Coal Business Unit. Bob Bell Chief Commercial Officer, Coal. Ian Kilgour Senior Vice President, Coal

Transcription

1 Coal Business Unit Bob Bell Chief Commercial Officer, Coal Ian Kilgour Senior Vice President, Coal

2 Forward Looking Information These slides 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). Forward-looking statements can be identified by the use of words such as anticipated, targeted and expect 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 estimates, forecasts, and statements as to management s expectations with respect to growth of our coal production; expansion of current operations production; restart of the Quintette mine and projected timing and production from the mine; timing and results from the planned Elkview plan expansion; expectations regarding levels of movement of material; projections regarding export levels and expanding port capacity. 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, the timing of receipt of regulatory and governmental approvals for Teck s development projects, 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 resources estimates (including, with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, tax benefits, our ongoing relations with our employees, ability of our transport and shipping suppliers to meet our demands for capacity; ability of port operators to meet our demand for capacity and expand operations; performance by customers and counterparties of their contractual obligations, and the future operational and financial performance of the company generally. The foregoing 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 are not limited to: adverse developments in business and economic conditions in the coal market, or in the supply, demand, and prices for coal, changes in interest and currency exchange rates, failure of customers or counterparties to perform their contractual obligations, inaccurate geological or metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), changes in taxation regimes, 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), political risk, social unrest, lack of available financing for Teck s service providers to fund expansion plans, and changes in general economic conditions or conditions in the financial markets. Certain of these risks are described in more detail in the annual information form of the company available at and in public filings with the Securities and Exchange Commission. The company does not assume the obligation to revise or update these forward-looking 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 Our Coal Business By the Numbers Producer of steelmaking coal in North America #1 Exporter of steelmaking coal in the world #2 Canadian steelmaking coal produced by Teck Employees in Teck s coal business unit 85% ~ 4,300 2

4 Our Steelmaking Coal Meets Customer Needs Our mines provide a range of mid-vol coals from which we tailor blends to meet customer needs Excellent contribution to coke cold and hot strength Low sulphur content Low ash content Consistent and stable quality 3

5 Coal Reserves Support Growth Long-life Quality Coal Reserves and Resources Approximately 25 years of reserves Significant resources to support existing reserve base More than 90% of our reserves and resources are steelmaking coal Reserves Measured & Indicated Resources Inferred Resources 665 million clean tonnes 4.16 billion tonnes, raw coal 4 Source: Teck Resources Limited

6 Steelmaking Coal Deposits A Look at Global Supply CANADA Met Coal Exports mt mt mt LEGEND Operating Deposits Western Canada USA Met Coal Exports mt mt mt Appalachia Elga (Russia) Tavan Tolgoi (Mongolia) Shanxi (China) Moatize (Mozambique) Maruwai (Indonesia) Bowen Basin AUSTRALIA Met Coal Exports mt mt mt Known potential sources of new supply necessary to meet forecast demand are limited. 5 Source: McCloskey

7 Our 2010 Exports 6 Source: Teck Resources Limited

8 China s Increasing Share of Global Hot Metal Production Global Hot Metal Production: 570 Mt 2000 Other Countries (77%) China (23%) Global Hot Metal Production: 1,026 Mt Other Countries (43%) China (57%) Source: World Steel Association

9 Urbanization in China and the Increasing Demand for Steel Limited land for urban development By 2025, urban population expected to grow by 350 million Steel needed to build necessary infrastructure 8 Source: McKinsey & Company

10 The image part with relationship ID rid4 was not found in the file. China s Steel Industry Growing and Modernizing Xinjiang New Capital Steel Caofeidian one of Capital the world s Steel largest Caofeidian blast furnaces one of the world s largest blast furnaces Qinghai Tibet Laioning InnerMongolia AnSteel Bayuquan Beijing Project Hebei Ningxia Capital Steel Shanxi Shandong Caofeidian Project Gansu Shaanxi Henan Jiangsu Sichuan Hubei Anhui Zhejiang Hunan Jiangxi Yunnan Guizhou Fujian Guangxi Guandong Heilongjiang Jilin Percentage of China s Steelmaking Industry Located on the Coast Total Coastal provinces Coastal % 65% 60% 55% 50% 45% 40% WISCO Fangcheng Project BaoSteel Zhanjiang Project Capital Steel Caofeidian 2x5500 m 3 blast furnace (2x4.5 Mtpa) China s steel industry is relocating to coastline to facilitate access to seaborne raw materials. 9 Source: NBS, CISA

11 Our Strategy to Meet Increasing Demand Expand our current operations to 28 million tonnes per year Brownfields expansion to utilize our significant coal reserves Potential Quintette restart 3 Mt Equipment + Plant + People = Production Renewing and improving our fleet Processing plant expansions Hired 1,400 people over the past 2 years * * Includes hiring for employee turnover, i.e., retirement 10

12 Operations Progress 2010 Ramp-up Plan Update New equipment 3 expansion shovels 23 of 41 expansion trucks have arrived and are operational Plant Greenhills plant expansion complete and truck shop expansion to be completed by year end Elkview plant expansion commissioning January 2012 People 600 new people employed in 2011 Recordable Injury Rate decreasing Results Record material movement in Q3 11

13 Record Material Moved in Q3 Moving More Material = Increased Coal Production Past the peak of higher strip ratio (clean coal) Record amount of material (raw coal + waste rock) moved during Q3 Expect similar levels of material movement in Q and beyond Prior to 2009 material moved hovered around 58 mbcm Teck Coal Material Moved (millions of BCM) Strike Impact Material Moved Average Material 55 mbcm QoQ: +11% YoY: +24% 66 mbcm 12

14 Sales Volume in Q3 Coal - Mt Q Q Q Production Sales Average Realized Price (US$/t) (C$/t) Site Costs (C$/t) * Transportation Costs (C$/t) Financial Results C$ millions Revenue 1,717 1,150 1,471 Gross Profit (before depreciation and amortization) 1, *Not reflecting one time costs due to settlement of labour contracts 13

15 Renewing and Improving our Fleet 14 Note: X axis is measured in age by operating hours.

16 Expanding Existing Operations Greenhills Plant Expansion Increases capacity from 4.2 to 5.0 Mt* Completed * Joint venture operation (80% Teck) 15

17 Expanding Existing Operations Elkview Plant Expansion Phase 1: Increasing production from 5.4 to 6 Mt (commissioning January 2012) Phase 2: Increasing capacity to 6.6 Mt (mid-2013) 16

18 Our Growth = More Jobs Coal Employees by the Numbers Note: Have also added more than 1,000 employees due to turnover since /Q4 07/Q4 08/Q4 09/Q4 10/Q4 11/Q3 11/Q2 17

19 Quintette Project Targeted 3 Mt Production First coal possible in mid-2013: Ability to use existing infrastructure: 18

20 Partnerships Support Growth Our Rail and Port Network Rail and port supply chain partners provide reliable & flexible service Long term commercial arrangements with railways based on growth, service and efficiency Long-term agreements with ports to meet growing demand 19

21 20 CP and CN Rail Alberta B.C. Western Corridors

22 Expanding Port Capacity Supports Growth Westshore Terminals 29 Mt, expanding to 33 Mt Largest user Potential Growth Planned Expansion Throughput Capacity Neptune Coal Terminal Exclusive usage Expanding to 12.5 Mt Ridley Terminals 5 Flexibility and growth 0 Neptune Coal Terminal Ridley Terminals Westshore Terminals Combined current throughput capacity of ~50 Mt 21

23 In Summary Growing to meet Global Demand #1 producer of steelmaking coal in North America Urbanization in Asia driving global demand for steelmaking coal Expanding production to > 30 million tonnes per year Secure rail and port network with capacity to meet growth targets 22

24 Thank You Contacts: Ian Kilgour Senior Vice President, Coal Phone: Bob Bell Vice President and Chief Commercial Officer, Coal Phone: