BC’s biggest miner is using a significant chunk of its $4.5 billion cash position to beef up operations in its own backyard.
Teck Resources (TSX:TCK.B) announced this fall plans to invest $685 million in its Highland Valley Copper mine near Kamloops and smelter in Trail.
The money will be used to modernize Highland Valley’s 40-year-old mill, extending the life of the mine to 2025 and increasing mill throughput by approximately 10%.
In Trail, a $210 million upgrade will increase the century-old smelter’s ability to recycle electronic waste, including household appliances such as washers and dryers.
Teck spokesperson Marcia Smith told Business in Vancouver the investments come at a time of renewed confidence in B.C.’s mining sector.
“One of the signals the provincial government has just given is the BC Jobs plan, and that’s a good signal that B.C. is still open for business,” said Smith.
Earlier this year, Premier Christy Clark unveiled her new jobs plan, which aims to see eight new mines in production by 2015 and a number of mine expansions.
Although the expansion of B.C.’s mining industry has more to do with external market forces and the financial health of each company than government support, Victoria’s commitment to one of the province’s founding industries has been well-received by the business community.
Companies such as Thompson Creek Metals (TSX:TCM) and Taseko Mines (TSX:TKO) are already moving forward with expansion projects.
Thompson Creek is also busy building the Mt. Milligan copper-gold mine near Fort St. James, while New Gold (TSX:NGD) is busy building the New Afton metal mine near Kamloops.
Teck, which employs 5,600 people and operates six mines in B.C., also has major plans to expand its coal production.
Smith said the company is working on a feasibility study to re-open its Quintette coal mine in northeast B.C., while also expanding production output at its five coal mines in southeast B.C.
Should Quintette proceed, Smith said the company would need to hire 1,100 new workers next year to support its coal operations.
Although Teck’s shares have dropped 66% from a high of $64.62 earlier this year, the company posted record quarterly results in its third quarter.
Teck finished the quarter with a 40% increase in revenue to $3.4 billion, and a record gross profit of $1.8 billion compared to the same period last year.
The company’s adjusted profit for the third quarter totalled $742 million, or $1.26 per share, compared with $452 million, or $0.77 per share, in the same period last year.
As of September 30, the company had $4.5 billion in cash and short-term investments.
In addition to capital spending, the company increased its shareholder dividend 33%.
“I think that’s a reflection of the strong fundamental areas of our business, particularly in coal and copper, and those are two strong commodities British Columbia produces,” said Smith. “We’re feeling very good about the long term prospects for our business in British Columbia.”
At press time, Teck’s shares were valued at $38.99. •
