BF #2 to be commissioned in Jun 2016
Ningde Steel Base• Proposed but no progress yet.
Ansteel Bayuquan Project• Phase 1 (~ 5.4 Mt pig iron, 5.2 Mt crude
steel and 5 Mt steel products) in 2013.• Phase 2 (5.4 Mt BF) planned but no
progress yet.
Capital Steel Caofeidian Project• Phase 1 (10 Mt) completed in 2010.• Phase 2, planned with the investment of ~
US$7 billion, kicked off in Aug 2015 and scheduled to be completed by 2018. Capacity: hot metal 8.9Mt, crude steel 9.4Mt, steel products 9.0Mt.
Shandong Steel Rizhao Project• Capacity: hot metal 8.1 Mt (2 BFs), crude
steel 8.5Mt, steel products 7.9Mt. • BF #1 started construction in Sep 2015.
50%52%54%56%58%60%62%64%66%68%
0100200300400500600700800900
2000 2003 2006 2009 2012 2015Non-coastal (Mt, lhs) Coastal (Mt, lhs)Coastal share (%, rhs)
We Are a Leading Steelmaking Coal Supplier To Steel Producers Worldwide
NorthAmerica
~5%Europe~20%China
~20%
High quality, consistency, reliability, long-term supply
Asia excl. China~50%
Source: Teck, based on 2015 sales volumes.
LatinAmerica
~5%
Proactively realigning sales with changing market47
0
50
100
150
200
250
300
350
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
US$
/ to
nne
Teck Realized Price (US$) Benchmark Price
Discount to the benchmark price is a function of:
1. Product mix: >90% hard coking coal
2. Direction of quarterly benchmark prices and spot prices- Q1 2016 benchmark for
premium products is US$81/t
Historical Average Realized Prices
Average Realized Price in Steelmaking Coal
Average realized price discount: ~8-9%Average realized % of benchmark: 91-92% (range: 88%-96%)
96%
88%
93%
94%92%
91%
48
4635 34
3
1
35
28 26
15
128
2014 2015 2016
Total cash costs down 31% from 2014 to 2016F2
Total Cash Costs2
49
US$/t 2014 2015 20163 Change
Site $46 $35 $34 -26%
Inventory Adjustments $3 $1 $0 -100%
Transportation $35 $28 $26 -25%
Unit Cost of Sales (IFRS) $84 $64 $60 -28%
Capitalized Stripping $15 $12 $84 -45%
Total Cash Costs2 $99 $76 $68 -31%
Sustaining Capital $6 $2 $14 -76%
All In Sustaining Costs $105 $78 $69 -34%
1. In US dollars per tonne. Assumes a Canadian dollar to US dollar exchange rate of 1.10 in 2014, 1.28 in 2015 and 1.38 in 2016.2. Steelmaking coal unit cost of sales include site costs, inventory adjustments and transport costs. Total cash costs are unit cost
of sales plus capitalized stripping. All in sustaining costs are total cash costs plus sustaining capital.3. Based on the mid-point of guidance ranges.4. Approximate, based on capital expenditures guidance and mid-point of production guidance ranges.
IFRS
Steelmaking Coal Costs1
$99
$76
IFRS IFRS
$68
Site
Inventory
Transport
Capitalized Stripping
Significant Long-Term Coal Growth Potential
Potential Production Increase ScenariosTeck’s large resource base supports several options for growth:• Quintette restart (up to 4 Mtpa)
fully permitted
• Brownfields expansions- Elkview expansion - Fording River expansion- Greenhills expansion
• Capital efficiency and operating cost improvements will be key drivers
-
10
20
30
40
50
Prod
uctio
n (M
t)
FRO GHO CMO EVO LCO
CRO QCO 28 Mt 40 Mt
Time Conceptual
Potential to grow production when market conditions are favourable50
>75 Mt of West Coast Port Capacity PlannedTeck Portion at 40 Mt
• Exclusive to Teck • Recently expanded to 12.5 Mt • Planned growth to 18.5 Mt
Westshore Terminals
Neptune Coal Terminal
Ridley Terminals
West Coast Port Capacity
• Current capacity: 18 Mt• Expandable to 25 Mt• Teck contracted at 3 Mt
• Teck is largest customer at 19 Mt• Large stockpile area• Recently expanded to 33 Mt• Planned growth to 36 Mt • Contract expires March 2021
Milli
on T
onne
s (N
omin
al)
Teck’s share of capacity exceeds current production plans, including Quintette
12.518
336
7
3
0
5
10
15
20
25
30
35
40
Neptune CoalTerminal
RidleyTerminals
WestshoreTerminals
Current Capacity Planned Growth
51
0%
20%
40%
60%
80%
100%
CO2 NOx Particulate SOxDiesel Natural Gas
LNG for Haul Trucks Project
• Pilot project underway to evaluate running Teck haul trucks on a blend of diesel and LNG- Six haul trucks at Fording River- First use of LNG as a haul truck fuel at a Canadian mine site
• Has the potential to eliminate ~35,000 tonnes of CO2 emissions annually at our steelmaking coal operations, and to reduce our fuel costs by >$20M per year across our operations
Comparison of Fuel Cost
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
LNG / Diesel Liter Diesel / LiterGas Cost Liquifaction Carbon Tax Delivery Diesel
Pric
e pe
r Lite
r
Comparison of Emissions
% o
f Die
sel E
mis
sion
s
52
Our Market: Seaborne Hard Coking Coal2~200 million tonnes
Global Coal Production1
7.9 billion tonnes
1. Source: International Energy Agency 2014 data.2. Source: CRU
Seaborne Steelmaking Coal2~290 million tonnes
Export Steelmaking Coal2~325 million tonnes
Steelmaking Coal Production2
~1,185 million tonnes
Seaborne Hard Coking Coal Market
53
• Around the world, and especially in China, blast furnaces are getting larger and increasing PCI rates
• 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
• Produce some of the highest hot strengths in the world50 60 70 80 90 100
South Africa
Japan (Sorachl)
Japan(Yubarl)
U.S.A.Canada OtherTeck HCCAustraliaJapanSouth Africa
Australia(hard coking)and Canada
U.S.A.
Australia(soft coking)
10
20
30
40
50
60
70
80
Drum Strength Dl 30 (%)
CSR
Teck HCC
54
Coking Coal Strength
High Quality Hard Coking Coal
0
200
400
600
800
1000
1200
1400
0¢
50¢
100¢
150¢
200¢
250¢
300¢
350¢
400¢
450¢
500¢
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
LME Stocks Comex SHFE Price
Historic Copper Metal Prices & StocksU
S¢/lb
thou
sand
tonn
es
plotted to Feb. 12, 2016
Daily Copper Prices & Stocks
Source: LME, ICSG, ILZSG56
Copper Mine Production Forecasts Continue to Decline
57
Losses in 2016 already 72% of 2015 levels
16,000
16,500
17,000
17,500
18,000
18,500
Apr
-15
May
-15
Jun-
15Ju
l-15
Aug
-15
Sep
-15
Oct
-15
Nov
-15
Dec
-15
Jan-
16
5% Disruption net of ProjectsMarket Adjustment2017 Adjusted
15,000
15,500
16,000
16,500
17,000
17,500
Feb-
13
Jun-
13
Oct
-13
Feb-
14
Jun-
14
Oct
-14
Feb-
15
Jun-
15
Oct
-15
2015 AdjustedMarket Adjustment5% Disruption
thou
sand
tonn
es c
onta
ined
cop
per
2015 2016
15,000
15,500
16,000
16,500
17,000
17,500
18,000
18,500
Apr
-14
Jun-
14A
ug-1
4O
ct-1
4D
ec-1
4Fe
b-15
Apr
-15
Jun-
15A
ug-1
5O
ct-1
5D
ec-1
5
5% Disruption & ProjectsMarket Adjustment2016 Adjusted
2017
thou
sand
tonn
es c
onta
ined
cop
per
thou
sand
tonn
es c
onta
ined
cop
per
• Down 588 kmt from 2013 net estimates• Down 1.8 million tonnes from guidance
Source: Wood Mackenzie
• Down 1.3 million from 2014 estimates• Projects down by 72% • Net Mine Production Growth in 2016 now
only 1.1%, less than 300 kmt
• Down 829 kt from April 2015 estimates • Projects down by 50% or 426 kmt
57
Copper Costs Higher than Understood
Source: Bernstein Research
Bernstein Estimated Margin After Sustaining Capex
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
-
1,000
2,000
3,000
4,000
5,000
6,000
- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
Mar
gin
(US$
/tonn
e)
Cumulative Copper Production (kt)
At US$2.00 Copper At US$2.40 Copper
At US$2.40 6,239kt
72nd Percentile
At US$2.004,270kt
49th Percentile
58
(300)
(250)
(200)
(150)
(100)
(50)
0
Thou
s. M
t-950
-859
-776-851
-945
-584
-839
-973
-831
-968
-1,015-1,200
-1,000
-800
-600
-400
-200
02005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2015YTD
Thou
sand
tonn
esDisruptions Continue in Copper
Significant Copper Concentrate Disruptions Breakdown of Disruptions including SXEW
plotted to December 2015
plotted to December 2015
Source: Teck, CRU59
Ore Grade TrendsOngoing decline will put upward pressure on unit costs
Source: Wood Mackenzie
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024
Cop
per G
rade
Cu
%
All Operations Primary Mines Co-By Product Mines - (RH axis)
Industry Head Grade Trends (Weighted by Paid Copper)
60
0¢
10¢
20¢
30¢
40¢
50¢
60¢
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Standard Spot High Grade Spot Realised TC/RC
Copper Concentrate TC/RCs
Copper Concentrate TC/RC
plotted to January 2016
Source: Teck, CRU61
0
200
400
600
800
1,000
1,200
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cathode Concs Scrap Blister/Semis
000’
s to
nnes
(con
tent
)
Net Copper Imports up 4.6% in 2015
Source: NBS
Chinese Copper Imports Switch from Cathode to Concentrates
Updated to December 2015
63
Significant Chinese Copper Demand Remains
…But Will Add Significantly in Additional Tonnage Terms
Annual Growth Rate of Chinese Copper Consumption to Slow Dramatically…
China expected to add almost as much to global demand in the next 15 years as the past 25 years
Source: Wood Mackenzie, Teck
-
200
400
600
800
1,000
1,200
1,400
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030
0%
5%
10%
15%
20%
25%
30%
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030
Annual Avg. 11.9%
Annual Avg. 2.8%
Annual Avg. Growth356 Mt/yr
Annual Avg. Growth325 Mt/yr
Thou
sand
tonn
es
64
Copper Scrap Supply vs. LME Price
Copper Scrap Supply
Source: Wood Mackenzie
Copper scrap supply is strongly correlated with price
10%11%12%13%14%15%16%17%18%19%20%21%22%23%24%25%26%
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Copper Price (USD/lb) Scrap as a % Consumption
65
-100
0
100
200
300
400
500
600
700
800
Apr
-15
May
-15
Jun-
15Ju
l-15
Aug
-15
Sep
-15
Oct
-15
Nov
-15
Dec
-15
Jan-
16
0
100
200
300
400
500
600
700
800
Feb-
13
Jun-
13
Oct
-13
Feb-
14
Jun-
14
Oct
-14
Feb-
15
Jun-
15
Oct
-15
Since April 2014• Despite a 725,000 tonne drop in demand
• The surplus is down 750,000 tonnes
Source: Wood Mackenzie
thou
sand
tonn
es c
onta
ined
cop
per
2015 2016
0
100
200
300
400
500
600
700
800
Apr
-14
Jun-
14A
ug-1
4O
ct-1
4D
ec-1
4Fe
b-15
Apr
-15
Jun-
15A
ug-1
5O
ct-1
5D
ec-1
5
2017
thou
sand
tonn
es c
onta
ined
cop
per
thou
sand
tonn
es c
onta
ined
cop
per
Global Copper Cathode BalancesWood Mackenzie’s Outlook is Trending Down
Since December 2014• Despite a drop of 660,000 tonnes to Wood
Mackenzie’s demand estimates
• Their surplus is down 700,000 tonnes
Since April 2015• Down from a 510,000 tonnes surplus
• Despite a 510,000 tonne drop in demand
66
• At 2% global demand growth, 400 ktof new supply needed annually
• We have lowered our demand forecast to below all analysts for 2016 & 2017,
• We still show structural deficit starts in 2018
• Project developments slowed due to lower prices, higher capex, corporate austerity, permitting & availability of financing
Forecast Copper Refined Balance
Long-Term Copper Mine Production Still Needed
Source: WM, CRU, ICSG, Teck
(2,000)
(1,500)
(1,000)
(500)
0
500
2012 2013 2014 2015 2016 2017 2018 2019 2020
Thou
sand
tonn
es
67
Building Partnerships: Corridor Project
Teck and Goldcorp have combined Relincho and El Morro projects and formed a 50/50 joint venture company
• Committed to building strong, mutually beneficial relationships with stakeholders and communities
Capital smart partnership • Shared capital, common infrastructure• Shared risk, shared rewards
Benefits of combining projects include:• Longer mine life• Lower cost, improved capital efficiency• Reduced environmental footprint• Enhanced community benefits• Greater returns over either standalone
project
68
Corridor Project Summary
Initial Capital
$3.0 - $3.5billion
Copper Production1
190,000tonnes per year
Gold Production1
315,000ounces per year
Mine Life
32+years
Copper in Reserves2
16.6billion pounds
Gold in Reserves2
8.9million ounces
Note: Conceptual based on preliminary design from the PEA1. Average production rates are based on the first full ten years of operations2. Total copper and gold contained in mineral reserves as reported separately by Teck and Goldcorp; refer to Appendix A in Additional Information.3. Capital estimate for Phase 1a based on preliminary design shown in 2015 dollars on an unescalated basis69
Copper Development Projects in theAmericas
Corridor is one of the largest open pit copper development projects in the Americas on the basis of copper contained in Proven and Probable Reserves
-
5,000
10,000
15,000
20,000
25,000
Rad
omiro
Tom
ic
Cor
ridor
El A
rco
Que
brad
aB
lanc
a II
Que
llave
co
Agu
a R
ica
Rel
inch
o
El M
orro
Cas
ino
Sch
aft C
reek
Gal
ore
Cre
ek
Rio
Bla
nco
Cop
per E
quiv
alen
t in
Res
erve
s (M
lbs)
Copper-equivalent contained in Reserves (Mlbs)(North & South American Copper Projects)
Note: Copper equivalent reserves calculated using $3.25/lb Cu and $1,200/oz Au. Does not include copper resource projects that are currently in construction
Source: SNL Metals & Mining, Thomson One Analytics, and company disclosures.70
Historic Zinc Metal Prices & Stocks
Daily Zinc Prices & Stocks
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0¢
50¢
100¢
150¢
200¢
250¢
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
LME SHFE Price
US¢
/lb
thou
sand
tonn
es
plotted to February 12, 2016
Source: LME, SHFE72
0
1,000
2,000
3,000
4,000
5,000
6,000
0
100
200
300
400
500
600
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 2014 2015
Monthly Chinese Zinc Mine Production
LME Zinc Stocks
Zinc Mine ProductionUndersupplied, Even With Lower Growth
4005006007008009001,0001,1001,200
50¢
60¢
70¢
80¢
90¢
100¢
110¢
120¢
Stocks Priceplotted to
Feb 12, 2016
plotted to December, 2015
• Metal market in deficit
• LME stocks down >776 kt over 27 months; sub-500 kt recently for the first time since 2010
• ‘Off-market’ inventory position to work down also
• Large periodic increases indicate significant off-market inventories flowing through the LME to consumers
• Chinese zinc mine production is down in the last 27 months
US
¢/lb
thou
sand
tonn
es
Source: LME, NBS, CNIA73
• Down 770 kt from January 2015 estimates
• Down 1,150 kt from January 2015 estimates
Zinc Mine Production Wood Mackenzie’s Outlook is Trending Down
thou
sand
tonn
es c
onta
ined
zin
c
2015 2016 2017
• Down 600 kt from April 2015 estimates • New project production down by 22%
thou
sand
tonn
es c
onta
ined
zin
c
thou
sand
tonn
es c
onta
ined
zin
c
12,000
12,500
13,000
13,500
14,000
14,500
15,000
Feb-
13M
ay-1
3A
ug-1
3N
ov-1
3Fe
b-14
May
-14
Aug
-14
Nov
-14
Feb-
15M
ay-1
5A
ug-1
5N
ov-1
5
12,000
12,500
13,000
13,500
14,000
14,500
15,000
May
-14
Jul-1
4S
ep-1
4N
ov-1
4Ja
n-15
Mar
-15
May
-15
Jul-1
5S
ep-1
5N
ov-1
5Ja
n-16
12,000
12,500
13,000
13,500
14,000
14,500
15,000
Apr
-15
May
-15
Jun-
15Ju
l-15
Aug
-15
Sep
-15
Oct
-15
Nov
-15
Dec
-15
Jan-
16
Source: Wood Mackenzie74
2014-2020 2014-2020
Significant Zinc Mine ReductionsLarge Short-Term Losses, More Long Term
-500
-400
-300
-200
-100
0
Cen
tury
Lish
een
Skor
pion
Red
Dog
Ros
eber
y
Brac
emac
-McL
eod
Rap
ura
Aguc
ha
Pom
orza
ny-O
lkus
z (in
cl B
ulk)
Jagu
ar
Mid
-Ten
ness
ee
Mae
Sod
Ende
avor
0
100
200
300
400
500
Gam
sber
gAn
tam
ina
Dug
ald
Riv
erM
cArth
ur R
iver
Bish
aG
ansu
Jin
hui
Kyzy
l-Tas
htyg
skoe
Shal
kiya
Res
tart
Sind
esar
Khu
rdAg
uas
Teni
das
Cha
ngba
Zaw
ar M
ines
El B
roca
lSa
ngui
kou
Car
ibou
Rea
ctiv
atio
nSa
n C
risto
bal
Pena
squi
to
Source: ICSG, Wood Mackenzie Teck, Company Reports75
LME Zinc Stocks – Since Dec 2012LME Zinc Stocks - 11 Years
Zinc Inventories Declining
400
500
600
700
800
900
1,000
1,100
1,200
50¢
60¢
70¢
80¢
90¢
100¢
110¢
120¢
Stocks Price
0
200
400
600
800
1,000
1,200
1,400
0¢
50¢
100¢
150¢
200¢
250¢
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Stocks Price
US
¢/lb
thou
sand
tonn
esplotted to
Feb. 12, 2016
US
¢/lb
thou
sand
tonn
es
• LME stocks down ~730 kt over 24 months• Large inventory position still to work down but we were recently under 500kt for the
first time since early 2010• Large, sudden increases indicate there are also significant off-market inventories
flowing through the LME to consumers
plotted to Jan . 12, 2016
Source: LME76
• Down 280 kt from December 2014 estimates, taking the market from surplus into a deficit of 119 kt
• Down 442 kt from December 2014 estimates, taking the market further into deficit of 666 kt
thou
sand
tonn
es c
onta
ined
zin
c
2015 2016 2017
• Up 259 kt from April 2015 estimates • Wood Mackenzie expects 300 kt of
projects will come online in 2017 due to higher prices
thou
sand
tonn
es c
onta
ined
zin
c
thou
sand
tonn
es c
onta
ined
zin
c
(300)
(200)
(100)
0
100
200
300
400
Feb-
13M
ay-1
3A
ug-1
3N
ov-1
3Fe
b-14
May
-14
Aug
-14
Nov
-14
Feb-
15M
ay-1
5A
ug-1
5N
ov-1
5
(800)
(600)
(400)
(200)
0
200
400
May
-14
Jul-1
4S
ep-1
4N
ov-1
4Ja
n-15
Mar
-15
May
-15
Jul-1
5S
ep-1
5N
ov-1
5Ja
n-16 (500)
(400)
(300)
(200)
(100)
0
100
200
300
400
Apr
-15
May
-15
Jun-
15
Jul-1
5
Aug
-15
Sep
-15
Oct
-15
Nov
-15
Dec
-15
Jan-
16
Zinc Concentrate BalancesWood Mackenzie’s 2015 and 2015 Outlooks Trending Down
Source: Wood Mackenzie77
Zinc Metal Market Mostly in Deficit Since 2013
-1000
-800
-600
-400
-200
0
200
400
600
2013 2014 2015 2016 2017
WoodMac CRU
Market View – Wood Mackenzie & CRU
• Zinc metal deficit forecasted for 2016 and 2017
• Mine production increases of -2.5% and 8.0% respectively expected for 2016 and 2017. The closure of Century and Lisheen, as well as production cuts due to low zinc prices will cause mine production to decrease in 2016. In 2017, higher prices are expected to bring a large amount of Chinese mine production online and it is expected that Glencore will bring production back in 2017
• Deficits of around 500kt/year in 2016 and 2017 will still result in large draw down of stocks
Zinc Metal Balance
Source: Wood Mackenzie, CRU78
China6%
USA 19%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Galvanized Steel as % Crude ProductionChina Zinc Demand
Construction15%
Transportation 20%
Other 5%
Consumer Goods30%
Infrastructure30%
Chinese Zinc Demand to Outpace Supply
Source: Teck
If China were to galvanize crude steel at half the rate of the US using the same rate of zinc/tonne, a further 2.1 Mt would be added to global zinc consumption
79
• Deficit decreased by 206 kt from December 2014 estimates, to 178 kt
• Deficit increased by 112 kt from December 2014 estimates, to 347 kt
• Increase due to production cuts, resulting in insufficient concentrate available to smelters and less refined production in 2016.
thou
sand
tonn
es
2015 2016 2017
• Deficit increased by 98 kt from April 2015 estimates, to 402 kt
thou
sand
tonn
es
thou
sand
tonn
es c
onta
ined
zin
c
Refined Zinc BalancesWood Mackenzie’s Outlook is Trending Down
(500)
(450)
(400)
(350)
(300)
(250)
(200)
(150)
(100)
(50)
0
Feb-
13M
ay-1
3A
ug-1
3N
ov-1
3Fe
b-14
May
-14
Aug
-14
Nov
-14
Feb-
15M
ay-1
5A
ug-1
5N
ov-1
5
(450)
(400)
(350)
(300)
(250)
(200)
(150)
(100)
(50)
0
May
-14
Jul-1
4S
ep-1
4N
ov-1
4Ja
n-15
Mar
-15
May
-15
Jul-1
5S
ep-1
5N
ov-1
5Ja
n-16
(500)
(450)
(400)
(350)
(300)
(250)
(200)
(150)
(100)
(50)
0
Apr
-15
May
-15
Jun-
15
Jul-1
5
Aug
-15
Sep
-15
Oct
-15
Nov
-15
Dec
-15
Jan-
16
Source: Wood Mackenzie80
Committed Supply Insufficient for Demand
Forecast Zinc Refined Balance
Source: Teck
• We expect insufficient mine supply to constrain refined production, allowing a refined metal supply increases of only 792 kt between 2014 and 2020
• Over this same period we expect refined demand to increase 2.8 Mt tonnes
• Market in deficit in 2014 and starting in 2016 will be ongoing, large inventory has funded the deficit but this will only continue in 2016.
• Metal market moving into significant deficit with further mine closures and inventories are depleting(2,500)
(2,000)
(1,500)
(1,000)
(500)
0
500
2013 2014 2015 2016 2017 2018 2019 2020
Thou
sand
tonn
es
81
Source: PIRA Scenario Planning Annual Guidebook: February 2015
0
20
40
60
80
100
120
2000 2014 2020 2025 2030 2035 2040
Milli
on b
pd
Transport Petrochemicals Other** Buildings Other Industry Power Generation
PIRA Forecasted World Oil Demand By Sector (2000-2040)
World Oil Demand Expected to Grow
83
North American Rig Counts Down Sharply
Source: Baker Hughes, EIA, National Bank of Canada, HIS, US Department Of Energy
North American Rig Count & US Production
5000
6000
7000
8000
9000
10000
300
700
1,100
1,500
1,900
1/7/
11
1/7/
12
1/7/
13
1/7/
14
1/7/
15
1/7/
16
Thou
sand
bpd
Rig
cou
nt U
nits
US Rig Count CAD Rig Count US 4-week Production Avg.
84
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
85
Mined bitumen is in Teck’s ‘sweet spot’
• 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
50-year assets provide for superior returns operating through many price cycles
The Real Value of Long-Life Assets
Fort Hills Project Indicative Rolling NPV1
1. 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).
86
Minimizing Execution Risk In The Fort Hills Project
• Cost-driven schedule- “Cheaper rather than sooner”
• Disciplined engineering approach
• “Shovel Ready” • Global sourcing of engineering
and module fabrication• Balanced manpower profileSuncor has completed 4
projects of ~$20 billion over last 5 years, all at or under budget
Benefiting from Suncor’s operational and project development experience
87
• Focusing on productivity improvements- Reduced pressure on skilled labour and contractors
• Benefiting from availability of fabricators for major equipment
• Seeking project cost reductions- Exploring performance improvements with
contractors and suppliers- Building cost savings and improved productivity
expectations into current contract negotiations- Reviewing all indirect costs
Lower Oil Price Environment Provides Opportunities for the Fort Hills Project
“Major projects in construction such as Fort Hills…will move forward as planned and take full advantage of the current economic environment.
These are long-term growth projects that are expected to provide strong returns when they come online in late 2017.”
- Suncor, January 13, 2015
Enhanced ability to deliver on time and on budget88
>95% Engineering completeapproximate as at December 2015
>50% Construction completeapproximate as at December 2015
Project Progressconstruction has surpassed the midway point and the project continues to track positively within schedule expectations
Fort Hills Project Status & Progress
Capital Expenditures1
continues to track positively within project sanction cost
Teck’s sanction capital$2.94B
Global fabrication, module and logistics programperforming well to date, delivering positive results
All critical schedule milestones have been achieved to date supporting target 2017 first oil
Remaining capital investmentas of February 10, 2016
$1.2B
1. Based on Suncor’s planned project spending. Sanction 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.
89
Teck’s Sanction Capital2
~$2.94billion
Teck’s Estimated 2016 Spend
$960million
Teck’s Remaining Capital3
~$1.2billion
Operating & Sustaining Costs3
$25-28per barrel of bitumen
Sustaining Capital3
$3-5per barrel of bitumen
Teck’s Share of Production
13,000,000bitumen barrels per year
1. All costs and capital are based on Suncor’s estimates.2. Sanction 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. Includes earn-in of $240M. 3. As of February 10, 2016.4. Sustaining capital is included in operating & sustaining costs.
Mine life: 50 years
Fort Hills By The Numbers1
90
Royalties based on pre-capital payout. * WTI/WCS Differential based on forecast from Lee & Doma Energy Consulting: 2017/2018 Fort Hills Startup, Constrained Pipe/Excess Rail**Tidewater Premium based on average premium pricing for USGC market via Keystone and Flanagan South PipelinesSource: Alberta Energy bitumen valuation methodology (http://www.energy.alberta.ca/OilSands/1542.asp)1. Estimates are based on C$/US$ exchange rates as shown, expected bitumen netbacks, operating costs of C$25 per barrel (including
sustaining capital of C$3-5 per barrel) and Phase 1 (pre-capital payout) royalties.
Cash Margin1 Calculation Example: Prior to Capital Recovery
Teck seeks to secure dedicated transportation capacity for Fort Hills volumes to key markets to minimize WCS discount
Fort Hills Bitumen Netback Calculation Model
$60$55.50
$37
$10-$11 $13
$-
$10
$20
$30
$40
$50
$60
$70$11
$10
$15.50$7-9$1.25
$22
$3$1-2 $2-3
91
Source: Shorecan, Net Energy, Lee & Doma
Western Canadian Select (WCS)
Average Monthly WTI-WCS DifferentialWestern Canadian Select (WCS) Is The Benchmark Price For Canadian Heavy Oil At Hardisty, Alberta
WCS differential to West Texas Intermediate (WTI) • Contract settled monthly as differential to Nymex WTI• Long term differential of Nymex WTI minus $10-20 US/bbl• Based on heavy/light differential, supply/demand, alternate
feedstock accessibility, refinery outages and export capability− Narrowed in 2014/2015 due to export capacity growth, rail
capacity increases, and short term production outages• Recently improved export capability to mitigate volatility− Further export capacity subject to rigorous regulatory review;
potential impact to WCS differentials.Plotted to Feb. 2016Long-term WCS Differential
$15.692010-2011
$23.122012-2013
$16.452014-2015
WTI (US/bbl) $40 $50 $60 $70 $80 $90 $100WCS Differential to Nymex WTI (US/bbl) -$13.00 -$14.50 -$15.50 -$17.00 -$18.00 -$19.50 -$20.50
*Forecast Assumptions: Fort Hills Startup 2017/2018 with supply/demand model exiting Western Canada in a constrained pipe/excess rail transportation model, per Lee & Doma Energy Consulting.
FORECAST*
$-
$5
$10
$15
$20
$25
$30
$35
$40
$45
WCS Differential (US$/bbl)
92
Source: Shorecan, Net Energy, Lee & Doma
Diluent (C5+) Pricing
Average Monthly WTI/Diluent (C5+) Differential
Diluent (C5+) at Edmonton, Alberta Is the benchmark contract for diluent supply for oil sands
Diluent differential to West Texas Intermediate (WTI)• Contract settled monthly as differential to Nymex WTI• Based on supply/demand, seasonal demand (high in winter, low
in summer), import outages• Long-term diluent (C5+) differential of Nymex WTI +/- $5 US/bbl
Diluent (“Pool” in Edmonton is a common stream of a variety of qualities• Diluent pool comprised of local and imported natural gas liquids
WTI (US/bbl) $40 $50 $60 $70 $80 $90 $100Diluent (C5+) Differentialto Nymex WTI (US/bbl) +$2.50 +$1.50 +$0.50 -$0.50 -$1.50 -$2.50 -$3.50
*Forecast Assumptions: Fort Hills Startup 2017/2018, using 2015 CAPP Western Canadian oil production forecast, Diluent (C5+) differentials per Lee & Doma Energy Consulting
FORECAST*
$(10)
$(5)
$-
$5
$10
$15
$20
Jan-
10M
ay-1
0S
ep-1
0Ja
n-11
May
-11
Sep
-11
Jan-
12M
ay-1
2S
ep-1
2Ja
n-13
May
-13
Sep
-13
Jan-
14M
ay-1
4S
ep-1
4Ja
n-15
May
-15
Sep
-15
Jan-
16
US
$/bb
l
WTI/C5+ Diff Long-term C5+ Diff Plotted to Feb 2016
93
Teck Marketing Plan for 50 kbpd Diluted Bitumen Blend
Cushing
Flanagan
Houston
Kitimat
HardistyEdmonton
Saint John
N.E. US
US Gulf Coast
Europe
Asia
TransCanada Energy East (Europe, Asia, US Gulf Coast, N.E. US)Teck can enter long-term commitments
Enbridge Northern Gateway (Asia)
Keystone, Keystone XL (US Gulf Coast)Enbridge Flanagan South (US Gulf Coast)
Vancouver
TransMountain Pipeline (Asia)
Steele City
Asia
Europe
Asia
Superior
* Acquired through Fort Hills participation
Sufficient export capacity in place• Includes pipeline and rail capability• No shut in risk, but price risk likely
Targeting long term market access • US Gulf Coast • Deep water ports
Hardisty tankage & export pipeline capacity are key
Non-committed barrels sold spot at Hardisty or nominated on common carriage pipeline
Diversified Market Access Strategy
94
Sufficient Transportation Capacity In Western Canada
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
kbbl
s/da
y
2015 CAPP Supply Forecast 2014 CAPP Supply Forecast
Total Pipeline & Local Refining Total Pipeline, Local Refin ing & Rail
Con
stra
ined
P
ipe
&
Bal
ance
d R
ail
Constrained Pipe & Excess Rail
Excess Pipe
Balanced Pipe
2 New Pipelines
Enbridge Expansions
Western Canadian Transport Supply & Demand
Assumptions
• Fort Hills first oil late 2017
• Enbridge mainline capacity expansions move forward
• Two export pipelines enter service• TransMountain Expansion (2019-2020)• Energy East (2021-2022)• Providing incremental capacity of
1.0-1.6 MM bbls/day
Source: CAPP (Canadian Association of Petroleum Producers), Lee& Doma, Teck
Sufficient pipeline & rail capacity to accommodate all production
Fort Hills’ First Oil
Con
stra
ined
P
ipe
&
Bal
ance
d R
ail
95
East Tank Farm Blending w/Condensate
Bitumen & Blend Logistics OperatorNominalCapacity(kbpd)
Status
Northern Courier Hot Bitumen TransCanada 202 Construction: ~40% complete
East Tank Farm - Blending Suncor 292 Construction: ~40% complete
Wood Buffalo Blend Pipeline Enbridge 550 Operating
Wood Buffalo Extension Enbridge 550 Construction: ~55% complete
Hardisty Blend Tankage Gibsons 450 Construction: ~60% complete
Wood BuffaloExtension
NorliteDiluent Pipeline
Cheecham Terminal
Hardisty Terminal
Wood Buffalo Pipeline
AthabascaTwin PipelineWaupisoo
Pipeline
Edmonton Terminal
Fort HillsMine Terminal
Northern CourierHot Bitumen Pipeline
TeckOptions
Export Pipeline
Rail
Local Market
Pipeline LegendBitumenBlendDiluentExistingNew
Kirby Terminal
Diluent Logistics OperatorNominalCapacity (kbpd)
Status
Norlite Diluent Pipeline Enbridge 130 Construction
Committed Logistics Solutions in Alberta
96