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2015 Sustainability Report Investors' Conference Call
- 1. 2015 Sustainability Report Investors’Conference Call July 12, 2016
- 2. Both these slidesand the accompanying oral presentation 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) and comparable legislation in other provinces. 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 statements relating to management's expectations with respect to our business and sustainability strategies, our sustainability goals 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 and economic conditions, technological solutions, receipt of regulatory approvals and ongoing relations with interested parties. 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: regulatory action, changes in laws and governmental regulations, development and use of new technology, natural disasters and adverse weather conditions, changes in commodity prices, general business and economic conditions, and the future operation 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 filings with the SEC. Teck 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. Under no circumstances should the information contained herein be considered an offer to sell or a solicitation of an offer to invest in securities. Forward-Looking Information 2
- 3. Agenda About Teck Our Approachto Sustainability 2015 Sustainability Risks and Opportunities Performance Summary Questions 3
- 4. About Teck Don Lindsay Presidentand CEO 4
- 5. Company Overview • Diversifiedresource 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
- 6. Our Approach toBusiness Sustainability Best people Balance sheet strength Nimble response to opportunity Operating excellence Long life, low cost assets in stable jurisdictions 6
- 7. • Zero fatalitiesin 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 Per200,000hours 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
- 8. 2015 Financial Performance Revenue$ 8.3 billion Gross 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
- 9. $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Existing Notes NewNotes 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
- 10. 2015 Guidance 2015Results 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
- 11. 2015 Sustainability Highlights Rankedin 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
- 12. Our Focus in2016 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
- 13. Our Approach toSustainability Marcia Smith SVP, Sustainability and External Affairs 13
- 14. • Six focusareas o Community o Biodiversity o Our People o Water o Air o Energy and Climate Change • Working towards short-term 2020 goals and long-term 2030 goals Our Sustainability Strategy 14
- 15. Our Approach toMateriality • 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
- 16. 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
- 17. 2015 Sustainability Risksand Opportunities 17
- 18. Energy and ClimateChange 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 EnergyConsumptioninTJ GHGEmissions(ktofCO2e) GHG Emissions Energy Consumption 18
- 19. Case Study Cutting Costsand 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
- 20. Water and TailingsManagement 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 Performance Water 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
- 21. Case Study West LineCreek 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
- 22. Communities and IndigenousPeoples 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
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- 25. Greg Waller Vice President,Investor Relations and Strategic Analysis Teck Resources Limited T: 604.699.4014 E: [email protected] Questions? Marcia Smith Senior Vice President, Sustainability and External Affairs Teck Resources Limited T: 604.699.4616 E: [email protected] www.teck.com/sustainability25
- 26. 2015 Sustainability Report Investors’Conference Call July 12, 2016