Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) today announced it is withdrawing the Frontier Project from the regulatory review process.
Teck CEO and President Don Lindsay has written to the federal Minister of Environment and Climate Change outlining the reasons for the withdrawal. The letter is included below.
Letter to Minister Wilkinson
I am writing to advise that after careful consideration Teck has made the difficult decision to formally withdraw our regulatory application for the Frontier oil sands project from the federal environmental assessment process.
We are disappointed to have arrived at this point. Teck put forward a socially and environmentally responsible project that was industry leading and had the potential to create significant economic benefits for Canadians. Frontier has unprecedented support from Indigenous communities and was deemed to be in the public interest by a joint federal-provincial review panel following weeks of public hearings and a lengthy regulatory process. Since the original application in 2011 we have, as others in the industry have done, continued to optimize the project to further confirm it is commercially viable.
Teck is extremely proud of the work done on this project and the strong relationships that we have formed with local governments, labour organizations, scientists, researchers and many other stakeholders, as well as with affected Indigenous communities. We believe that our agreements with Indigenous communities on Frontier, and very recently the work undertaken by the Alberta government with Indigenous communities in the region, form an important foundation for the future, and we applaud them for this milestone achievement.
However, global capital markets are changing rapidly and investors and customers are increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate change, in order to produce the cleanest possible products. This does not yet exist here today and, unfortunately, the growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved. In that context, it is now evident that there is no constructive path forward for the project. Questions about the societal implications of energy development, climate change and Indigenous rights are critically important ones for Canada, its provinces and Indigenous governments to work through.
I want to make clear that we are not merely shying away from controversy. The nature of our business dictates that a vocal minority will almost inevitably oppose specific developments. We are prepared to face that sort of opposition. Frontier, however, has surfaced a broader debate over climate change and Canada’s role in addressing it. It is our hope that withdrawing from the process will allow Canadians to shift to a larger and more positive discussion about the path forward. Ultimately, that should take place without a looming regulatory deadline.
Resource development has been at the heart of the Canadian economy for generations. Resource sectors including the Alberta oil sands create jobs; build roads, schools and hospitals; and contribute to a better standard of living for all Canadians. At the same time, there is an urgent need to reduce global carbon emissions and support action on climate change.
As a proudly Canadian company for over 100 years, we know these two priorities do not have to be in conflict. Our nation is uniquely positioned with abundant natural resources coupled with strong environmental regulations and a deeply engrained culture of social responsibility. We can build on that foundation and be a global provider of sustainable, climate-smart resources to support the world’s transition to a low carbon future. And yes, that can include low-carbon energy produced from the Alberta oil sands from projects like Frontier, using best-in-class technology, which would displace less environmentally and ethically sound oil sources.
At Teck, we believe deeply in the need to address climate change and believe that Canada has an important role to play globally as a responsible supplier of natural resources. We support strong actions to enable the transition to a low carbon future. We are also strong supporters of Canada’s action on carbon pricing and other climate policies such as legislated caps for oil sands emissions.
The promise of Canada’s potential will not be realized until governments can reach agreement around how climate policy considerations will be addressed in the context of future responsible energy sector development. Without clarity on this critical question, the situation that has faced Frontier will be faced by future projects and it will be very difficult to attract future investment, either domestic or foreign.
Teck has not taken this decision lightly. It is our hope that the decision to withdraw will help to create both the space and impetus needed for this critical discussion to take place for the benefit of all Canadians.
President and Chief Executive Officer
Teck Resources Limited
As a result of this decision Teck will write down the $1.13 billion carrying value of the Frontier Project.
Teck Resources Ltd. is pulling its application for a controversial new oil-sands mine in Alberta, freeing Canadian Prime Minister Justin Trudeau from a political predicament.
Teck’s decision not to proceed with the mine frees Trudeau from possibly the toughest test yet of his vow to balance developing Canada’s resources with fighting climate change. Rejecting the mine would have sparked widespread anger in Alberta, where the mine would have provided jobs and investment; approving it would have alienated the Liberal prime minister’s environmentalist base.
However, Teck pulling the application won’t be an unvarnished win for Trudeau. In a letter explaining why the miner pulled the plug, Chief Executive Officer Don Lindsay placed the blame on governments, saying Canada doesn’t yet have a clear framework to reconcile resource development and climate change.
“The growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved,” Lindsay said. “In that context, it is now evident that there is no constructive path forward for the project.”
Beyond the climate-change debate, the economics of the project have changed radically since it was first proposed in 2011. Back then, crude prices often topped $100 a barrel and fears abounded that the world was running out of oil. Canada’s oil sands, which contain the world’s third-largest reserves, saw a boom of spending as companies and countries rushed to secure supplies.
Teck Resources Limited (TECK) Gross Profit is $4.63B. The average 10-day trading volume of Teck Resources Limited (TECK) is 6.71M compared to 4.06M over the last 3 months which indicates a pop in trading activity. Right now, Teck Resources Limited (TECK) has a 50-day moving average of $14.40 and a 200-day moving average of $16.10. These moving averages are popular technical details that investors use to analyze price trends of Teck Resources Limited (TECK).
Approximately 0.77% of the shares of the company are sold short from investors betting the stock may trade lower. The beta value of Teck Resources Limited (TECK) stock is 1.34, indicating its 6.16% to 4.13% more volatile than the overall marketplace.
Technically, TECKs short term resistance levels are $32.12, $32.12 and $32.12 on the upside.
TECK is trading 0.65% off its 52 week low at $10.85 and -57.58% off its 52 week high of $25.75. Performance wise, TECK stock has recently shown investors -22.06% a cutback in a week, -29.14% a cutback in a month and -32.30% a cutback in the past quarter. More importantly, Teck Resources Limited (TECK) has shown a return of -37.13% since the 1st of this year.There are currently 539.57M shares in the float and 647.59M shares outstanding. There are 0.77% shares short in TECKs float.
The industry rank for Teck Resources Limited (TECK) is 109 out of 255 ranking it at the Top 43% .
TECK last 2 years revenues have decreased from $12,564,000 to $12,526,000 showing a downtrend.
Wall Street expects Teck Resources Limited (TECK) to report an EPS next Qtr profit of 0.29 and a profit of 11.59% next year.
The growth rate on TECK this year is -17.57 compared to an industry 10.20. TECKs next year’s growth rate is 3.28 compared to an industry 15.20.
About Teck Resources Limited (TECK):
Vancouver, Canada-based Teck Resources Limited is a diversified resource company committed to mining and mineral development with business units focused on steelmaking coal, copper, zinc and energy.The company’s principal products include steelmaking coal; copper concentrates and refined copper cathodes; refined zinc and zinc concentrates; energy products, such as bitumen; and lead concentrates. It also produces molybdenum, gold, silver, germanium, indium, mercury, and cadmium, as well as chemicals, industrial products, and fertilizers. The company also holds interest in oil sands projects.As of Dec 31, 2019, the company owned or had interests in 13 operating mines, a large metallurgical complex, and several major development projects in the Americas. The company expertise includes a wide array of activities related to exploration, development, mining and minerals processing, including smelting and refining.It operates through the following segments -Steelmaking Coal (51% of fiscal 2018 revenues): The company is the world’s second-largest seaborne exporter of steelmaking coal, with six operations in Western Canada that have significant high-quality steelmaking coal reserves. The operations are Cardinal River, Fording River, Greenhills, Line Creek, Elkview and Coal Mountains.Copper (22%): The company is a significant copper producer in the Americas, with four operating mines in Canada, Chile and Peru, and copper development projects in North and South America. Its main projects are Highland Valley Copper in Canada and Antamina, Quebrada Blanca and Carmen de Andacollo in South America.Zinc (25%): Teck Resources is one of the world’s largest producers of mined zinc, with three operating mines in the United States and Peru, and it owns one of the world’s largest fully integrated zinc and lead smelting and refining facilities located in Canada. The main projects are Red Dog, Trail Operations and Pend Oreille.Energy (3%): The company owns interest in a large producing oil sands mine in Alberta, and oil sands development assets. The main projects are Fort Hills and Frontier.