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FORWARD TOGETHER
Teck Resources Limited
Suite 3300, 550 Burrard Street
Vancouver, British Columbia, Canada
V6C 0B3
+1.604.699.4000 Tel
www.teck.com
2020
ANNUAL
REPORT
2020 ANNUAL REPORT
IN THIS REPORT
1
3
4
5
8
11
16
20
26
29
30
31
73
140
141
142
Our Business
2020 Highlights
Letter from the Chair
Letter from the CEO
Management’s Discussion and Analysis
Copper
Zinc
Steelmaking Coal
Energy
RACE21™
Exploration & Geoscience
Financial Overview
Consolidated Financial Statements
Board of Directors
Off icers
Corporate Information
On the cover: Rebecca Nielsen, Engineer-In-Training Geotech at Highland Valley Copper
in British Columbia, Canada. Photo taken with all necessary COVID-19 protocols in place
to ensure health and safety.
Our Business
Teck is a diversified resource company committed to responsible mining and
mineral development with business units focused on copper, zinc, steelmaking
coal, and energy. Headquartered in Vancouver, British Columbia (B.C.), Canada,
we own or have interests in 10 operating mines, a large metallurgical complex,
and several major development projects in the Americas. We have expertise across
a wide range of activities related to exploration, development, mining and minerals
processing, including smelting and refining, health and safety, environmental
protection, materials stewardship, recycling and research.
Our corporate strategy is focused on exploring for, developing, acquiring and
operating world-class, long-life assets in stable jurisdictions that operate through
multiple price cycles. We maximize productivity and efficiency at our existing
operations, maintain a strong balance sheet, and are nimble in recognizing and
acting on opportunities. The pursuit of sustainability guides our approach to
business, and we recognize that our success depends on our ability to ensure safe
workplaces, collaborative community relationships and a healthy environment.
Mineral reserve and resource estimates for our properties are disclosed in our most recent Annual Information Form, which is available on our website at www.teck.com,
under Teck’s profile at www.sedar.com (SEDAR), and on the EDGAR section of the United States Securities and Exchange Commission (SEC) website at www.sec.gov.
Forward-Looking Statements
This annual report contains forward-looking statements. Please refer to the “Cautionary Statement on Forward-Looking Statements” on page 70.
All dollar amounts expressed throughout this report are in Canadian dollars unless otherwise noted.
Our Business
1
1
Operations &
Major Projects:
Copper
1
Highland Valley Copper
Antamina
Quebrada Blanca
Carmen de Andacollo
Quebrada Blanca Phase 2
2
3
4
5
1
1
1
2
Operations &
Major Projects:
Zinc
1
Red Dog
Trail Operations
2
Steelmaking Coal
1
Steelmaking Coal Mines in B.C.
· Fording River
· Greenhills
· Line Creek
· Elkview
Energy
1
Fort Hills
Producing Operation
Development Project
Copper
1
Highland Valley Copper
Antamina
Quebrada Blanca
Carmen de Andacollo
Quebrada Blanca Phase 2
2
3
4
5
Zinc
1
Red Dog
Trail Operations
2
Steelmaking Coal
1
Steelmaking Coal Mines in B.C.
· Fording River
· Greenhills
· Line Creek
· Elkview
Copper
We are a significant copper producer in the Americas, with four operating mines in
Energy
1
Canada, Chile and Peru, and copper development projects in North and South America.
Fort Hills
Producing Operation
Development Project
Zinc
We are one of the world’s largest producers of mined zinc, with two operating mines in
the United States and Peru, and we own one of the world’s largest fully integrated zinc
and lead smelting and refining facilities.
Steelmaking Coal
We are the world’s second-largest seaborne exporter of steelmaking coal, with four
low-carbon intensity1 operations in British Columbia, Canada that have significant
high-quality steelmaking coal reserves.
Energy
We have an interest in a producing oil sands mine in Alberta, Canada, which produces
a low-carbon intensity product.
2
3
5
4
1 Carbon intensity in this context refers to the GHG emissions per tonne of product produced (e.g., GHG per tonne of steelmaking coal).
2
Teck 2020 Annual Report | Forward Together
2020 Highlights
Safety
• All sites implemented comprehensive measures to manage through the global pandemic, protect the health and
safety of employees and communities, and operate responsibly
• Health and safety performance in 2020 was the best on record for Teck, with a 32% reduction in High-Potential
Incident Frequency and a 23% reduction in Lost-Time Disabling Injury Frequency
• Created a $20 million COVID-19 Response Fund to provide direct support to critical services in communities
Financial
• Revenues of $8.9 billion and cash flow from operations of $1.6 billion
• Gross profit before depreciation and amortization of $2.8 billion
• Liquidity remained strong at $6.5 billion, including $450 million of cash
• Returned $106 million in cash to shareholders through dividends and completed $207 million of share buybacks in 2020
• Exceeded our cost reduction target, realizing more than $1.0 billion in savings as of the end of 2020
Operating and Development
• Achieved our target for our Quebrada Blanca Phase 2 project of 40% overall completion at the end of 2020, with the
construction workforce ramped back up to pre-COVID-19 levels
• Structurally shifted the cost base of our steelmaking coal business lower with the closure of our Cardinal River
Operations, completion of the expansion of our Elkview Operations, planned decrease in strip ratios and value
supported by RACE21™
• Advanced measures to reduce costs and improve reliability of our steelmaking coal supply chain through new rail
and terminal agreements and significant progress of the Neptune Bulk Terminals upgrade project
Sustainability
• Launched an updated sustainability strategy with new goals, including becoming carbon neutral across all operations
and activities by 2050
• Ranked as the top mining company for Environmental, Social, and Governance (ESG) performance by the S&P 2020
Dow Jones Sustainability World Index, Sustainalytics and FTSE4Good, and as the top company overall in North
America by Vigeo Eiris; also ranked in the top tier of our industry by MSCI, ISS ESG and Refinitiv
• Named to the Forbes World’s Best Employers 2020 list, Canada’s Top Employers for Young People 2021 and as one
of Canada’s Top 100 Employers for the fourth consecutive year by Mediacorp Canada’s Top Employers program
• Named to the 2021 Bloomberg Gender-Equality Index for the fourth straight year
Revenues
($ in billions)
Adjusted Profit Attributable to Shareholders(1)(2)(3)
($ in billions)
Cash Flow from Operations(4)
($ in billions)
2020
2019
2018
2017
2016
$8.9
2020
$0.6
$11.9
$12.6
$11.9
$9.3
2019
2018
2017
2016
$1.7
$2.4
$2.5
$1.1
2020
2019
2018
2017
2016
$1.6
$3.5
$4.4
$5.0
$3.1
Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
Notes:
(1)
(2) See “Use of Non-GAAP Financial Measures” section for reconciliation.
(3) Certain 2019 and 2018 comparatives have been restated, while 2017 and prior years have not been restated.
(4) Certain 2017 comparatives have been restated, while 2016 and prior years have not been restated.
2020 Highlights
3
Letter from the Chair
Sheila A. Murray
Chair of the Board
To the Shareholders
When I was appointed Chair of Teck’s Board of Directors in February 2020, I could not have imagined the unprecedented
challenges that were just ahead for our company and for society. As we reflect on a year since the onset of COVID-19 changed
the world, I could not be more proud of how the Teck team has met this challenge and worked together to ensure the safety of
our people and the continuity of our business.
I want to offer my sincere gratitude to all Teck employees, who demonstrated incredible strength and compassion in response to
the COVID-19 pandemic. Together you rose to the challenge, exemplifying remarkable resilience during extraordinarily difficult
circumstances, supporting each other and our communities, and moving our business forward safely and responsibly. On behalf
of the Board of Directors, I would also like to thank our shareholders, customers, suppliers, all levels of government, Indigenous
groups and the communities where we operate for your support during 2020. Despite the many unprecedented challenges
presented by the global pandemic, the Teck team remained focused and advanced key priorities while maintaining operations
and supporting jobs and economic activity throughout the communities in which we operate. As vaccines are distributed and
fiscal stimulus plans are rolled out to support global economic recovery, the Teck Board remains focused on ensuring we are well
positioned to support responsible execution of those strategic priorities and managing risk across all aspects of the business.
This focus includes executing on our copper growth strategy. In particular, we are advancing construction of the long-life,
low-cost Quebrada Blanca Phase 2 (QB2) project in Chile, which will double Teck’s copper production on a consolidated basis
when complete. We are also closely following the implementation of our plans to optimize our steelmaking coal business
following the decision to close our Cardinal River Operations and replace it with lower-cost coal production from our Elkview
Operations expansion. Together with improvements to our supply chain, such as our Neptune Bulk Terminals upgrade and new rail
and terminal agreements, these initiatives have strengthened our steelmaking coal business substantially for 2021 and beyond.
These strategic moves position Teck well for the future, particularly when combined with our RACE21™ innovation program and
continued focus on strong environmental, social and governance (ESG) performance to support Teck’s position as one of the
world’s most sustainable mining companies. In 2020, we continued to lead in areas that reflect societal priorities, which include
an increased focus on managing sustainability issues such as climate change, water, diversity and inclusion, and communities.
That work involved setting out a new sustainability strategy with ambitious goals, including a commitment to being carbon
neutral by 2050. While we are encouraged by the recognition of Teck’s sustainability efforts, such as our ongoing inclusion in
the Dow Jones Sustainability World Index, your Board remains focused on continuous improvement and being a global leader
in ESG performance. This also includes supporting our world-class team of people and continuing to be a leading employer,
as was recognized in 2020 when we were named to the Forbes World’s Top Employers list.
Your Board is working hard to ensure that our track record of success continues well into the future. I am extremely proud of our
company’s adaptability and resiliency, and I strongly believe that 2020 served as a reminder that together we have the ability
to overcome any challenges we face. Looking to the future, we will remain focused on advancing strategic priorities, supporting
the communities where we operate, and delivering value to our shareholders as we move forward, together.
Sheila A. Murray, Chair of the Board
Toronto, Ontario, Canada
February 17, 2021
4
Teck 2020 Annual Report | Forward Together
Letter from the CEO
Donald R. Lindsay
President and Chief Executive Officer
To the Shareholders
2020 was unlike any year we’ve experienced, with a global pandemic that had an unprecedented impact and that
required new ways of working and living. Yet through it all, the Teck team rose to the challenge and moved forward
together to advance our priorities.
Thanks in no small part to the strong culture of health and safety our people have worked to build over the years,
Teck was able to quickly respond to the pandemic. We implemented comprehensive protocols and preventive
measures to safeguard our people and transitioned thousands of employees to remote work overnight. We made
tough but necessary decisions to ensure safety, including temporarily reducing crew sizes at our operations and
suspending construction at our Quebrada Blanca Phase 2 (QB2) project in Chile. These measures allowed us to
keep operating, maintain jobs and continue providing essential metals and minerals for the world.
In keeping with our long-standing track record of supporting the communities in which we operate, we focused on
helping those who have been hard hit by the pandemic by establishing a $20 million COVID-19 response fund to
support healthcare and community organizations such as food banks in communities where we operate. As well,
we looked at how we can contribute to protecting our communities in the long term through the expansion of our
Copper & Health Program, which promotes the use of antimicrobial copper coatings in healthcare and public transit
settings, with the goal of reducing transmission of infections like COVID-19.
Health and safety is a core value at Teck and our first consideration in everything we do. Our health and safety
performance in 2020 was the best on record, with a 32% reduction in High-Potential Incidents from 2019. However,
we were deeply saddened by a fatality that took place in January 2021 at our Red Dog Operations. In response to
the incident, we are carrying out an in-depth investigation to learn as much as possible and implement measures
to prevent a reoccurrence.
In spite of the challenges of 2020, we continued to operate responsibly, advance our business strategy and
strengthen Teck for the future. We maintained our focus and progressed our key priorities of advancing copper
production growth, enhancing the efficiency of our steelmaking coal logistics chain, implementing our RACE21™
business transformation program, and reducing costs—all while maintaining strong health and safety and
sustainability performance.
Advancing Copper Growth
Copper is an essential material for the global transition to a low-carbon future. Renewable energy systems can
require up to 10 times more copper compared to traditional energy systems, and a zero-emission electric vehicle
needs up to four times as much copper as an internal combustion vehicle.
As such, the low-carbon transition will drive increased copper demand in the near and long term. To support this
global transition, we continued in 2020 to advance our strategy of growing copper production and rebalancing
our portfolio towards copper. In spite of the challenges posed by COVID-19, we achieved our year-end target of
40% completion of QB2 which, once operating at full capacity, will double Teck’s copper production on a consolidated
basis and significantly advance our copper growth strategy.
Letter from the CEO
5
Letter from the CEO
Improving Steelmaking Coal Logistics and Productivity
We also continued to improve our low-carbon intensity steelmaking coal business in 2020, strengthening our logistics
through rail and terminal agreements and upgrades at Neptune Bulk Terminals. When complete this year, the Neptune
upgrades will increase terminal-loading capacity, improve our capability to meet our delivery commitments and lower
our overall transportation costs. In addition, we structurally reduced our mine operating costs with the closure of our
higher-cost Cardinal River Operations, replacing this production through the expansion of our lower-cost Elkview
Operations. Collectively, these improvements position us well to meet steelmaking coal demand growth as the rollout
of vaccines and fiscal stimulus drive the global economic recovery.
Implementing the RACE21™ Business Transformation
RACE21™ is Teck’s business transformation program, which focuses on harnessing innovation and technology to
strengthen productivity, health and safety, and sustainability. In 2020, we advanced a broad range of initiatives,
including using machine learning to analyze data and provide real-time recommendations to our front-line operators
to maximize throughput at our processing plants and automation. This will improve safety and maximize the efficiency
of our mobile mining fleets. Moving forward, we will continue to implement and scale up technologies to optimize
our operations.
Implementing Cost Reductions
We implemented a company-wide program beginning in 2019 to reduce operating costs and planned capital spending
for the third quarter of 2019 and all of 2020, targeting total reductions of approximately $500 million. As of the end
of 2020 we had exceeded this target, achieving a total of approximately $1.0 billion of reductions from previously
planned spending across 2019 and 2020.
Financial Performance
In 2020 we maintained our strong financial position, despite challenging market conditions in the wake of COVID-19.
Revenues were $8.9 billion, and gross profit before depreciation and amortization was $2.8 billion. We ended the
year with $450 million of cash and $6.5 billion of liquidity, and our balance sheet remains strong. We also returned
$106 million in cash to shareholders through dividends and completed $207 million of share buybacks.
Sustainability Performance
2020 was a milestone year for our sustainability efforts, marking the 20th year of our annual Sustainability Report
as well as the 10th anniversary of our sustainability strategy. In 2020, we updated our sustainability strategy to meet
changing global expectations and to position us for the future. This included setting ambitious, new long-term
priorities and goals under eight strategic themes, including a goal to become a carbon-neutral operator by 2050.
We also took major steps toward achieving this goal, entering into renewable energy agreements to supply 50% of the
power for our QB2 project and 100% of the power for our Carmen de Andacollo Operations. Together, these agreements
will eliminate 1 million tonnes of greenhouse gas emissions annually and demonstrate our commitment to making real
progress on our path to decarbonization.
We were recognized for our sustainability efforts in the year, being named the top-ranked mining company on the
Dow Jones Sustainability World Index, while also being named to the Global 100 Most Sustainable Corporations list
by Corporate Knights. Sustainalytics also ranks Teck first in its Diversified Metals and Mining category, and we are
currently listed on the MSCI World ESG Leaders Index, FTSE4Good Index, Bloomberg Gender-Equality Index and
Jantzi Social Index.
6
Teck 2020 Annual Report | Forward Together
Our People
In a year that saw unexpected global challenges, our people rose to the occasion and worked to move our company
forward together like never before. We worked closely with communities, unions and other stakeholders to ensure
we could continue operating safely and responsibly.
Our leadership team also underwent significant change in 2020 with the appointment of three experienced senior
executives to help advance our key priorities: Red Conger, Executive Vice President and Chief Operating Officer;
Jonathan Price, Senior Vice President and Chief Financial Officer; and Nicholas Hooper, Senior Vice President,
Corporate Development. Ron Millos, our former Senior Vice President, Finance and Chief Financial Officer;
Dale Andres, our former Senior Vice President, Base Metals; and Andrew Golding, Senior Vice President, Corporate
Development, announced their retirements in 2020, as did Vice Presidents Chris Dechert, Scott Wilson, Mark Edwards
and Keith Stein in early 2021. I want to thank all these individuals for their many significant contributions to our
business over many years.
Forward Together
I am incredibly proud of how much we accomplished during such an unprecedented time. Our team was put to the
test and persevered, maintaining a strong focus on health and safety while advancing our key priorities. In 2021,
we will continue to strengthen our business, provide value to our shareholders, support the global transition to a
low-carbon future and provide the metals and minerals that are essential to our modern world.
Donald R. Lindsay
President and Chief Executive Officer
Vancouver, B.C., Canada
February 17, 2021
Letter from the CEO
7
MANAGEMENT’S
DISCUSSION AND
ANALYSIS
8
Teck 2020 Annual Report | Forward Together
Management’s Discussion
and Analysis
Our business is exploring for, acquiring, developing and producing natural resources. We are organized into business units
focused on copper, zinc, steelmaking coal, and energy. These are supported by our corporate offices, which manage our
corporate growth initiatives and provide marketing, administrative, technical, health, safety, environment, community,
financial and other services.
Through our interests in mining and processing operations in Canada, the United States (U.S.), Chile and Peru, we are an
important producer of copper, one of the world’s largest producers of mined zinc, the world’s second-largest seaborne
exporter of steelmaking coal and we have an interest in a producing oil sands mine. We also produce lead, silver,
molybdenum and various specialty and other metals, chemicals and fertilizers. We actively explore for copper, zinc and
gold, and we hold interests in oil sands assets in the Athabasca region of Alberta, Canada.
This Management’s Discussion and Analysis of our results of operations is prepared as at February 17, 2021 and should
be read in conjunction with our audited annual consolidated financial statements for the year ended December 31, 2020.
Unless the context otherwise dictates, a reference to Teck, Teck Resources, the Company, us, we or our refers to Teck
Resources Limited and its subsidiaries, including Teck Metals Ltd. and Teck Coal Partnership. All dollar amounts are in
Canadian dollars, unless otherwise stated, and are based on our 2020 audited annual consolidated financial statements
that are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board. In addition, we use certain financial measures, which are identified throughout the
Management’s Discussion and Analysis in this report, that are not measures recognized under IFRS and do not have a
standardized meaning prescribed by IFRS. See “Use of Non-GAAP Financial Measures” on page 59 for an explanation of
these financial measures and reconciliation to the most directly comparable financial measures under IFRS.
This Management’s Discussion and Analysis contains certain forward-looking information and forward-looking statements.
You should review the cautionary statement on forward-looking statements under the heading “Cautionary Statement
on Forward-Looking Statements” on page 70, which forms part of this Management’s Discussion and Analysis, as well as
the risk factors discussed in our most recent Annual Information Form.
Additional information about us, including our most recent Annual Information Form, is available on our website at
www.teck.com, under Teck’s profile at www.sedar.com (SEDAR), and on the EDGAR section of the United States Securities
and Exchange Commission (SEC) website at www.sec.gov.
Business Unit Results
The following table shows a summary of our production of our major commodities for the last five years and estimated
production for 2021.
Management’s Discussion and Analysis
9
Five-Year Production Record and Our Estimated Production in 2021
Principal Products
2016
2017
2018
2019
2020
estimate(3)
2021
Copper(1)
thousand tonnes
324
287
294
297
276
283
Zinc
Contained in concentrate(1) thousand tonnes
Refined
thousand tonnes
Steelmaking coal
Bitumen(1)(2)
million tonnes
million barrels
662
312
27.6
–
659
310
26.6
–
705
303
26.2
6.8
640
287
25.7
12.3
587
305
21.1
8.4
598
305
26.0
10.4
Notes:
(1)
We include 100% of production and sales from our Quebrada Blanca and Carmen de Andacollo mines in our production and sales volumes, even
though we do not own 100% of these operations, because we fully consolidate their results in our financial statements. We include 22.5% and
21.3% of production and sales from Antamina and Fort Hills, respectively, representing our proportionate ownership interest in these operations.
Zinc contained in concentrate production includes co-product zinc production from our 22.5% interest in Antamina.
(2) Fort Hills bitumen results for the year ended December 31, 2018 are included from June 1, 2018.
(3) Production estimates for 2021 represent the midpoint of our production guidance range.
Average commodity prices and exchange rates for the past three years, which are key drivers of our profit, are
summarized in the following table.
US$
CAD$
2020 % chg
2019 % chg
2018
2020 % chg
2019 % chg
2018
Zinc (LME cash — $/pound)
Copper (LME cash — $/pound)
2.80
1.03
Steelmaking coal (realized — $/tonne)
113
Blended bitumen (realized — $/barrel)(1) 27.99
Exchange rate (Bank of Canada)
+3%
-11%
-31%
2.72
1.16
164
-8%
2.96
-13%
-12%
1.33
187
-38% 45.20
+29% 35.12
3.76
1.38
152
37.51
+4%
-10%
-30%
3.62
1.54
218
-6%
3.84
-10%
-10%
1.72
243
-38% 60.12
+30% 46.14
US$1 = CAD$
CAD$1 = US$
1.34
0.75
+1%
0%
1.33
0.75
+2%
-3%
1.30
0.77
Note:
(1) Fort Hills blended bitumen results for the year ended December 31, 2018 are included from June 1, 2018.
Our revenues, gross profit before depreciation and amortization,1, 2 and gross profit by business unit for the past three
years are summarized in the following table.
Revenues
Gross Profit (Loss) Before
Depreciation and Amortization(1)(2)
Gross Profit (Loss)
($ in millions)
2020
2019
2018
2020
2019
2018
2020
2019
2018
Copper
Zinc
Steelmaking coal
Energy(3)
$ 2,419 $ 2,469 $ 2,714 $ 1,242 $ 1,080 $ 1,355 $ 859 $
815
1,009
(223)
2,700
3,375
454
523
277
(326)
6,349
3,094
2,968
3,770
5,522
1,085
2,904
(106)
407
975
831
144
617 $
877
601
869
2,112
3,040
10 (165)
Total
$ 8,948 $ 11,934 $ 12,564 $ 2,843 $ 4,959 $ 6,104 $ 1,333 $ 3,340 $ 4,621
Notes:
(1) Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
(2) See “Use of Non-GAAP Financial Measures” section for reconciliation.
(3) Fort Hills blended bitumen results for the year ended December 31, 2018 are included from June 1, 2018.
1 Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
2 See “Use of Non-GAAP Financial Measures” section for reconciliation.
10 Teck 2020 Annual Report | Forward Together
Copper
In 2020, we produced 276,000 tonnes of copper from our Highland Valley Copper Operations in B.C., our 22.5% interest
in Antamina in Peru, and our Carmen de Andacollo and Quebrada Blanca operations in Chile.
In 2020, our copper business unit accounted for 27% of our revenue and 44% of our gross profit before depreciation
and amortization.
Revenues
Gross Profit (Loss) Before
Depreciation and Amortization(1)(2)
Gross Profit (Loss)
($ in millions)
2020
2019
2018
2020
2019
2018
2020
2019
2018
Highland Valley
Copper
$
Antamina
Carmen de
Andacollo
Quebrada Blanca
Other
Total
993 $ 1,005 $
868
900
941 $
1,061
476 $
566
395 $
614
343 $
794
331 $
414
196 $
457
164
652
442
116
–
394
170
–
488
224
–
170
30
–
89
(18)
–
193
26
(1)
95
19
–
23
(59)
–
121
(59)
(1)
$ 2,419 $ 2,469 $ 2,714 $ 1,242 $ 1,080 $ 1,355 $
859 $
617 $
877
Notes:
(1) Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
(2) See “Use of Non-GAAP Financial Measures” section for reconciliation.
Production(1)
Sales(1)
(thousand tonnes)
2020
2019
2018
2020
2019
2018
Highland Valley Copper
Antamina
Carmen de Andacollo
Quebrada Blanca
Total
119
86
58
13
276
121
101
54
21
297
101
100
67
26
294
119
85
59
14
277
124
101
55
21
301
103
99
64
26
292
Note:
(1) We include 100% of production and sales from our Quebrada Blanca and Carmen de Andacollo mines in our production and sales volumes,
even though we do not own 100% of these operations, because we fully consolidate their results in our financial statements. We include
22.5% of production and sales from Antamina, representing our proportionate ownership interest in the operation.
Management’s Discussion and Analysis
11
Operations
Highland Valley Copper
Our Highland Valley Copper Operations is located in south-central B.C. Gross profit was $331 million in 2020, compared
with $196 million in 2019. The increase was primarily due to lower operating costs, reduced depreciation and
amortization expense, and higher copper prices, partially offset by lower sales volumes resulting from a decrease in
copper and molybdenum production. Gross profit before depreciation and amortization was $476 million in 2020,
compared to $395 million in 2019 and $343 million in 2018.
Highland Valley Copper’s 2020 copper production was 119,300 tonnes, compared to 121,300 tonnes in 2019 and
100,800 tonnes in 2018. The decrease in 2020 production compared with 2019 was primarily due to lower mill
throughput as a result of harder ores, offset by higher mill recoveries and copper grades. Molybdenum production was
50% lower in 2020 at 3.3 million pounds, compared to 6.6 million pounds in 2019, primarily due to substantially lower
molybdenum grades and recovery, as anticipated in the mine plan.
Copper production in 2021 is anticipated to be between 128,000 and 133,000 tonnes, with lower production in the first
half of 2021. This is lower than our previous guidance. We have identified the rock unit attributable to the decreased
throughput and it is now incorporated in our throughput model. This will continue to be a component of the ore feed
through 2022 and declines thereafter. Copper production from 2022 to 2024 is expected to be between 135,000 and
165,000 tonnes per year. Molybdenum production in 2021 is expected to be between 1.2 million and 1.8 million pounds,
with production expected to be between 3.0 million and 4.5 million pounds per year from 2022 to 2024.
Antamina
We have a 22.5% share interest in Antamina, a copper-zinc mine in Peru. The other shareholders are BHP (33.75%),
Glencore (33.75%) and Mitsubishi Corporation (10%). Gross profit in 2020 was $414 million, compared with $457 million
in 2019. Gross profit in 2020 decreased from 2019 primarily due to a temporary shutdown due to COVID-19 in the
second quarter, partially offset by higher copper prices and zinc sales. In 2020, our share of gross profit before
depreciation and amortization was $566 million, compared with $614 million in 2019 and $794 million in 2018.
On a 100% basis, Antamina’s copper production in 2020 was 380,700 tonnes, compared to 448,500 tonnes in 2019,
with the decrease primarily due to the temporary shutdown. Zinc production was 427,800 tonnes in 2020, an increase
from 303,300 tonnes of production in 2019, primarily due to higher zinc grades and a higher proportion of copper-zinc
ore processed as expected in the mine plan. In 2020, molybdenum production was 7.9 million pounds, which was
similar to 2019.
Pursuant to a long-term streaming agreement made in 2015, Teck delivers an equivalent to 22.5% of payable silver sold
by Compañía Minera Antamina S.A. to a subsidiary of Franco-Nevada Corporation (FNC). FNC pays a cash price of
5% of the spot price at the time of each delivery, in addition to an upfront acquisition price previously paid. In 2020,
approximately 2.8 million ounces of silver were delivered under the agreement. After 86 million ounces of silver have
been delivered under the agreement, the stream will be reduced by one-third. A total of 18.0 million ounces of silver
have been delivered under the agreement from the effective date in 2015 to December 31, 2020.
Our 22.5% share of 2021 production at Antamina is expected to be in the range of 91,000 to 95,000 tonnes of copper,
95,000 to 100,000 tonnes of zinc and 1.0 to 1.4 million pounds of molybdenum. Our share of annual copper production
is expected to average 90,000 tonnes from 2022 to 2024. Zinc production is expected to remain high through the next
couple of years as a result of mine sequencing. Our share of zinc production is expected to average between 80,000
and 100,000 tonnes per year during 2022 to 2024, with annual production fluctuating due to feed grades and the amount
of copper-zinc ore available to process. Our share of annual molybdenum production is expected to be between 2.0 and
3.0 million pounds between 2022 and 2024.
Carmen de Andacollo
We have a 90% interest in the Carmen de Andacollo mine, which is located in the Coquimbo Region of central Chile.
The remaining 10% is owned by Empresa Nacional de Minería (ENAMI), a state-owned Chilean mining company. Gross
profit increased to $95 million in 2020 from $23 million in 2019, with production and sales in 2019 impacted by a labour
12 Teck 2020 Annual Report | Forward Together
strike. Gross profit before depreciation and amortization was $170 million in 2020, compared to $89 million in 2019
and $193 million in 2018.
Carmen de Andacollo produced 55,400 tonnes of copper contained in concentrate in 2020, compared to 51,600 tonnes
in 2019. The increase was primarily due to the labour strike in 2019, which impacted production, partially offset by
lower copper grades. Copper cathode production was 2,000 tonnes in 2020, compared with 2,400 tonnes in 2019.
Gold production of 49,200 ounces in 2020 was higher than the 46,800 ounces produced in 2019, with 100% of the
gold produced for the account of RGLD Gold AG, a wholly owned subsidiary of Royal Gold, Inc. In effect, 100% of gold
production from the mine has been sold to Royal Gold, Inc., who pays a cash price of 15% of the monthly average gold
price at the time of each delivery, in addition to an upfront acquisition price previously paid.
Carmen de Andacollo’s production in 2021 is expected to be in the range of 46,000 to 51,000 tonnes of copper,
including approximately 1,000 tonnes of copper cathode. Production in 2021 is expected to be lower than 2020 due to
lower copper grades. Annual copper in concentrate production is expected to be between 50,000 and 60,000 tonnes
for 2022 to 2024.
Quebrada Blanca
Our Quebrada Blanca Operations is located in the Tarapacá Region of northern Chile. We have a 60% indirect interest
in Compañía Minera Quebrada Blanca S.A. (QBSA). A 30% interest is owned indirectly by Sumitomo Metal Mining Co.,
Ltd. and Sumitomo Corporation (together referred to as SMM/SC), and 10% is owned by ENAMI. ENAMI’s 10% preference
share interest in QBSA does not require ENAMI to fund capital spending.
Quebrada Blanca Operations
Quebrada Blanca’s gross profit in 2020 was $19 million, in comparison to a gross loss of $59 million in 2019. The increase
is primarily a result of substantially lower operating costs and reduced depreciation and amortization expense as
the cathode operation nears the end of its operating life. Quebrada Blanca’s gross profit before depreciation and
amortization was $30 million in 2020, compared to a loss of $18 million in 2019 and a profit of $26 million in 2018.
Mining operations ceased in the fourth quarter of 2018, and mining equipment and personnel have been redeployed
to the Quebrada Blanca Phase 2 (QB2) project. The operation is now focused on secondary copper extraction from
previous leach piles.
Quebrada Blanca produced 13,400 tonnes of copper cathode in 2020, compared to 21,100 tonnes in 2019, with the
decrease due to the continued decline of cathode production, as planned. Cathode production has been extended to
the end of 2021, with anticipated production of approximately 10,000 to 11,000 tonnes in 2021, with declining production
rates in the second half of the year.
Quebrada Blanca Phase 2
The QB2 project is one of the world’s largest undeveloped copper resources. QB2 is expected to have low operating
costs, an initial mine life of 28 years and significant potential for further growth. Teck approved the QB2 project for full
construction in December 2018.
On March 18, 2020, we temporarily suspended construction activities at the project to protect the health and safety
of our employees and to support Chilean efforts to limit transmission of COVID-19. The project has subsequently
ramped up in stages to pre-COVID-19 levels in accordance with plan and will continue to ramp up further as conditions
permit, with peak construction workforce levels expected in the second quarter of 2021. The overall project progress
through the end of December 31, 2020 met our year-end target of 40% overall completion. Significant focus remains
on managing COVID-19 and the extensive protocols in place to protect the health and safety of our employees.
On March 31, 2020, we announced an updated capital cost estimate for the project of US$5.2 billion, including
escalation, and the go-forward spend from April 1, 2020 was estimated at US$3.9 billion, assuming a CLP/USD of
775 over the remainder of the project. The estimate was based on a schedule that contemplated first production in
the second quarter of 2022 and included a contingency of approximately US$400 million. This updated estimate and
schedule did not reflect the impact of COVID-19 on the project outlined below, including the temporary suspension of
project construction activities due to the pandemic.
Management’s Discussion and Analysis
13
The temporary suspension due to COVID-19 in mid-March and impacts related to managing ramp-up and construction
within the current COVID-19 environment has resulted in changes to both project capital costs and schedule. We have
updated our estimate of the overall COVID-19 related costs based on the impacts to construction seen to date under
the existing COVID-19 management protocols. However, additional cost risk remains, should the pandemic worsen or
continue for a protracted period of time.
The impact of the construction suspension including estimated ramp-up costs and estimated costs associated with
ongoing compliance with health and safety protocols in the context of COVID-19, as well as additional camp space
that would not have been required absent COVID-19, are anticipated to be approximately US$450 to US$500 million,
of which US$197 million has been expensed. This is an increase of US$50 million over previous guidance. This does not
include interest that would have otherwise been capitalized if the project were not suspended.
The estimated capital cost of QB2 excluding costs associated with COVID-19 remains US$5.2 billion as announced on
March 31, 2020, including escalation and based on a CLP/USD exchange rate of 775 from April 1, 2020. The average
realized exchange rate was approximately 800 from April 1, 2020 to December 31, 2020. The go-forward capital cost
from January 1, 2021 is estimated at US$3.2 billion, assuming a CLP/USD rate of 775 over the remainder of the project.
A 25 CLP change in the CLP/USD exchange rate would change the capital cost by approximately US$80 million.
First production is expected in the second half of 2022, in line with previous guidance, reflecting the estimate of schedule
delay related to COVID-19, including demobilization, suspension and restart impacts.
Project development expenditures in 2020 were approximately US$1.227 billion, with additional capital commitments
as at December 31, 2020 of approximately US$1.3 billion. The development of the project is based on a technical
report that is compliant with National Instrument (NI) 43-101.
Quebrada Blanca Phase 3
Drilling and engineering studies for the Quebrada Blanca Phase 3 project progressed in 2020. A limited amount of
work continues on targeted trade-off studies in preparation for the start of the prefeasibility study.
Other Copper Projects
Teck and our partners continue to advance the development of five base metals projects, Zafranal, San Nicolás,
Galore Creek, Mesaba and Schaft Creek, collectively referred to as the Project Satellite assets. Work in 2021 at Zafranal
will include submission of a Social and Environmental Impact Assessment in support of project permitting. Work at
San Nicolás in 2021 will focus on completing a prefeasibility study and baseline environmental studies. At Galore Creek,
a prefeasibility study and associated environmental and social baseline studies will be initiated. Limited baseline field
studies and focused engineering work will be carried out at Mesaba and Schaft Creek.
In addition to the Project Satellite assets, Teck has a 50% interest in Compañía Minera NuevaUnión S.A., which owns
the Relincho and La Fortuna projects. Newmont Corporation owns the remaining 50%. In 2020, limited work focused
on a review of study results and an assessment of optimization opportunities, with assessments continuing in 2021.
Expenditures in 2021 on NuevaUnión and the Satellite assets in total are expected to increase over 2020 expenditures.
Our 2020 capital expenditures for the Satellite assets were $23 million and funding to NuevaUnión, which is accounted
for as an equity investment, was $11 million. Capital expenditures in 2021 for the Satellite assets are expected to be
$40 million and funding to NuevaUnión is expected to be $5 million.
Markets
Copper prices on the London Metal Exchange (LME) averaged US$2.80 per pound in 2020, up from an average of
US$2.72 per pound in 2019.
Copper stocks on the LME fell by 26% to 107,950 tonnes in 2020, and copper stocks on the Shanghai Futures Exchange
fell by 30% to 86,700 tonnes, while COMEX warehouse stocks rose 120% to 68,400 tonnes. Combined exchange
stocks decreased by 38,500 tonnes during 2020 and ended the year at 261,700 tonnes, or less than four weeks of
global consumption, well below the 25-year average of 11.3 weeks of global consumption. Exchange stocks ended the
year at six-year lows and came within 1,000 tonnes of reaching levels last seen in 2008. Total reported global stocks,
14 Teck 2020 Annual Report | Forward Together
including producer, consumer, merchant and terminal stocks, stood at an estimated 18.8 days of global consumption
versus the 25-year average of 26.9 days.
In 2020, global copper mine production decreased 1.4% according to Wood Mackenzie, a commodity research
consultancy, with total production estimated at 20.6 million tonnes. Wood Mackenzie is forecasting a 3.5% increase
in global mine production in 2021 to 21.3 million tonnes.
Copper scrap availability decreased in 2020 as scrap and unrefined copper imports into China, including blister and
anode, were down 5.9% year over year to December 2020. China-refined copper imports increased by 36% in 2020
to 4.3 million tonnes, in response to improved demand, inventory restocking, and lower availability of copper
concentrates and copper scrap.
Wood Mackenzie estimates that global refined copper production grew 1.0% in 2020, above the 1.3% decrease in
global copper cathode demand. They are projecting that refined production will increase 1.5% in 2021, reaching
24.1 million tonnes. Fundamentals for copper are expected to improve in the coming years as global stimulus spending
by governments continues, and as governments and corporations continue to build out their exposure to the green
economy through increased electrification and reductions to carbon emissions, requiring additional copper units.
Wood Mackenzie is forecasting that global copper metal demand will increase by 2.7% in 2021, reaching 24.0 million
tonnes, suggesting the refined copper market will be balanced in 2021.
Copper Price and LME Inventory
Source: LME
Global Demand for Copper
Source: Wood Mackenzie
Global Copper Inventories
Source: ICSG, LME, COMEX, SHFE
$4.00
$3.00
$2.00
$1.00
$0.00
Price
2015
2016
2017
2018
2019
2020
500
400
300
200
100
0
Tonnes
25
20
15
10
5
35
30
25
20
15
10
5
2000
2004
2008
2012
2016
2020
0
0
Tonnes Days
2015
2016
2017
2018
2019
2020
1,600
1,400
1,200
1,000
800
600
400
200
0
Tonnes
LME inventory (tonnes in thousands)
Copper price (US$ per pound)
Rest of the world (tonnes in millions)
China (tonnes in millions)
Inventories (tonnes in thousands)
Days of global consumption
25-year average days inventory
Outlook
We expect 2021 copper production to be in the range of 275,000 to 290,000 tonnes. Higher production at Highland
Valley Copper and Antamina is expected to offset declines at Carmen de Andacollo and Quebrada Blanca.
In 2021, we expect our copper total cash unit costs1 to be in the range of US$1.65 to US$1.75 per pound before cash
margins for by-products. Copper net cash unit costs are expected to be in the range of US$1.30 to US$1.40 per pound
after cash margins for by-products, based on current production plans, by-product prices and exchange rates.
We expect copper production to be in the range of 275,000 to 315,000 tonnes per year from 2022 to 2024,
excluding QB2, which is expected to add substantially to our overall copper production following first production
in the second half of 2022.
1 Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
Management’s Discussion and Analysis
15
Zinc
We are one of the world’s largest producers of mined zinc, primarily from our Red Dog Operations in Alaska, and the
Antamina copper mine in northern Peru, which has significant zinc co-product production. Our metallurgical complex
in Trail, B.C. is one of the world’s largest integrated zinc and lead smelting and refining operations. In 2020, we
produced 587,000 tonnes of zinc in concentrate, while our Trail Operations produced 305,100 tonnes of refined zinc.
In 2020, our zinc business unit accounted for 30% of revenue and 29% of gross profit before depreciation and amortization.
Revenues
Gross Profit (Loss) Before
Depreciation and Amortization(1)(2)
Gross Profit (Loss)
($ in millions)
2020
2019
2018
2020
2019
2018
2020
2019
2018
Red Dog
Trail Operations
Pend Oreille
Other
Intra-segment
$ 1,394 $ 1,594 $ 1,696 $
1,829
1,942
1,761
–
9
(464)
56
8
98
8
(519)
(650)
717 $
65
–
33
–
837 $
–
(4)
(2)
–
990 $
91
(5)
9
–
513 $
(23)
–
33
–
696 $ 864
(86)
(7)
(2)
–
16
(20)
9
–
Total
$ 2,700 $ 2,968 $ 3,094 $
815 $
831 $ 1,085 $
523 $
601 $ 869
Notes:
(1)
(2) See “Use of Non-GAAP Financial Measures” section for reconciliation.
Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
(thousand tonnes)
2020
2019
2018
2020
2019
2018
Production
Sales
Refined zinc
Trail Operations
Contained
in concentrate
Red Dog
Antamina(1)
Pend Oreille
Total
305
287
303
307
284
304
491
96
–
587
553
68
19
640
583
92
30
705
551
95
–
646
561
68
20
649
521
93
30
644
Note:
(1) Co-product zinc production from our 22.5% interest in Antamina.
16 Teck 2020 Annual Report | Forward Together
Operations
Red Dog
Our Red Dog Operations, located in northwest Alaska, is one of the world’s largest zinc mines. Gross profit in 2020
was $513 million, lower than $696 million in 2019, primarily due to lower zinc and lead prices, higher smelter processing
charges and higher depreciation and amortization expense, which were partially offset by lower royalty expense. Red
Dog’s gross profit before depreciation and amortization in 2020 was $717 million, compared with $837 million in 2019
and $990 million in 2018.
In 2020, zinc production at Red Dog was 490,700 tonnes, lower than 552,400 tonnes produced in 2019, primarily
due to lower zinc grades and lower mill recoveries. Lead production in 2020 of 97,500 tonnes was slightly lower than
102,800 tonnes in 2019.
We continue to implement tailings and water-related projects to manage increased water volume at Red Dog
Operations. Climate change is affecting conditions in the receiving environment, which limited our ability to discharge
treated water in 2020, leading to increased water in the storage facilities. Throughout 2020, we completed several
projects to increase storage capacity and implemented a breakthrough RACE21™ project that significantly increased
water treatment capability. In addition, a new water treatment plant was installed to increase the water discharge
capacity when permit limitations allow. These projects removed the temporary restrictions from the mine plan put in
place to manage water levels in 2020. We are advancing additional projects in 2021 to minimize potential constraints
on production in the future.
Construction on the mill upgrade project, called VIP2, was completed in 2020. The project, which started construction
in late 2017, is expected to increase average mill throughput by about 15% over the remaining mine life, helping to
offset lower grades and harder ore.
Red Dog’s location exposes the operation to severe weather and winter ice conditions, which can significantly affect
production, sales volumes and operating costs. In addition, the mine’s bulk supply deliveries and all concentrate
shipments occur during a short ocean shipping season that normally runs from early July to late October. This short
shipping season means that Red Dog’s sales volumes are usually higher in the last six months of the year, resulting in
significant variability in its quarterly profit, depending on metal prices.
The Red Dog concentrate shipping season, which commenced on July 13, 2020, following a delay due to the failure of
the loading arm on one of two shipping barges, was completed successfully on November 2, 2020, with all available
concentrate shipped.
In accordance with the operating agreement governing the Red Dog mine between Teck and NANA Regional
Corporation, Inc. (NANA), we pay a royalty on net proceeds of production to NANA, which increased from 30% to
35% in October 2017. This royalty increases by 5% every fifth year to a maximum of 50%, with the next adjustment
to 40% anticipated to occur in October 2022. The NANA royalty payment in 2020 was US$175 million, compared
with US$231 million in 2019. NANA has advised us that it ultimately shares approximately 60% of the royalty, net of
allowable costs, with other Regional Alaska Native Corporations pursuant to section 7(i) of the Alaska Native Claims
Settlement Act.
Red Dog’s production of contained metal in 2021 is anticipated to be in the range of 490,000 and 510,000 tonnes
of zinc and 85,000 to 95,000 tonnes of lead. From 2022 to 2024, zinc production is expected to be in the range of
510,000 to 550,000 tonnes of contained zinc per year as the mine plan enters an area of higher-grade ores, while
lead production is expected to be between 80,000 and 90,000 tonnes of contained lead per year.
Trail Operations
Our Trail Operations in southern B.C. produces refined zinc and lead, as well as a variety of precious and specialty
metals, chemicals and fertilizer products.
Trail Operations incurred a gross loss of $23 million in 2020, in comparison to a gross loss of $86 million in 2019. The
lower loss in 2020 is primarily due to higher smelter processing charges realized in 2020 as well as higher production
Management’s Discussion and Analysis
17
and sales. Production and sales were reduced in 2019 due to an electrical equipment failure in one of four rectifiers at
the zinc refinery. Trail Operations’ gross profit before depreciation and amortization was $65 million in 2020, compared
with nil in 2019 and $91 million in 2018.
Refined zinc production in 2020 was 305,100 tonnes, higher than 287,400 tonnes in 2019 when production was reduced
due to the electrical equipment failure in 2019. Refined zinc production in 2020 was impacted by the extension of the
annual zinc roaster maintenance to facilitate physical distancing and by the quality of feed sources available. Refined
lead production in 2020 was 72,900 tonnes, compared with 69,000 tonnes in 2019. Silver production fell to 11.5 million
ounces in 2020 from 14.0 million ounces in 2019 due to lower silver contained in purchased concentrates.
Our recycling process treated 43,100 tonnes of material during the year, and we plan to treat about 44,300 tonnes in
2021. Our focus remains on treating lead acid batteries and cathode ray tube glass, plus small quantities of zinc
alkaline batteries and other post-consumer waste.
In 2021, we expect Trail Operations to produce between 300,000 and 310,000 tonnes of refined zinc. Refined zinc
production from 2022 to 2024 is expected to be between 305,000 and 315,000 tonnes per year. Refined lead and
silver production at Trail are expected to be similar to prior years but will fluctuate as a result of concentrate feed
source optimization.
Markets
Zinc prices on the London Metals Exchange (LME) averaged US$1.03 per pound for the year, lower than US$1.16 per
pound in 2019. Zinc prices ended the year at US$1.24 per pound, rising from a low of US$0.80 per pound in March.
Zinc stocks on the LME rose by 151,000 tonnes in 2020, a 295% increase from historically low 2019 levels, finishing the
year at 202,225 tonnes. Stocks held on the Shanghai Futures Exchange rose 527 tonnes in 2020, a 1.9% increase from
2019 levels, finishing the year at 28,600 tonnes. Total global exchange stocks remained well below historical levels,
ending the year at 6.4 days of global consumption, well below the 25-year average of 18 days. We estimate that total
reported global stocks, which include producer, consumer, merchant and terminal stocks, rose by approximately
138,600 tonnes in 2020 to 0.8 million tonnes at year-end, representing an estimated 21 days of global demand, compared
to the 25-year average of 38 days.
In 2020, global zinc mine production decreased 3.4% according to Wood Mackenzie, a commodity research consultancy,
with total production reaching 12.5 million tonnes as mines in South America were forced to close for extended periods
of time in the first half of 2020. Wood Mackenzie expects global zinc mine production to grow 5.5% in 2021 to reach
13.2 million tonnes, down from their September estimate of 8.5% in 2021. This increase is largely attributable to a
resumption in production at South American mines.
Wood Mackenzie estimates that the global zinc metal market moved into surplus in 2020, recording an excess of
0.46 million tonnes of available material. Global refined zinc demand fell 5.5% in 2020 over 2019, declining to 13.1 million
tonnes. Demand in China rebounded strongly in the second half of 2020, with Wood Mackenzie estimating that it was
one of the only countries to show growth in 2020, rising 0.1% over 2019.
Wood Mackenzie estimates that global refined zinc production increased 1.5% in 2020, with refined production
reaching 13.6 million tonnes. They also estimate that refined zinc production will see a 1.9% increase in 2021 over 2020
levels, to 13.9 million tonnes. The estimate for the total increase in supply will be above global metal demand, which is
forecast to grow 4.0% to 13.6 million tonnes, suggesting that the refined metal market will be in a 0.3 million tonne
surplus in 2021.
18 Teck 2020 Annual Report | Forward Together
Zinc Price and LME Inventory
Source: LME
Global Demand for Zinc
Source: Wood Mackenzie
Global Zinc Inventories
Source: ILZSG, LME, SHFE
$1.80
$1.60
$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
Price
2015
2016
2017
2018
2019
2020
1,200
1,000
800
600
400
200
0
Tonnes
20
16
12
8
4
60
50
40
30
20
10
2000 2004
2008
2012
2016
2020
0
0
Tonnes Days
2015
2016
2017
2018
2019
2020
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Tonnes
LME inventory (tonnes in thousands)
Zinc price (US$ per pound)
Rest of the world (tonnes in millions)
China (tonnes in millions)
Inventories (tonnes in thousands)
Days of global consumption
25-year average days inventory
Outlook
We expect 2021 production of zinc in concentrate, including co-product zinc production from our copper business
unit, to be in the range of 585,000 to 610,000 tonnes. We expect lead production from Red Dog to be in the range of
85,000 to 95,000 tonnes in 2021.
In 2021, we expect our zinc total cash unit costs to be in the range of US$0.54 to US$0.59 per pound before cash
margins for by-products. Total cash unit costs at Red Dog are expected to increase in 2021 due primarily to lower
production volumes in 2020 compared to prior years. Zinc net cash unit costs are expected to be in the range of
US$0.40 to US$0.45 per pound after cash margins for by-products in 2021, based on current production plans,
by-product prices and exchange rates. Cash margins for by-products are expected to be lower in 2021 primarily due to
lower silver production. Net cash unit costs are expected to vary significantly throughout the year, in line with normal
seasonal sales patterns. Sales of Red Dog lead, our main by-product, are typically completed in the third and fourth
quarters, resulting in limited by-product credits and consequently higher net cash unit costs in the first half of the year.
For the 2022 to 2024 period, we expect total zinc in concentrate production to be in the range of 590,000 to
650,000 tonnes per year.
Management’s Discussion and Analysis
19
Steelmaking Coal
In 2020, our steelmaking coal operations in Western Canada produced 21.1 million tonnes of coal, with sales of 21.9 million
tonnes. As planned, Cardinal River Operations in Alberta completed its final production in the second quarter and began
transitioning to closure in the second half of 2020. The majority of our steelmaking coal sales are to the Asia-Pacific
region, with the remaining amounts sold primarily to Europe and the Americas. Our long-term annual average
production capacity is 26 to 27 million tonnes, and we have total proven and probable reserves of 811 million tonnes
of steelmaking coal.
A major expansion of our Elkview Operations processing facility, completed in the second quarter, increased Elkview’s
capacity to allow it to produce 9 million tonnes annually. This has enabled us to replace higher-cost production from
our Cardinal River Operations with lower-cost production from our Elkview Operations.
In 2020, our steelmaking coal business unit accounted for 38% of revenue and 35% of gross profit before depreciation
and amortization.
($ in millions)
Revenues
Gross profit before depreciation and amortization(1)(2)
Gross profit
Production (million tonnes)
Sales (million tonnes)
$
$
$
2020
3,375
1,009
277
21.1
21.9
2019
2018
$
$
$
5,522
2,904
2,112
25.7
25.0
$
$
$
6,349
3,770
3,040
26.2
26.0
Notes:
(1) Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
(2) See “Use of Non-GAAP Financial Measures” section for reconciliation.
Operations
Gross profit for our steelmaking coal business unit was $277 million in 2020, down from $2.1 billion in 2019, largely due
to COVID-19, which impacted demand for our products and substantially reduced prices in 2020. In addition, logistics
chain disruptions early in the year and a planned extended shutdown at Neptune Bulk Terminals (Neptune), resulted in
lower production and sales volumes. Gross profit before depreciation and amortization for our steelmaking coal business
unit decreased to $1.0 billion in 2020, compared with $2.9 billion in 2019.
Our average realized steelmaking coal selling price in 2020 decreased to US$113 per tonne, compared with US$164 per
tonne in 2019 and US$187 per tonne in 2018.
Sales volumes were 21.9 million tonnes in 2020, compared with 25.0 million tonnes sold in 2019. Our 2020 production
of 21.1 million tonnes was 4.6 million tonnes lower than 2019, for the reasons noted above.
20 Teck 2020 Annual Report | Forward Together
Cost of sales in 2020 was $67 per tonne, and adjusted site cash cost of sales1, 2 in 2020 was $64 per tonne. This cost
was lower than the $65 per tonne adjusted site cost of sales in 2019. Higher cost of sales in the first and second
quarters of 2020 was due to logistics issues and the impacts of COVID-19, and was offset by our cost reduction efforts
and a structural change in our cost base. We have restructured the cost base in our steelmaking coal business unit
with the expansion of our Elkview Operations completed in the first half of 2020, closure of our higher-cost Cardinal
River Operations, a planned decline in strip ratio, and the benefits of our cost reduction program and RACE21™.
Capital spending in 2020 included $571 million for sustaining capital, including water, and $411 million for growth
capital, which includes $379 million for the Neptune upgrade project, as described below.
Elk Valley Water Management Update
We continue to implement the water quality management measures required by the Elk Valley Water Quality Plan
(the Plan). The Plan establishes short-, medium- and long-term water quality targets for selenium, nitrate, sulphate and
cadmium to protect the environment and human health, as well as a plan to manage calcite formation. In 2020, we
completed the Elkview Phase 2 Saturated Rock Fill (SRF), doubling its capacity from 10 to 20 million litres per day, and
we are currently in the commissioning phase. We also continued to advance the construction of the Fording River South
Active Water Treatment Facility (FRO-S AWTF), expected to be complete during the second quarter of 2021, and the
construction of our next SRF at our Fording River Operations, planned for commissioning in the fourth quarter of 2021.
The majority of our 2020 capital spending for water projects in the steelmaking coal business unit was associated with
our FRO-S AWTF, the Elkview Phase 2 SRF, the Kilmarnock Diversion and the advancement of the Eagle 4 SRF at our
Fording River Operations. Capital spending in 2020 on water treatment was $266 million, below our previous guidance
of $285 million. COVID-19 resulted in a delay in the construction of our FRO-S AWTF in the fourth quarter 2020, which
in combination with a change in the general contractor, has delayed the completion of the project to the second
quarter of 2021.
Capital spending in 2021 on water treatment (AWTFs and SRFs) and water management (source control, calcite
management and tributary management) is estimated to be approximately $255 million. By the end of 2021, we
expect to increase total treatment capacity to more than 50 million litres per day with the completion of FRO-S AWTF,
Elkview Phase 2 SRF and the first phase of an SRF at the north end of the Elk Valley.
From 2022 to 2024, we plan to invest an additional $300 to $400 million of capital on water management and water
treatment. The investment in water treatment will further increase treatment capacity to 90 million litres per day and
will be achieved through the development of SRFs. Our guidance on water-related capital spending from 2021 to 2024
has increased by approximately $100 million. The increase in costs is due to approximately $25 million in spending
that was delayed from 2020 to 2021, approximately $45 million in COVID-19 costs primarily related to the FRO-S AWTF,
and approximately $30 million related to other factors including scope changes.
The table below sets out the components of our expected water treatment and management capital costs for the
years 2021 and 2022 to 2024.
($ in millions)
Water treatment (AWTFs and SRFs)
Water management (source control, calcite and tributary)
2021
2022 to 2024
$ 215
40
$ 255
$ 200 – 250
100 – 150
$ 300 – 400
In addition to the capital set out above and as previously announced, the aggregate cost of the incremental measures
required under the October 2020 Direction issued by Environment and Climate Change Canada, outlined below, are
preliminarily estimated at $350 to $400 million between 2021 and 2030. These cost estimates are based on limited
engineering, and the feasibility of certain measures has not yet been confirmed. The results of environmental monitoring
may dictate that certain of the measures do not need to be fully implemented, or that other measures will be required.
1 Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
2 See “Use of Non-GAAP Financial Measures” section for reconciliation.
Management’s Discussion and Analysis
21
We continue to invest in various innovative technical solutions to address water quality issues. Additional research
and development projects are ongoing to continue to improve our understanding of water quality, source control and
treatment options.
Operating costs associated with water treatment were approximately $0.75 per tonne in 2020 and are projected to
increase gradually over the long term to approximately $3 per tonne as additional AWTFs and SRFs become operational.
Long-term capital costs for construction of additional treatment facilities are expected to average approximately
$2 per tonne annually.
Fish census data obtained in late 2019, and confirmed in 2020, showed unexpected and substantial reductions in
populations of Westslope Cutthroat Trout in certain mine-affected waters in the Elk Valley. The causes of the reductions
are still unclear and substantial technical effort is ongoing to determine whether the reductions are associated with
water quality issues, flow conditions, habitat, predation, weather, other natural causes or a combination of these factors.
However, preliminary findings indicate water quality constituents, including selenium, were not a primary contributor
to the decline. Given the nature and timing of the reduction in the fish population, it is more likely that the fish
population decline happened due to a combination of factors. Preliminary findings have been shared and discussed
with representatives of the various government agencies and Ktunaxa Nation Council and are currently under review.
Concurrently, we have implemented Westslope Cutthroat Trout recovery-focused projects in the upper Fording River
watershed in 2020 with more planned for 2021. Teck is also working collaboratively with representatives from the
Province of B.C., Ktunaxa Nation Council and Department of Fisheries and Oceans to develop a Westslope Cutthroat
Trout recovery plan. Until the results of the evaluation of cause are available, currently expected mid-2021, and
appropriate mitigation measures in place, we may face delays in permitting or restrictions on our mining activities
in the Elk Valley.
During the third quarter of 2018, we received notice from Canadian federal prosecutors of potential charges under the
Fisheries Act in connection with discharges of selenium and calcite from steelmaking coal mines in the Elk Valley. Since
2014, compliance limits and site performance objectives for selenium and other constituents, as well as requirements
to address calcite, in surface water throughout the Elk Valley and in the Koocanusa Reservoir have been established
under a regional permit issued by the provincial government, which references the Plan.
As noted above, in October 2020, Environment and Climate Change Canada issued a Direction under the Fisheries Act
(the Direction) setting out measures to be taken to improve water quality and prevent calcite deposition in the Elk Valley
in waters affected by Teck’s Fording River and Greenhills operations. The measures set out in the Direction are
complementary to measures already included in the Plan being implemented by Teck. The Direction does not require
construction of any additional water treatment facilities beyond those already contemplated by the Plan, but sets
out requirements with respect to water management such as diversions, mine planning, fish monitoring and calcite
prevention measures, as well as the installation, by December 31, 2030, of a 200-hectare geo-synthetic cover trial in
the Greenhills Creek drainage. The headwaters of Greenhills Creek have been identified as the location where a
geo-synthetic cover over waste rock has the greatest technical potential as a source control measure.
Certain of the measures in the Direction, including the cover trial, will require incremental spending beyond that already
associated with the Plan. The issuance of the Direction does not resolve the potential charges under the Fisheries Act
previously notified to Teck. Discussions with respect to those charges continue and the outcome of these discussions
is uncertain. If a pre-trial resolution of the potential charges is not feasible, it is not possible to assess the viability of
potential defences to any charges, and the impact of a conviction may be material.
Final costs of implementing the Plan and managing water quality will depend in part on the technologies applied,
on regulatory developments and on the results of ongoing environmental monitoring and modelling. The timing of
expenditures will depend on resolution of technical issues, permitting timelines and other factors. As previously noted,
our current plan is that the Fording River AWTF will be the last full-scale AWTF and that future treatment facilities will
be SRFs. Implementation of this plan will require additional operating permits. We expect that, in order to maintain
water quality, some form of water treatment will continue for an indefinite period after mining operations end. The Plan
contemplates ongoing monitoring to ensure that the water quality targets set out in the Plan are in fact protective of
the environment and human health, and provides for adjustments if warranted by monitoring results. This ongoing
monitoring, as well as our continued research into treatment technologies, could reveal unexpected environmental
22 Teck 2020 Annual Report | Forward Together
impacts, technical issues or advances associated with potential treatment technologies that could substantially increase
or decrease both capital and operating costs associated with water quality management, or that could materially
affect our ability to permit mine life extensions in new mining areas.
Rail
Rail transportation of product westbound from our four steelmaking coal mines in southeast B.C. to Vancouver port
terminals is currently provided under a 10-year agreement with CP Rail, which expires March 31, 2021. Most eastbound
coal deliveries to North American customers are shipped pursuant to an arrangement with CP Rail. The remaining
eastbound coal deliveries are shipped via the BNSF Railway.
In 2019, we entered into a long-term agreement with CN Rail for shipping of steelmaking coal from our four B.C.
operations between Kamloops and Neptune and other west coast ports, including Ridley Terminals Inc. (Ridley).
The agreement, which runs from January 2019 to December 2026, enables us to significantly increase shipment
volumes through an expanded Neptune. The agreement also provides for investments by CN Rail of more than
$125 million to enhance rail infrastructure and support increased shipment volumes through Neptune and Ridley.
Negotiations with CP Rail for the new westbound contract commenced in the third quarter of 2020 and continued
into the first quarter of 2021.
Ports
We continue to progress the Neptune facility upgrade project. All major equipment is now installed and work activity
is focused on final mechanical installations and completion of electrical and control systems. Significant new facilities
including the replacement of the existing dumper and the stacker-reclaimer have been fully constructed, tested and
successfully placed in operation, with train dumping and shiploading performing as planned. A 35-day scheduled
outage took place in the first quarter of 2021, removing one of the existing shiploaders and installing a new high-
capacity shiploader and associated material handling systems. This shutdown essentially completes the outbound
system, with commissioning to be concluded during the first quarter. Construction of the inbound-coal facilities,
including the new tandem railcar dumper, is anticipated to be completed at the end of the first quarter, with first
steelmaking coal handled early in the second quarter and commissioning and full ramp-up to follow. Construction
activities and delivery of materials have been impacted by the resurgence of COVID-19 late in the year, resulting in
pressure on the project schedule and cost increases. We will provide an update on the capital cost of the project
once the final costs are determined, but at this point the total cost of the project before COVID-19 impacts is expected
to be approximately 10% higher than our previous estimate of approximately $800 million. Costs associated with
the impacts of COVID-19 since the onset of the pandemic, including vendor delays and subsequent construction
resequencing, workforce productivity and mandated restrictions, are estimated to be an additional $80 to $100 million.
Spending on the Neptune facility upgrade project is expected to be approximately $310 million in 2021 through to
completion. Once completed, the upgrade project will significantly increase terminal-loading capacity and improve
our capability to meet delivery commitments to our customers while lowering our overall logistics costs.
In January 2020, we announced an agreement with Ridley for shipments of steelmaking coal from Teck’s B.C. operations.
The agreement runs from January 2021 to December 2027 and provides for shipments of 6 million tonnes per annum.
In the third quarter of 2020, we entered into an agreement in principle, since reflected in a definitive agreement, with
Westshore Terminals for the shipment of steelmaking coal beyond the expiry of our current contract on March 31, 2021.
With improving demand for steelmaking coal and strong pricing FOB Australia as well as CFR China, we have arranged
for additional tonnage at Westshore to increase our operating flexibility. We expect to ship between 12.55 and 13.55 million
tonnes through Westshore in 2021, of which approximately 5 million tonnes is expected to be shipped in the first quarter.
After 2021, the agreement provides for the shipment of between 5 and 7 million tonnes per annum at fixed loading
charges, for a total of 33 million tonnes over a period of approximately five years.
Our commercial agreements with Westshore and Ridley terminals complement the upgrades underway at Neptune and
investments by CN Rail and CP Rail between Kamloops and Neptune to enhance rail infrastructure. Together, these
structural changes to the supply chain will provide greater flexibility and optionality for Teck shipments and contribute
to reduced costs and improved performance and reliability throughout the company’s steelmaking coal supply chain.
Management’s Discussion and Analysis
23
Sales
Our steelmaking coal marketing strategy is focused on maintaining and building relationships with our traditional
customers, while establishing new customers in markets where we anticipate long-term growth in steel production
and demand for seaborne steelmaking coal. In 2020, we continued to focus our marketing in areas with the greatest
demand growth and also increased sales volumes to China. As a result of recent China sales at premium prices, our
fourth-quarter realized price was higher than anticipated when compared to the FOB Australia price assessments,
despite the price drop for markets outside China, where the majority of our volumes are sold.
Markets
Demand for seaborne steelmaking coal was healthy at the start of 2020 before market conditions deteriorated sharply
with the onset of the COVID-19 pandemic in the first quarter. Steel production in China recovered during the second
quarter and China’s 2020 steel production reached a record high 1.05 billion tonnes. China continued to increase
steelmaking coal seaborne imports amid virtually flat domestic steelmaking coal production and to mitigate lower
imports from Mongolia. Demand for steelmaking coal continued to gradually recover through the fourth quarter and
into early 2021 when a number of steel producers outside of China, who had previously deferred purchases to manage
stock levels in response to the decreased demand, began restocking raw materials. The increased demand and
restocking reflect blast furnace restarts and increased levels of production expected in 2021.
Chinese steel production has been running at record-high levels, and the demand for steelmaking coal is improving in
the rest of the world. Despite this, change in seaborne steelmaking coal trade flows are adversely impacting pricing
outside of China as cargoes originally destined for China have been diverted to non-Chinese markets. The average of
the FOB Australia price assessments declined from approximately US$138 per tonne in early October to approximately
US$103 per tonne by year-end. Subsequent to the end of 2020, FOB Australia pricing levels increased significantly and
are currently approximately US$40 per tonne higher than at the start of 2021, and CFR China prices have increased to
above US$220 per tonne.
The following graphs show key metrics affecting steelmaking coal sales: spot price assessments and quarterly pricing,
hot metal production (each tonne of hot metal, or pig iron, produced requires approximately 650–700 kilograms of
steelmaking coal), and China’s steelmaking coal imports by source.
Daily Steelmaking Coal Assessments
Source: Argus, Platts, TSI
Hot Metal (Pig Iron) Production
Source: World Steel Association, National
Bureau of Statistics of China
China Steelmaking Coal Imports
Source: China’s Customs
$350
$300
$250
$200
$150
$100
$50
2015
2016
2017
2018
2019
2020
2000
2004
2008
2012
2016
2020
1,400
1,200
1,000
800
600
400
200
0
Tonnes
80
70
60
50
40
30
20
10
2012
2014
2016
2018
2020
0
Tonnes
Spot price assessments
(US$ per tonne FOB Australia, Argus)
Quarterly benchmark
(US$ per tonne FOB Australia)
Quarterly index-linked price
(US$ per tonne FOB Australia)
Rest of the world (tonnes in millions)
China (tonnes in millions)
Landborne (tonnes in millions)
Seaborne (tonnes in millions)
24 Teck 2020 Annual Report | Forward Together
Outlook
Despite the challenges in 2020, the steelmaking coal business unit achieved a substantial ramp-up in production and
sales in the fourth quarter and entered 2021 with strong raw coal inventory levels.
We anticipate annual production in 2021 to be between 25.5 and 26.5 million tonnes as we transition to full production
rates to meet anticipated demand. We continue to advance mining in new areas at our Fording River, Elkview and
Greenhills operations. The new areas are expected to extend the lives of these mines and allow us to produce 26 to 27 million
tonnes in the long term to continue to offset the closure of Coal Mountain and Cardinal River operations.
Over the past two weeks, severe winter weather has impacted our production and logistics service providers. Including
the adverse weather impacts, we expect sales of 5.9 to 6.3 million tonnes in the first quarter of 2021.
We will continue to prioritize available spot sales volumes to China, which is expected to result in favourable price
realizations. We expect our realized price in the first quarter of 2021 to be materially higher than the 10-year average
when compared with the average of the three assessments lagged by one month.
Although steelmaking coal prices have softened since the pandemic, market fundamentals remain supportive of our
sales plan. We continue to have detailed discussions with customers regarding 2021 sales and we are restructuring our
sales book to target approximately 7.5 million tonnes to China. These sales are subject to a range of risks, including
general market and economic conditions, general and specific port restrictions, Chinese regulation and policies, and
normal production and operating risks. We aim to sell these tonnes at CFR China pricing, which currently reflects a
premium to Australian FOB spot pricing. Final sales and average prices for a given quarter will depend on product mix,
market direction for spot priced sales and timely arrival of vessels, as well as the performance of the rail transportation
network and port loading facilities.
We expect 2021 adjusted site cash cost of sales to be between $59 and $64 per tonne, consistent with the second half
of 2020, reflecting the structural change in the cost base of our steelmaking coal business unit. Within this guidance,
we expect to be near the higher end of the range in the second and third quarters of 2021 as a result of annual
maintenance outages. In the first and fourth quarters of the year, we expect to be near the lower end of the range
based on higher productivities and fewer scheduled outages.
Transportation costs in 2021 are expected to decrease substantially to approximately $36 to $39 per tonne with the
completion of the Neptune upgrade project and enhanced rail network flexibility. Transportation costs in the first half
of the year are expected to exceed the upper end of the annual range during the final stages of Neptune upgrade
construction and commissioning. We expect higher first-half transportation costs to be offset by costs at the lower
end of the range in the second half of 2021.
We expect sustaining capital expenditures for our steelmaking coal operations to be approximately $430 million in
2021, including approximately $255 million related to water treatment and approximately $175 million for ongoing
operations. In addition, growth capital of approximately $310 million will be invested in the Neptune facility upgrade
project and $80 million in RACE21™. The RACE21™ program expenditures include substantial completion of the
autonomous haulage pilot at Elkview Operations and investment in process and mining operating systems and data
analytics at our operations. Capitalized stripping costs are expected to be approximately $295 to $345 million in 2021.
Management’s Discussion and Analysis
25
Energy
Our energy business unit primarily includes a 21.3% interest in the Fort Hills oil sands mine. Our share of production at
the Fort Hills oil sands mine was 8.4 million barrels of bitumen in 2020.
In 2020, our energy business unit accounted for 5% of revenue and incurred a $223 million loss before depreciation
and amortization.
Fort Hills(1)
($ in millions)
Blended bitumen price (realized US$/bbl)(3)(4)
Bitumen price (realized CAD$/bbl)(3)(4)
Operating netback (CAD$/bbl)(3)(4)
Production (million bitumen barrels)
Production (average barrels per day)
Sales (million blended bitumen barrels)
Gross profit (loss) before depreciation and amortization(3)(4)
Gross profit (loss)
2020
$
$
$
27.99
25.27
(19.03)
8.4
22,875
11.6
(223)
(326)
$
$
2019
45.20
52.21
11.85
12.3
$
$
$
2018(2)
$
$
$
35.12
32.81
(10.95)
6.8
33,593
31,955
16.0
144
10
8.8
(106)
(165)
$
$
$
$
Notes:
(1) Fort Hills figures presented at our ownership interest of 21.3%.
(2) Fort Hills financial results included from June 1, 2018.
(3) Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
(4) See “Use of Non-GAAP Financial Measures” section for reconciliation.
Fort Hills
The Fort Hills oil sands mine is located in northern Alberta. We hold a 21.3% interest in the Fort Hills Energy Limited
Partnership (Fort Hills Partnership), which owns the Fort Hills oil sands mine, with Suncor Energy Inc. (Suncor) and Total
E&P Canada Ltd. (Total) holding the remaining interest. An affiliate of Suncor is the operator of the project.
Our gross loss was $326 million in 2020, compared with a gross profit of $10 million in 2019. Our gross loss before
depreciation and amortization from Fort Hills was $223 million in 2020, compared with a gross profit of $144 million in
2019. Unprecedented market volatility and a historic decline in global benchmark crude oil prices, including Western
Canadian Select (WCS), resulted in significantly lower realized prices and profitability in 2020. As a result of the lower
realized prices, we recorded bitumen and diluent inventory write-downs of $54 million during the year.
Our 21.3% share of bitumen production from Fort Hills was 22,875 barrels per day in 2020. This compares to 33,593 barrels
per day produced in 2019. The change is primarily attributable to the Fort Hills Partnership safely and efficiently reducing
operations in the second quarter, which helped reduce negative cash flows through the year in light of COVID-19 and
26 Teck 2020 Annual Report | Forward Together
unprecedented low WCS prices. Fort Hills ramped up production in the fourth quarter to approximately 120,000 barrels
per day, of which our share was 21.3%. However, production was impacted by the shutdown of operations for
several days to help facilitate a thorough investigation of a fatal incident in late December. Operations have since
commenced with production ramping up in January. Suncor, the Operator of Fort Hills, is conducting an
investigation of the incident.
Cost of sales was $780 million in 2020 compared with $965 in 2019, reflecting the decision to reduce production
during the year. Adjusted operating costs1, 2 of $31.96 per barrel in 2020 were higher than the $29.24 per barrel in 2019.
Excluding the impact of bitumen inventory write-downs, our annual 2020 site operating costs were CAD$36.84 per
barrel, remaining within our annual guidance of CAD$35 to CAD$38 per barrel, but higher than last year due to the
lower volumes.
In 2020, we recorded non-cash, pre-tax impairments of our interest in Fort Hills of $1.2 billion. The details of these
impairments are outlined on pages 52 to 54.
Our share of Fort Hills’ capital expenditures in 2020 was $90 million, which related to tailings infrastructure and mining
equipment, including autonomous haul systems.
Frontier Project
We hold a 100% interest in the Frontier oil sands project, which is located in northern Alberta. In February 2020, we
announced that we were withdrawing the Frontier project from the regulatory review process. As a result of this decision,
we recorded a non-cash, pre-tax impairment of $1.13 billion in relation to the project in the fourth quarter of 2019.
Markets
Fort Hills’ bitumen production is delivered to a blend facility located near Fort McMurray, Alberta and ultimately sold as
a blended bitumen product known as Fort Hills Reduced Carbon Life Cycle Dilbit Blend (FRB). We sell our share of FRB
to a variety of customers at the Hardisty, Alberta market hub and the U.S. Gulf Coast. In 2020, approximately 80% of our
FRB sales were at Hardisty, with the remainder at the U.S. Gulf Coast.
Our blended bitumen price realizations are influenced by NYMEX light sweet crude oil (WTI) and Canadian heavy crude
oil differentials at Hardisty, and the U.S. Gulf Coast for WCS. Price realizations are also marginally affected by the specific
quality of our blended bitumen.
In 2020, WTI averaged US$39.40 per barrel. The WCS price for our Hardisty deliveries of blended bitumen were
indexed at an average of WTI less US$12.60 per barrel, for a WCS blend value of US$26.80 per barrel. U.S. Gulf Coast
deliveries were priced at an average of WTI minus US$3.55 per barrel, for a WCS blend value of US$35.85 per barrel.
The COVID-19 pandemic negatively impacted global crude oil markets in 2020, with global demand reduced by
9.0 million barrels per day compared to 2019. The loss of demand, coupled with an unexpected increase in production
from the Organization of the Petroleum Exporting Countries (OPEC), resulted in severe price weakness throughout
much of the year.
Global supply/demand balances began to recover towards the end of the year on lower OPEC supply and the shut-in
of non-OPEC production for economic reasons. Demand also began to recover in the latter half of 2020. Global crude
oil prices improved, with the WTI benchmark closing at just under US$50.00 per barrel at the end of December. Crude
oil prices continued to improve into 2021 with WTI increasing to almost US$60.00 per barrel.
Canadian production was brought back online in the second half, with pipelines filling up, prompting a substantive
return of excess volumes being shipped to market by rail. Government of Alberta production restrictions in place since
January 2019 were also relaxed in the fourth quarter, increasing the amount of available crude supply. With the
Enbridge Line 3 and Trans Mountain Expansion (TMX) pipeline expansions now under construction, pipeline capacity
shortfalls are expected to be eliminated by the end of 2022.
1 Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
2 See “Use of Non-GAAP Financial Measures” section for reconciliation.
Management’s Discussion and Analysis
27
Operating Netback
The following table summarizes our Fort Hills operating netback for the year.
(Amounts reported in CAD$ per barrel of bitumen sold)
Bitumen price realized(1)(2)(4)
Crown royalties(5)
Transportation costs for FRB(6)
Adjusted operating costs(1)(2)(7)
Operating netback(1)(2)
$
2020
25.27
(0.49)
(11.84)
(31.96)
2019
2018(3)
$
52.21
$
32.81
(1.50)
(9.62)
(29.24)
(2.04)
(8.83)
(32.89)
$
(19.02)
$
11.85
$
(10.95)
Notes:
(1) Non-GAAP measure. See “Use of Non-GAAP Financial Measures” section for further information.
(2) See “Use of Non-GAAP Financial Measures” section for reconciliation.
(3) Fort Hills financial results included from June 1, 2018.
(4) Bitumen price realized represents the realized petroleum revenue (blended bitumen sales revenue) net of diluent expense, expressed on a per
barrel basis. Blended bitumen sales revenue represents revenue from our share of the heavy crude oil blend known as Fort Hills Reduced Carbon
Life Cycle Dilbit Blend (FRB), sold at the Hardisty and U.S. Gulf Coast market hubs. FRB is comprised of bitumen produced from the Fort Hills oil
sands mining and processing operations blended with purchased diluent. The cost of blending is affected by the amount of diluent required and
the cost of purchasing, transporting and blending the diluent. A portion of diluent expense is effectively recovered in the sales price of the blended
product. Diluent expense is also affected by Canadian and U.S. benchmark pricing and changes in the value of the Canadian dollar relative to the
U.S. dollar.
(5) The royalty rate applicable to pre-payout oil sands operations starts at 1% of gross revenue and increases for every dollar by which the WTI crude
oil price in Canadian dollars exceeds $55 per barrel, to a maximum of 9% when the WTI crude oil price is $120 per barrel or higher. Fort Hills is
currently in the pre-payout phase.
(6) Transportation costs represent pipeline and storage costs downstream of the East Tank Farm blending facility. We use various pipeline and
storage facilities to transport and sell our blend to customers throughout North America. Sales to the U.S. markets require additional
transportation costs, but realize higher selling prices.
(7) Adjusted operating costs represent the costs to produce a barrel of bitumen from the Fort Hills mine and processing operation.
Outlook
We expect our share of Fort Hills annual production to be approximately 23,500 to 33,000 barrels per day in 2021.
The midpoint of our guidance represents an increase of approximately 25% when compared to 2020 production.
The Fort Hills partners continue to focus on cost discipline and maintaining the operating and capital cost savings
achieved in 2020, while assessing plans to further increase production to nameplate capacity as the business
environment improves. Adjusted operating costs are expected to be $28 to $32 per barrel for 2021, a decrease of
approximately 20% when compared to 2020. We also expect production to be lower in the first half of the year and
higher in the second half as we ramp up production. As such, adjusted operating costs are expected to be higher in
the first half of the year.
Our share of Fort Hills capital expenditures for 2021 is expected to be approximately $85 million, focused on tailings
infrastructure and work to transition to the next mining area at Fort Hills.
28 Teck 2020 Annual Report | Forward Together
RACE21™
In May 2019, we began implementing RACE21™, our innovation-driven business transformation program. RACE21™
is a company-wide approach to Renewing our technology infrastructure, Accelerating and scaling automation and
robotics, Connecting data systems to enable broad application of advanced analytics and artificial intelligence, and
Empowering our employees, all with a focus on improving our operating results through 2021 and beyond.
Despite the challenges of COVID-19, Teck’s RACE21™ transformation had significant KPI impacts across our
operations in 2020. The RACE21™ program is progressing well and the resulting improvements are being embedded
in operating plans and budgets across our sites. Going forward, the results of the RACE21™ program will be reported
in our operating results.
Major applications of technology to improve margins, productivities and efficiencies and to reduce potential health
and safety risks include:
•
At Highland Valley Copper, advanced analytics tools in the plant, together with drill to mill optimization and
blasting improvements, resulted in an improvement of approximately 7% in throughput and approximately 2% in
copper recovery
• Across all Teck sites with major trucks and shovel fleets (all four steelmaking coal operations and Highland Valley
Copper), RACE21™ contributed to record haul truck productivity
• At Trail, blending optimization tools led to an increase of approximately $5 per tonne in the margin of zinc concentrate
processed, while enabling process engineers to effectively handle complex blend conditions presented due to a
challenging concentrate market impacted by COVID-19
Finally, we began using data and advanced analytics to give greater insight into high-risk activities and locations in our
mines to reduce the risk associated with heavy vehicle/light vehicle interactions.
Outlook
In 2021, we plan to continue implementing initiatives to deliver significant key performance indicator improvements
and to expand the RACE21™ scope to include water, tailings and orebody knowledge. We look forward to sharing
our results in these new domains as RACE21™ develops and deploys digital tools to improve decision-making and
reduce risk.
Management’s Discussion and Analysis
29
Exploration & Geoscience
Throughout 2020, we conducted exploration around our existing operations and globally in seven countries through
our six regional offices. Our exploration activities were impacted by the COVID-19 pandemic as we took actions to
protect our teams and host communities. Expenditures for the year of $45 million were focused on copper, zinc and
gold and were lower than expenditures in 2019 of $67 million, primarily due to COVID-19 restrictions.
Exploration & Geoscience plays three critical roles at Teck: discovery of new orebodies through early stage exploration
and acquisition; pursuit, evaluation and acquisition of development opportunities; and delivery of geoscience solutions
and services to create value at our existing mines and development projects.
In 2020, we drilled 69 kilometres across four steelmaking coal operations in the Elk Valley to support our existing
operations and extension projects.
Early stage copper exploration continued to focus primarily on advancing porphyry-style projects in Canada, Chile,
Peru and the United States. In addition, significant exploration was carried out in and around our existing operations
and advanced projects, including at Quebrada Blanca. In 2021, we plan to drill several early stage copper projects, and
we will continue to support our existing operations and advanced projects.
Zinc exploration in 2020 was concentrated in four areas: Red Dog mine district in Alaska, northeastern Australia,
Ireland and Turkey. In Alaska, Australia and Canada, the targets are large, high-grade sediment-hosted deposits similar
to major world-class deposits and in Ireland, the targets are large carbonate-hosted deposits. In 2020, we drilled greenfield
targets in Ireland, Australia and Turkey (completing approximately 18 kilometres of drilling) to better understand the
geologic setting and confirm the presence of economic mineralization. In 2021, we plan to continue drill testing early
stage targets on our properties.
We have ongoing exploration for gold, both on 100% Teck-owned properties and through partnerships. Our current
exploration efforts and drill testing for gold are focused in Peru and Turkey.
30 Teck 2020 Annual Report | Forward Together
Financial Overview
Financial Summary
($ in millions, except per share data)
Revenues and profit
Revenues
Gross profit before depreciation and amortization(1)(2)
Gross profit
Adjusted EBITDA(1)(2)
Profit (loss) attributable to shareholders
Cash flow
Cash flow from operations
Property, plant and equipment expenditures
Capitalized production stripping costs
Investment expenditures
Balance sheet
Cash balances
Total assets
Debt and lease liabilities, including current portion
Per share amounts
Profit (loss) attributable to shareholders
Dividends declared
2020
2019
2018
$ 8,948
$
$
$
$
$
$
$
$
2,843
1,333
2,570
(864)
1,563
3,129
499
190
$
$
$
$
$
$
$
$
$
11,934
4,959
3,340
4,473
(605)
3,484
2,788
680
178
$
$
$
$
$
$
$
$
$
12,564
6,104
4,621
5,607
3,107
4,438
1,906
707
284
$
450
$ 41,278
$
6,947
$
1,026
$
1,734
$ 39,350
$ 39,626
$
4,834
$
5,519
$
$
(1.62)
0.20
$
$
(1.08)
0.20
$
$
5.41
0.30
Notes:
(1)
(2) See “Use of Non-GAAP Financial Measures” section for reconciliation.
Non-GAAP Financial Measures. See “Use of Non-GAAP Financial Measures” section for further information.
Our revenue and profit depend on the prices for the commodities we produce, sell and use in our production processes.
Commodity prices are determined by the supply of and demand for those commodities, which are influenced by
global economic conditions. We normally sell the products that we produce at prevailing market prices or, in the case
of steelmaking coal, through an index-linked pricing mechanism or on a spot basis. Prices for our products can
fluctuate significantly, and that volatility can have a material effect on our financial results.
Management’s Discussion and Analysis
31
Foreign exchange rate movements can also have a significant effect on our results and cash flows, as a substantial
portion of our operating costs are incurred in Canadian dollars and other currencies, and most of our revenue and debt
are denominated in U.S. dollars. We determine our financial results in local currency and report those results in
Canadian dollars; accordingly, our reported operating results and cash flows are affected by changes in the Canadian
dollar exchange rate relative to the U.S. dollar, as well as the Peruvian sol and Chilean peso.
In 2020, we had a loss attributable to shareholders of $864 million, or $1.62 per share. This compares with a loss
attributable to shareholders of $605 million or $1.08 per share in 2019, and profit attributable to shareholders of
$3.1 billion or $5.41 per share in 2018. COVID-19 had a significant negative effect on the prices and demand for our
products in 2020, increasing our loss attributable to shareholders in the year, compared to 2019 and 2018. Asset
impairments were recorded in 2020 and 2019 and reduced profit attributable to shareholders in each respective year,
as outlined below. Other significant items affecting our profit and loss attributable to shareholders in 2020, 2019 and
2018 are also outlined below.
Our profit and loss over the past three years has included items that we segregate for presentation to investors so
that the underlying profit of the company may be more clearly understood. Our adjusted profit attributable to
shareholders,1, 2 which takes these items into account, was $561 million in 2020, $1.7 billion in 2019 and $2.5 billion in
2018, or $1.05, $3.03 and $4.36 per share, respectively. These items are described below and summarized in the table
that follows.
In 2020, as outlined below, COVID-19 had a significant effect on our financial results with decreases in commodity
prices, most significantly for steelmaking coal and blended bitumen, the temporary suspension of construction on our
QB2 project and temporary reductions in production at our operations in the second quarter. As a result, we expensed
$434 million of costs associated with COVID-19, primarily relating to the suspension of our QB2 project, including
$103 million of interest that would otherwise have been capitalized if construction on QB2 had not been suspended.
We also recorded inventory write-downs of $134 million, primarily in our steelmaking coal and energy business units,
as a result of lower prices.
During 2020, we recorded non-cash pre-tax asset impairments on our interest in Fort Hills of $1.2 billion, as outlined on
pages 52 to 54. We also recorded environmental costs of $270 million, primarily relating to a decrease in the rates used
to discount our decommissioning and restoration provisions and increased expected remediation costs.
In 2019, we recorded non-cash pre-tax impairments of $1.2 billion on our interest in Fort Hills as a result of lower market
expectations for future WCS heavy oil prices; $1.1 billion on our Frontier oil sands project as a result of our decision
to withdraw the project from the regulatory review process; and $289 million on our Cardinal River Operations and
$31 million on our Quebrada Blanca cathode operations, both of which have short remaining mine lives. We also
redeemed US$600 million of outstanding 8.5% notes due in 2024 and recorded a $224 million pre-tax charge on the
transaction, of which $174 million was non-cash. This charge was partially offset by a $105 million pre-tax gain on the
debt prepayment option in the 8.5% 2024 notes up to the date of redemption.
In 2018, we completed the sale of our two-thirds interest in the Waneta Dam to BC Hydro for $1.2 billion in cash and
recorded a pre-tax gain of $888 million, with no cash taxes payable on the transaction. We redeemed US$1.0 billion
principal amount of our near-term debt maturities, reducing the outstanding balance to US$3.8 billion, and recorded
a $26 million pre-tax charge on the transaction. We also recorded non-cash pre-tax asset impairments of $41 million,
of which $31 million related to capitalized exploration expenditures that are not expected to be recovered, and
$10 million related to Quebrada Blanca assets that would not be recovered through use because mining operations
ended in the fourth quarter of 2018.
1 Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
2 See “Use of Non-GAAP Financial Measures” section for reconciliation.
32 Teck 2020 Annual Report | Forward Together
The following table shows the effect of these items on our profit (loss).
($ in millions, except per share data)
2020
2019
2018
Profit (loss) attributable to shareholders
$
(864)
$
(605)
$
3,107
Add (deduct):
Asset impairments
COVID-19 costs
Environmental costs
Inventory write-downs
Share-based compensation
Commodity derivative losses (gains)
Loss on debt redemption or purchase
Debt prepayment option loss (gain)
Gain on sale of Waneta Dam
Taxes and other
912
233
210
91
34
(46)
8
–
–
(17)
2,052
–
142
41
3
(13)
166
(77)
–
(12)
Adjusted profit attributable to shareholders (1)(2)
$
561
Adjusted basic earnings per share(1)(2)
Adjusted diluted earnings per share(1)(2)
Weighted average diluted shares outstanding (millions)
$
$
1.05
1.04
538.0
$
$
$
1,697
3.03
3.00
565.3
$
$
$
30
–
16
57
43
26
19
31
(812)
(16)
2,501
4.36
4.30
582.1
Notes:
(1) Non-GAAP Financial Measures. See “Use of Non-GAAP Financial Measures” section for further information.
(2) See “Use of Non-GAAP Financial Measures” section for reconciliation.
Cash flow from operations in 2020 was $1.6 billion, compared with $3.5 billion in 2019 and $4.4 billion in 2018. The
changes in cash flow from operations are mainly due to varying commodity prices and sales volumes, offset to some
extent by changes in foreign exchange rates.
Since the launch of our cost reduction program at the beginning of the fourth quarter of 2019, we have realized
approximately $355 million in operating cost and $710 million in capital cost reductions. These reductions are against
our expected spending that was contemplated at the end of June 2019. Our cost reduction program is now complete
and reductions are built into our operating plans and guidance.
At December 31, 2020, our cash balance was $450 million. Total debt was $6.9 billion and our net-debt to net-debt-
plus-equity ratio1 was 24% at December 31, 2020, compared with 15% at December 31, 2019 and 14% at the end of 2018.
COVID-19 Financial Impact
COVID-19 operating protocols remain in place across our business, with a continued focus on preventive measures,
controls and compliance processes, and the integration of these actions into our operations and business planning.
Operating our mines at full production in a COVID-19 environment increases certain costs, such as medical testing,
safety equipment, safety supplies, additional transportation and accommodation costs for social distancing, among
other things. These costs and certain costs related to inefficiencies would not have occurred absent COVID-19 and are
incremental costs. However, they are considered a cost of operating in this environment and are not adjusted for in our
adjusted profit calculation. To the extent these costs or inefficiencies have significantly impacted business unit costs
or performance, they are discussed in the respective business unit sections of this MD&A.
The COVID-19 pandemic had a significant negative effect on prices and demand for our products and on our financial
results in 2020. As a result of the pandemic, during the second quarter, we had to temporarily reduce production at a
number of our operations, and we suspended active construction at our QB2 project. We incurred idle labour and other
1 Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
Management’s Discussion and Analysis
33
non-productive costs when production was temporarily reduced and these costs are adjusted for in our adjusted profit
calculation, noted above.
During 2020, we expensed $272 million in costs associated with the temporary suspension of our QB2 project and the
remobilization of the project. We also expensed $103 million of interest that would otherwise have been capitalized if
construction on our QB2 project had not been suspended. Consistent with the return to active construction on the
QB2 project in the third quarter, we recommenced capitalization of borrowing costs and we did not expense further
costs associated with remobilization of the project in the fourth quarter.
The following table is intended to outline the COVID-19-related costs that are included in our adjusted profit for 2020.
Financial Statement Category
(CAD$ in millions)
COVID-19 costs –
Adjusted Profit
Cost of sales
COVID-19 costs at operating sites including:
• Labour costs for idle employees at sites
with temporary shutdowns due to COVID-19
Other operating income (expense)
COVID-19 costs including:
• QB2 demobilization, remobilization and care
and maintenance costs
• Antamina care and maintenance and labour costs
during temporary mine closure
• COVID-19 fund donations
Borrowing costs that would have been capitalized
for QB2 if the project was not suspended
Finance expense
Total COVID-19 costs
Total COVID-19 costs
(after-tax and non-controlling interests)
Gross Profit
2020
$
41
$
290
$
$
$
103
434
233
Our gross profit is made up of our revenue less the operating expenses at our producing operations, including
depreciation and amortization. Income and expenses from our business activities that do not produce commodities
for sale are included in our other operating income and expenses or in our non-operating income and expenses.
Our principal commodities are copper, zinc, steelmaking coal and blended bitumen, which accounted for 24%, 20%,
38% and 5% of revenue, respectively, in 2020. Silver and lead are significant by-products of our zinc operations,
accounting for 9% of our 2020 revenue. We also produce a number of other by-products, including molybdenum,
various specialty metals, and chemicals and fertilizers, which in total accounted for 4% of our revenue in 2020.
Our revenue is affected by sales volumes, which are determined by our production levels and by demand for the
commodities we produce, commodity prices and currency exchange rates.
Our revenue was $8.9 billion in 2020, compared with $11.9 billion in 2019 and $12.6 billion in 2018. The decrease in
2020 revenue from 2019 was primarily due to the impact of COVID-19 on prices for our products, most significantly
steelmaking coal, zinc and blended bitumen. Revenue was also negatively impacted in 2020 by significantly lower
sales volumes for steelmaking coal due to the impact of COVID-19 on demand, logistics chain issues early in the year
and the planned shutdown at Neptune. These decreases were partially offset by an increase in copper prices
compared to 2019. The decrease in 2019 revenue from 2018 was due to lower steelmaking coal, copper and zinc prices
and reduced steelmaking sales volumes, partially offset by a full year of revenue from the sale of blended bitumen
from our Fort Hills oil sands mine. Average prices for steelmaking coal, zinc and blended bitumen were 31%, 11% and
38% lower in 2020 than in 2019, while copper prices were up 3%.
34 Teck 2020 Annual Report | Forward Together
Our cost of sales includes all of the expenses required to produce our products, such as labour, energy, operating
supplies, concentrates purchased for our Trail Operations’ refining and smelting activities, diluent purchased for our
Fort Hills oil sands mine to transport our bitumen by pipeline, royalties, and marketing and distribution costs required
to sell and transport our products to various delivery points. Our cost of sales also includes depreciation and
amortization expense. Due to the geographic locations of many of our operations, we are highly dependent on third
parties for the provision of rail, port, pipeline and other distribution services. In certain circumstances, we negotiate
prices and other terms for the provision of these services where we may not have viable alternatives to using specific
providers or may not have access to regulated rate-setting mechanisms or appropriate remedies for service failures.
Contractual disputes, demurrage charges, availability of vessels and railcars, weather problems and other factors, as
well as rail, port and pipeline capacity issues can have a material effect on our ability to transport materials from our
suppliers and to our customers in accordance with schedules and contractual commitments.
2020 Revenue by Business Unit
2020 Gross Profit by Business Unit
(Before depreciation and amortization)
2020 Revenue by Commodity
5%
Energy
27%
Copper
38%
Steelmaking
Coal
–8%
Energy
29%
Zinc
5%
Energy
4%
Lead
9%
Other
44%
Copper
38%
Steelmaking
Coal
24%
Copper
30%
Zinc
35%
Steelmaking
Coal
20%
Zinc
Our costs are dictated mainly by our production volumes, by the costs for labour, operating supplies, concentrate
purchases and diluent purchases, and by strip ratios, haul distances, ore grades, distribution costs, commodity prices,
foreign exchange rates, costs related to non-routine maintenance projects, and our ability to manage these costs.
Production volumes mainly affect our variable operating and distribution costs. In addition, production affects our
sales volumes; when combined with commodity prices, this affects profitability and our royalty expenses.
Our cost of sales was $7.6 billion in 2020, compared with $8.6 billion in 2019 and $7.9 billion in 2018. The decrease
in cost of sales in 2020 compared to 2019 was primarily due to a decrease in production volumes during the year. In
addition, operating costs in our business units decreased compared to 2019, supported by our cost reduction program
and RACE21™. We have structurally shifted the cost base of our steelmaking coal business lower, as outlined in the
business unit section, reducing unit costs in 2020. Depreciation and amortization decreased by $109 million compared
to 2019 as a result of lower production volumes during 2020.
The increase in cost of sales in 2019 compared with 2018 is partially due to Fort Hills being operational for the full year,
which accounted for approximately $400 million of the increase. In addition, depreciation and amortization rose by
approximately $60 million at our steelmaking coal operations, and electricity costs increased by approximately $45 million
at Trail Operations following the sale of the Waneta Dam in 2018.
In 2018, in our steelmaking coal business, unit cost increases were partially driven by our decision to increase mining
activity to capture margin in a favourable steelmaking coal price environment. In addition, increased diesel and
operating supplies costs also resulted in increased unit costs. Costs were higher at our Trail Operations due to
maintenance issues, the effect of wildfires in southeast British Columbia and the increase in power costs resulting
from the sale of the Waneta Dam to BC Hydro in July 2018. Cost of sales in 2018 also included costs from Fort Hills,
which produced its first bitumen in January and achieved commercial production on June 1, 2018.
Management’s Discussion and Analysis
35
Other Expenses
($ in millions)
General and administration
Exploration
Research and innovation
Asset impairments
Other operating (income) expense
Finance income
Finance expense
Non-operating (income) expense
Share of losses of associates and joint ventures
2020
2019
2018
$
$
132
45
97
$
161
67
67
1,244
2,690
725
(10)
278
(43)
1
505
(48)
266
97
3
$ 2,469
$
3,808
$
142
69
35
41
(450)
(33)
252
52
3
111
General and administration expenses decreased in 2020 compared to 2019 as COVID-19 reduced travel and other
corporate expenses. Our exploration activities were impacted by the COVID-19 pandemic as we took actions to protect
our teams and host communities. Expenditures for the year of $45 million were focused on copper, zinc and gold and
were lower than expenditures in 2019 of $67 million, primarily due to COVID-19 restrictions.
We must continually replace our reserves as they are depleted in order to maintain production levels over the long
term. We try to do this through our exploration and development programs and through acquisition of interests in new
properties or in companies that own them. Exploration for minerals, steelmaking coal and oil is highly speculative and
the projects involve many risks. The vast majority of exploration projects are unsuccessful and there are no assurances
that current or future exploration programs will find deposits that are ultimately brought into production.
Our research and innovation expenditures are primarily focused on advancing our proprietary CESL hydrometallurgical
technology, the development of internal and external growth opportunities, RACE21 , and the development and
implementation of process and environmental technology improvements at operations.
We recorded asset impairments of $1.2 billion in 2020, $2.7 billion in 2019 and $41 million in 2018, as outlined in the
following table:
($ in millions)
Fort Hills
Frontier project
Cardinal River Operations
Other
2020
$
1,244
$
–
–
–
$
2019
1,241
1,129
289
31
$
1,244
$
2,690
$
2018
–
–
–
41
41
In the fourth quarter of 2020, updated mine plans for Fort Hills became available, reflecting an earlier-than-planned
restart of the second train of operations and including operating and capital cost reductions over the life of mine.
These updates to the mine plans indicated a change in the valuation of the asset. This, combined with macroeconomic
conditions, including the cost of capital for oil assets and lower market expectations for long-term WCS heavy oil
prices, required us to perform an impairment test for our interest in Fort Hills. As a result, we recorded a non-cash,
pre-tax asset impairment for our interest in Fort Hills of $597 million (after-tax $438 million) in the fourth quarter.
The estimated post-tax recoverable amount of our Fort Hills cash-generating unit (CGU) of $2.1 billion was lower than
our carrying value.
36 Teck 2020 Annual Report | Forward Together
Combined with a pre-tax impairment of $647 million (after-tax $474 million) recorded in the first quarter of 2020, we
recorded total pre-tax impairments related to our interest in Fort Hills of $1.2 billion for the year ended December 31, 2020.
In 2019, we recorded asset impairments of $2.7 billion, of which $1.2 billion related to our interest in Fort Hills due to
lower market expectations for future WCS oil prices, and $1.1 billion related to our Frontier oil sands project due to our
decision to withdraw the project from the regulatory review process. In addition, we recorded impairments of $289 million
related to our Cardinal River Operations as a result of our decision not to proceed with the MacKenzie Redcap extension,
the short remaining mine life, and a reduction in short-term steelmaking coal prices, and $31 million related to remaining
Quebrada Blanca assets as we near the end of operations.
In 2018, we recorded asset impairments of $41 million, of which $31 million related to capitalized exploration expenditures
that are not expected to be recovered, and $10 million related to our Quebrada Blanca assets that would not be
recovered through use because mining operations ended in the fourth quarter of 2018 as reserves were depleted.
The key inputs used in determining the magnitude of asset impairments and reversals are outlined on pages 52 to 54
in this Management’s Discussion and Analysis.
Other operating income and expenses include items we consider to be related to the operation of our business, such
as final pricing adjustments (which are further described below), share-based compensation, gains or losses on
commodity derivatives, gains or losses on the sale of operating or exploration assets, and provisions for various costs
at our closed properties. Significant items in 2020 included $282 million of costs associated with COVID-19, primarily
relating to the suspension of our QB2 project and $270 million of environmental costs, primarily relating to a decrease
in the rates used to discount our decommissioning and restoration provisions for closed operations and increased
expected reclamation costs. In addition, we recorded commodity derivative gains of $62 million and $104 million of
take-or-pay contract costs. Significant items in 2019 included $49 million of negative pricing adjustments, $197 million
for environmental costs primarily relating to additional decommissioning and restoration provisions at certain closed
operations, and $123 million for take-or-pay contract costs. Significant items in 2018 included an $888 million gain
on the sale of our two-thirds interest in the Waneta Dam to BC Hydro, $117 million of negative pricing adjustments,
$20 million for environmental costs, $59 million for share-based compensation and a $106 million charge for take-or-
pay contracts.
Sales of our products, including by-products, are recognized in revenue at the point in time when the customer obtains
control of the product. Control is achieved when a product is delivered to the customer, we have the present right to
payment for the product, significant risks and rewards of ownership have transferred to the customer according to
contract terms, and there is no unfulfilled obligation that could affect the customer’s acceptance of the product. For
sales of steelmaking coal and copper, zinc and lead concentrates, control of the product generally transfers to the
customer when an individual shipment parcel is loaded onto a carrier accepted or directly contracted by the customer.
For sales of refined metals, control of the product transfers to the customer when the product is loaded onto a carrier
specified by the customer. For blended bitumen, control of the product generally transfers to the customer when the
product passes the delivery point specified in the sales contract.
The majority of our base metal concentrates and refined metals are sold under pricing arrangements where final
prices are determined by quoted market prices in a period subsequent to sale. For these sales, revenue is recognized
based on the estimated consideration to be received at the date of sale with reference to relevant commodity market
prices. Our refined metals are sold under spot or average pricing contracts. For all steelmaking coal sales under
average pricing contracts where pricing is not finalized when revenue is recognized, revenue is recorded based on
the estimated consideration to be received at the date of sale with reference to steelmaking coal price assessments.
The majority of our blended bitumen is sold under pricing arrangements where final prices are determined based on
commodity price indices that are finalized at or near the date of sale. Our revenue for blended bitumen is net of royalty
payments to governments.
Adjustments are made to settlement receivables in subsequent periods based on movements in quoted market prices
or published price assessments (for steelmaking coal) up to the date of final pricing. These pricing adjustments result
in gains in a rising price environment and losses in a declining price environment and are recorded as other operating
income or expense. The extent of the pricing adjustments also takes into account the actual price participation terms
as provided in certain concentrate sales agreements. It should be noted that these effects arise on the sale of
concentrates, as well as on the purchase of concentrates at our Trail Operations.
Management’s Discussion and Analysis
37
The following table outlines our outstanding receivable positions, which were provisionally valued at December 31,
2020 and 2019, respectively.
(payable pounds in millions)
Pounds
US$/lb.
Pounds
US$/lb.
Copper
Zinc
132
142
$
$
3.52
1.24
65
239
$
$
2.80
1.04
Outstanding at
December 31, 2020
Outstanding at
December 31, 2019
Our finance expense includes the interest expense on our debt, on advances to QBSA from SMM/SC, on lease liabilities,
letters of credit and standby fees, interest on our pension obligations, and accretion on our decommissioning and
restoration provisions, less any interest that we capitalize against the cost of our development projects. Debt interest
expense increased in 2020 compared to 2019, mainly due to lower interest capitalized on our development projects.
As a result of the temporary suspension of the QB2 project during 2020, we expensed $103 million of interest that
would have otherwise been capitalized if the project had not been suspended. Debt interest expense decreased in
2019 compared to 2018, mainly due to lower outstanding debt balances. This was partially offset by an increase in
interest on lease liabilities relating to the adoption of IFRS 16, Leases (IFRS 16) on January 1, 2019 and interest on
advances to QBSA from SMM/SC relating to the QB2 partnering transaction.
Non-operating income (expense) includes items that arise from financial and other matters, and includes such items
as foreign exchange gains or losses, debt refinancing costs, gains or losses on the revaluation of debt prepayment
options, and gains or losses on the sale of investments. In 2020, non-operating income (expense) included a gain of
$56 million on the revaluation of the financial liability for the preferential dividend stream relating to ENAMI’s interest
in QBSA due to the effect of changes in interest rates. This was partially offset by an $11 million loss on the purchase
of US$268 million aggregate principal amount of our outstanding notes. In 2019, non-operating expenses included a
$224 million loss on the redemption of our 8.5% notes due in 2024 and foreign exchange losses of $4 million. These
losses were partially offset by a $105 million gain on the debt prepayment option in the 8.5% 2024 notes up to the date
of redemption and a gain of $37 million on the revaluation of the financial liability for the preferential dividend stream
relating to ENAMI’s interest in QBSA. In 2018, other non-operating expenses included $42 million of losses on debt
prepayment options, $16 million of foreign exchange gains and a $26 million loss on debt purchased during the year.
Profit (loss) attributable to non-controlling interests relates to the ownership interests that are held by third parties in
our Quebrada Blanca, Carmen de Andacollo and Elkview operations, and Compañia Minera Zafranal S.A.C.
Income Taxes
Recovery for income and resource taxes was $192 million, or 17% of pre-tax loss of $1.136 billion. Our overall effective
tax rate this year was significantly impacted by the impairments of our interest in Fort Hills, which resulted in a deferred
income tax recovery at 27% of $331 million. Excluding these impairments, we would have pre-tax profit of $108 million
and a provision for income and resource taxes of $139 million, or 129% thereof. In this year, with overall low operating
margins, our rate is higher because certain corporate, finance and other costs are not deductible in computing income
for resource tax purposes. In addition, our rate is, as usual, higher than the Canadian statutory income tax rate of
27% due to resource taxes and higher taxes in some foreign jurisdictions.
Due to available tax pools, we are currently shielded from cash income taxes in Canada. We remain subject to cash
resource taxes in Canada and both cash income and resource taxes in foreign jurisdictions.
In 2019, Antamina received income tax assessments and determinations from the Peruvian tax authority, La Superintendencia
Nacional de Aduanas y de Administración Tributaria (SUNAT) for its 2013 and 2014 taxation years, denying accelerated
depreciation claimed by Antamina in respect of a mill expansion and certain other assets on the basis that the
expansion was not covered by Antamina’s tax stability agreement. Antamina is pursuing the issue in the Peruvian
courts. Based on opinions of counsel, we have provided for the tax on this issue for all years possibly affected, but not
38 Teck 2020 Annual Report | Forward Together
for associated penalties and interest. The denial of accelerated depreciation claimed is a timing issue in our tax
provision. If the interest and penalties were upheld, the charge to our earnings could reach $65 million (US$51 million).
Antamina has paid all amounts of taxes, interest and penalties in issue for its 2013 and 2014 taxation years. Teck’s
share of additional amounts of taxes, interest and penalties that might be payable for assessments, which we expect
will be raised for the balance of the years in issue (2015 to 2017), is currently estimated to be $78 million (US$61 million).
Financial Position and Liquidity
Our liquidity remained strong at $6.5 billion as at December 31, 2020, including $450 million of cash, of which $82 million
is in Chile for the development of the QB2 project and $26 million is held in Antamina. At December 31, 2020, the
principal balance of our term notes was US$3.5 billion, US$262 million was drawn on our US$4.0 billion revolving credit
facility and we maintained a US$1.0 billion undrawn revolving credit facility. At December 31, 2020, US$1.15 billion was
outstanding under the US$2.5 billion QB2 project financing facility. Based on our strong financial position, we expect
to be able to maintain our operations and fund our development activities as planned.
Our outstanding debt was $6.9 billion at December 31, 2020, compared with $4.8 billion at the end of 2019 and
$5.5 billion at the end of 2018. The increase in 2020 is due to a draw of US$1.15 billion on the QB2 project financing
facility and a draw of US$262 million on our US$4.0 billion revolving credit facility.
We maintain investment grade ratings of Baa3, BBB-, BBB- and BBB from Moody’s, S&P, Fitch and DBRS, respectively.
Moody’s, S&P and DBRS have a stable outlook, while Fitch assigned a negative outlook from stable in June of 2020.
Our debt positions and credit ratios are summarized in the following table:
December 31, December 31, December 31,
2018
2019
2020
$
3,209
$
3,809
Unsecured term notes
US$5 billion of revolving credit facilities
QB2 US$2.5 billion limited recourse project finance facility
Lease liabilities
Antamina credit facilities
Other
Less unamortized fees and discounts
$
3,478
262
1,147
544
90
1
(66)
–
–
518
23
3
(31)
Debt (US$ in millions)
$
5,456
$
3,722
Debt (Canadian $ equivalent)(1) (A)
Less cash balances
Net debt(2) (B)
Equity (C)
Net-debt to net-debt-plus-equity ratio(2) (B/(B+C))
Net debt to adjusted EBITDA ratio(2)(3)
Weighted average coupon rate on the term notes
$
6,947
(450)
$
6,497
$
20,708
24%
2.5x
5.5%
$
4,834
$
$
(1,026)
3,808
22,074
15%
0.9x
5.6%
Notes:
(1) Translated at period end exchange rates.
(2) Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
(3) See “Use of Non-GAAP Financial Measures” section for reconciliation.
–
–
248
23
(3)
(31)
4,046
5,519
(1,734)
3,785
23,018
14%
0.6x
6.1%
$
$
$
$
Management’s Discussion and Analysis
39
At December 31, 2020, the weighted average maturity of our term notes is approximately 16.5 years and the weighted
average coupon rate is approximately 5.47%.
Our primary sources of liquidity and capital resources are our cash and temporary investments, cash flow provided from
operations, and funds available under our committed and uncommitted bank credit facilities, of which approximately
US$4.7 billion is available. Further information about our liquidity and associated risks is outlined in Notes 30 and 32 to
our 2020 audited annual consolidated financial statements.
Cash flow from operations was $1.6 billion in 2020. Our cash position decreased from $1.0 billion at the end of 2019
to $450 million at December 31, 2020. Significant outflows included $3.1 billion of capital expenditures, $499 million
of capitalized stripping costs, $190 million on investments and other assets expenditures, $106 million on returns to
shareholders through dividends, $207 million on returns to shareholders through share buybacks and $355 million of
interest and finance charges, primarily on our outstanding debt. Significant inflows during 2020 included $2.3 billion
of net proceeds from debt drawn on the QB2 project financing facility and our US$4.0 billion revolving credit facility.
We maintain various committed and uncommitted credit facilities for liquidity and for the issuance of letters of credit,
including a US$4.0 billion committed revolving credit facility, which had US$262 million outstanding as at December
31, 2020.
Borrowing under our primary committed revolving credit facility is subject to our compliance with the covenants in the
agreement and our ability to make certain representations and warranties at the time of the borrowing request. The only
financial covenant under our credit agreements is a requirement for our net debt to capitalization ratio1, 2 not to exceed
60%. That ratio was 24% at December 31, 2020.
In addition to our primary revolving committed credit facility, we maintain uncommitted bilateral credit facilities with
various banks and with Export Development Canada and our US$1.0 billion revolving credit facility, for the issuance
of letters of credit, stand-alone letters of credit and surety bonds, all primarily to support our future reclamation
obligations. At December 31, 2020, we had $1.6 billion of letters of credit issued on our $1.9 billion of bilateral credit
facilities. In addition to the letters of credit outstanding under these uncommitted credit facilities, we also had
stand-alone letters of credit of $459 million outstanding as at December 31, 2020, which were not issued under a
credit facility. We also had surety bonds of $840 million outstanding as at December 31, 2020 to support our current
and future reclamation obligations.
Under the terms of the silver streaming agreement relating to Antamina, if there is an event of default under the
agreement or Teck insolvency, Teck Base Metals Ltd., our subsidiary that holds our interest in Antamina, is restricted
from paying dividends or making other distributions to Teck to the extent that there are unpaid amounts under the
agreement. In addition, the QB2 project finance arrangements include customary restrictions on the payment of
dividends and other distributions from the project company until project completion has been achieved; such
distributions are also subject to compliance with certain other conditions.
Early repayment of borrowings under our revolving credit facility, outstanding public debt and the QB2 project finance
arrangements may be required if an event of default under the relevant agreement occurs. In addition, we are required
to offer to repay indebtedness outstanding under our revolving credit facility and certain of our public debt in the
event of a change of control, as determined under the relevant agreements.
Capital Allocation Framework
Our capital allocation framework describes how we allocate funds to sustaining and growth capital, maintaining solid
investment grade credit metrics and returning excess cash to shareholders. This framework reflects our intention to
make additional returns to shareholders by supplementing our base dividend with at least an additional 30% of available
cash flow after certain other repayments and expenditures have been made. For this purpose, we define available
cash flow as cash flow from operating activities after cash taxes, cash interest and distributions to non-controlling
interests less: (i) sustaining capital and capitalized stripping; (ii) committed enhancement and growth capital; (iii) any
cash required to adjust the capital structure to maintain solid investment grade credit metrics; and (iv) our $0.20 per
1 Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
2 See “Use of Non-GAAP Financial Measures” section for reconciliation.
40 Teck 2020 Annual Report | Forward Together
share annual base dividend. Proceeds from any divestment and partnering proceeds may also be used to supplement
available cash flow. Any additional cash returns will be made through share repurchase and/or supplemental dividends,
depending on market conditions at the relevant time.
Our results can be highly variable, as they are dependent on commodity prices and various other factors. Investors
should not assume that there will be available cash or any supplemental returns in any given year.
During 2020, we returned $106 million to shareholders through our annual base dividend of $0.20 per share. We
also purchased and cancelled 16,292,441 Class B subordinate voting shares under our normal course issuer bid for
$207 million.
Operating Cash Flow
Cash flow from operations was $1.6 billion in 2020, compared with $3.5 billion in 2019 and $4.4 billion in 2018. The
decrease in 2020 was primarily due to lower commodity prices, most significantly steelmaking coal, and a reduction
in sales volumes as a result of COVID-19. The decrease in 2019 as compared to 2018 was primarily associated due to
lower commodity prices and reduced steelmaking coal sales volumes.
Investing Activities
Expenditures on property, plant and equipment were $3.1 billion in 2020, including $1.6 billion on the QB2 project,
$463 million on growth capital and $1.0 billion on sustaining capital. The largest component of growth capital was
$379 million spent on the Neptune facility upgrade. The largest components of sustaining capital expenditures were
$571 million at our steelmaking coal operations, inclusive of water management, $188 million in our zinc business unit
and $161 million in our copper business unit.
Capitalized production stripping costs were $499 million compared with $680 million in 2019. The majority of these
costs in 2020 and 2019 represent the advancement of pits for future production at our steelmaking coal operations.
Capitalized production stripping costs were lower than a year ago due mainly to planned mining and production
outages at our steelmaking coal operations in 2020 to correspond with anticipated reduced demand related to
COVID-19 and reduced capacity due to the planned Neptune shutdown.
Capital expenditures for 2020 are summarized in the table on pages 48 to 49.
Expenditures on investments in 2020 were $190 million and included $11 million for NuevaUnión, which is held as an
equity investment, $165 million for intangibles and other assets, and $14 million for marketable securities.
Cash proceeds from the sale of assets and investments were $146 million in 2020, $80 million in 2019 and $1.3 billion
in 2018. There were no significant items in 2020 or 2019, and 2018 included the $1.2 billion of proceeds from the sale
of our two-thirds interest in the Waneta Dam.
Financing Activities
Debt proceeds in 2020 totalled $2.4 billion, while debt repayments totalled $457 million. Debt proceeds included a
drawdown of $1.5 billion on the US$2.5 billion limited recourse project financing facility to fund the development of
the QB2 project. During the year, we drew $363 million, net, on our US$4.0 billion revolving credit facility. Both of these
debt facilities are further outlined in the Liquidity section of this MD&A.
In 2020, we issued US$550 million of notes due July 2030. These notes bear interest at 3.90% per annum. We used
the US$542 million of net proceeds to purchase US$268 million aggregate principal amount of our outstanding notes
pursuant to cash tender offers and a private purchase, the latter of which had a US$13 million principal amount.
The purchased notes comprised US$104 million of 4.5% notes due 2021, US$52 million of 4.75% notes due 2022 and
US$112 million of 3.75% notes due 2023. The remainder of the proceeds were used to repay amounts drawn on our
US$4.0 billion revolving credit facility. We recorded a pre-tax loss through non-operating income (expense) of $11 million
in connection with these purchases.
Management’s Discussion and Analysis
41
In November 2019, we closed our US$2.5 billion limited recourse project financing facility to fund the development of the
QB2 project. Amounts drawn under the facility will bear interest at LIBOR plus applicable margins that vary over time
and will be repaid in 17 semi-annual instalments starting the earlier of six months after project completion or June 2023.
These project finance loans are guaranteed pre-completion on a several basis by Teck, SMM and SC pro rata to their
respective interests in the Series A shares of QBSA. We have provided security in the form of QBSA’s assets, which
consist primarily of QB2 project assets. At December 31, 2019, the facility was undrawn.
On March 29, 2019, the transaction through which SMM/SC subscribed for a 30% indirect interest in QBSA closed. On
closing, SMM/SC contributed $1.3 billion (US$966 million) to the QB2 project and a further $444 million (US$336 million)
was contributed over the remainder of 2019. These contributions are made in the form of shareholder loans and share
subscriptions for equity in Quebrada Blanca Holdings SPA, which holds a 90% interest in QBSA. We retain control of
QBSA and consequently continue to consolidate its results.
In 2019, we redeemed US$600 million of our 8.5% notes that were due in 2024 for US$638 million of cash, which
included the premium paid on redemption. We recorded a pre-tax charge of $224 million on the redemption, of which
$174 million was non-cash.
In 2018, we redeemed US$1.0 billion aggregate principal amount of our outstanding notes pursuant to cash tender
offers. The principal amount of notes purchased was US$103 million of 4.50% notes due January 2021, US$471 million
of 4.75% notes due 2022 and US$426 million of 3.75% notes due 2023. The total cost of the purchases, which was
funded from cash on hand, including the premiums, was US$1.01 billion. We recorded a pre-tax accounting charge of
$26 million ($19 million after tax) in non-operating income (expense) in connection with these purchases.
Debt interest and finance charges paid during 2020 were $355 million compared with $386 million in 2019 due to the
reduction of our outstanding notes in the second quarter of 2019.
During 2020, we paid $106 million in respect of our regular annual base dividend of $0.20 per share.
In 2020, we purchased and cancelled approximately 16.3 million Class B subordinate voting shares under our normal
course issuer bid for $207 million. These purchases completed the $1.0 billion of share buybacks announced in 2019.
In 2019, we purchased and cancelled approximately 24.4 million Class B subordinate voting shares at a cost of
$654 million under our normal course issuer bids.
Quarterly Profit and Cash Flow
($ in millions except per share data)
2020
2019
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Revenue
Gross profit
$ 2,560 $ 2,291 $ 1,720 $ 2,377
398
505
139
291
$ 2,655 $ 3,035 $ 3,138 $ 3,106
460
787
1,051
1,042
Profit (loss) attributable
to shareholders
(464)
Basic earnings (loss) per share $ (0.87)
Diluted earnings (loss)
61
(149)
(312)
(1,835)
369
231
630
$ 0.11
$ (0.28) $ (0.57) $
(3.33) $ 0.66 $ 0.41 $
1.11
per share
Cash flow from operations
$ (0.87) $ 0.11 $ (0.28) $ (0.57) $
$
$ 594 $ 390 $ 300 $ 279
(3.33) $ 0.66 $ 0.41 $
1.10
782 $ 1,062 $ 1,120 $ 520
42 Teck 2020 Annual Report | Forward Together
Gross profit from our copper business unit was $368 million in the fourth quarter compared with $130 million a year
ago. Gross profit before depreciation and amortization increased by $231 million compared with a year ago primarily
due to higher copper prices and sales volumes, and higher by-product contributions from zinc.
Copper production of 78,100 tonnes in the fourth quarter was 6,900 tonnes higher than a year ago, primarily due to
higher production at Carmen de Andacollo, which was impacted by a labour strike in the fourth quarter of 2019, as well
as higher production at Antamina. Production at Highland Valley Copper was similar to a year ago, while production
declined at Quebrada Blanca.
Gross profit from our zinc business unit was $147 million in the fourth quarter compared with $120 million a year ago.
Gross profit before depreciation and amortization increased by $32 million compared with a year ago primarily as a
result of higher zinc prices and higher by-product contributions, which were partially offset by higher unit operating
costs and higher royalty expense.
At our Red Dog Operations, zinc and lead production in the fourth quarter increased by 11% and 2%, respectively,
compared to a year ago. The higher production was primarily due to higher mill throughput and improved mill recoveries.
At Trail Operations, production of refined zinc was 20% higher than a year ago, while lead production increased by 5%.
Production and sales of refined zinc were reduced in 2019 due to an electrical equipment failure in one of four rectifiers
at the zinc refinery.
Gross profit in the fourth quarter from our steelmaking coal business unit was $36 million compared with $241 million
a year ago. Gross profit before depreciation and amortization in the fourth quarter declined by $200 million from a year
ago, primarily due to an 19% decrease in realized steelmaking coal prices.
Fourth-quarter sales of 6.1 million tonnes were near the high end of our guidance range, while being slightly below
the same quarter a year ago, and 18% higher compared to the third quarter of this year. We increased our sales volumes
to China in the fourth quarter to nearly 20% of our total sales in response to increased demand due to restrictions on
Australian coal imports into China.
Our energy business unit continued to be impacted by market volatility and low global benchmark crude oil prices.
This resulted in lower realized prices including WCS prices compared to the same period last year. In the fourth
quarter, we incurred a gross loss of $46 million compared to a gross loss of $31 million in the fourth quarter of 2019.
Our 21.3% share of bitumen production from Fort Hills decreased by 10,057 barrels per day in the fourth quarter
compared to the same period in 2019. The Fort Hills partners safely and efficiently reduced operations to a single train
facility in the second quarter, which helped reduce negative cash flows in light of COVID-19 and unprecedented low
WCS prices. As previously announced, Fort Hills restarted the second train and ramped up production in the fourth
quarter to approximately 120,000 barrels per day. However, production was impacted by the shutdown of operations
for several days to help facilitate a thorough investigation of a fatal incident in late December. Operations have since
recommenced with production ramping up in January.
In the fourth quarter, our loss attributable to shareholders was $464 million, or $0.87 per share, compared with a loss
to shareholders of $1.8 billion, or $3.33 per share, in the same period a year ago. In the fourth quarter, we recorded an
after-tax impairment of $438 million on our interest in Fort Hills. Our loss in the fourth quarter of 2019 was primarily
due to after-tax asset impairments totalling $1.9 billion on our interest in Fort Hills and our Frontier oil sands project.
Cash flow from operations in the fourth quarter was $594 million compared with $782 million a year ago, with the
decrease primarily due to changes in non-cash working capital items. During the fourth quarter, changes in working
capital items resulted in a use of cash of $104 million compared with a source of cash of $210 million a year ago.
The fluctuation in working capital changes year over year was primarily related to changes in our trade receivable
balances due to the timing of sales and the effect of higher closing base metal prices, compared with a year ago
.
Management’s Discussion and Analysis
43
Outlook
The sales of our products are denominated in U.S. dollars, while a significant portion of our expenses are incurred in
local currencies, particularly the Canadian dollar and the Chilean peso. Foreign exchange fluctuations can have a
significant effect on our operating margins, unless such fluctuations are offset by related changes to commodity prices.
Our U.S. dollar denominated debt is subject to revaluation based on changes in the Canadian/U.S. dollar exchange
rate. As at December 31, 2020, US$3.6 billion of our U.S. dollar denominated debt is designated as a hedge against our
foreign operations that have a U.S. dollar functional currency. As a result, any foreign exchange gains or losses arising
on that amount of our U.S. dollar debt are recorded in other comprehensive income, with the remainder being charged
to profit.
Commodity markets are volatile. Prices can change rapidly and customers can alter shipment plans. This can have a
substantial effect on our business and financial results. Continued uncertainty in global markets arising from the
macroeconomic outlook and government policy changes, including tariffs and the potential for trade disputes, as well
as pandemic concerns, may have a significant positive or negative effect on the prices of the various products
we produce.
We remain confident in the longer-term outlook for our major commodities, however, global economic uncertainty and
COVID-19 had significant negative effects on the prices for our products in the first half of 2020. The extent, duration
and impacts that COVID-19 may have on demand and prices for our commodities, on our suppliers and employees and
on global financial markets going forward is not known at this time, but could be material.
Commodity Prices and Sensitivities
Commodity prices are a key driver of our profit and cash flows. On the supply side, the depleting nature of ore reserves,
difficulties in finding new orebodies, the permitting processes and the availability of skilled resources to develop
projects, as well as infrastructure constraints, political risk and significant cost inflation, may continue to have a
moderating effect on the growth in future production for the industry as a whole.
The sensitivity of our annual profit attributable to shareholders and EBITDA to changes in the Canadian/U.S. dollar
exchange rate and commodity prices, before pricing adjustments, based on our current balance sheet, our expected
2021 mid-range production estimates, current commodity prices and a Canadian/U.S. dollar exchange rate of $1.30,
is as follows:
US$ exchange
Copper (000’s tonnes)
Zinc (000’s tonnes)(3)
Steelmaking coal (million tonnes)
WCS (million bbl)(4)
WTI(5)
2021 Mid-Range
Production
Estimates(1)
Estimated Effect
of Change
on Profit(2)
($ in millions)
Change
Estimated
Effect on
EBITDA(2)
($ in millions)
282.5
902.5
CAD$0.01
US$0.01/lb.
US$0.01/lb.
26.0
US$1/tonne
10.4
US$1/bbl
US$1/bbl
$
$
$
$
$
$
44
5
9
19
9
6
$
$
$
$
$
$
70
8
12
30
13
8
Notes:
(1) All production estimates are subject to change based on market and operating conditions.
(2) The effect on our profit attributable to shareholders and on EBITDA of commodity price and exchange rate movements will vary from quarter to
quarter depending on sales volumes. Our estimate of the sensitivity of profit and EBITDA to changes in the U.S. dollar exchange rate is sensitive to
commodity price assumptions.
(3) Zinc includes 305,000 tonnes of refined zinc and 597,500 tonnes of zinc contained in concentrate.
(4) Bitumen volumes from our energy business unit.
(5) Our WTI oil price sensitivity takes into account our interest in Fort Hills for respective change in revenue, partially offset by the effect of the change
in diluent purchase costs as well as the effect on the change in operating costs across our business units, as our operations use a significant
amount of diesel fuel.
44 Teck 2020 Annual Report | Forward Together
Guidance
There is still uncertainty over the extent and duration of impacts that COVID-19 may have on demand and prices for
our commodities, on our suppliers and employees, and on global financial markets going forward. Accordingly, the
ability for us to achieve the guidance provided throughout this document is dependent on various factors, including
the COVID-19 pandemic and how it might affect us, our customers and our suppliers.
Production Guidance
We expect 2021 copper production to be in the range of 275,000 to 290,000 tonnes. Higher production at Highland
Valley Copper and Antamina are expected to offset declines at Carmen de Andacollo and Quebrada Blanca.
We expect 2021 production of zinc in concentrate, including co-product zinc production from our copper business
unit, to be in the range of 585,000 to 610,000 tonnes. We expect lead production from Red Dog to be in the range of
85,000 to 95,000 tonnes in 2021. In 2021, we expect Trail Operations to produce between 300,000 and 310,000 tonnes
of refined zinc. Refined lead and silver production at Trail are expected to be similar to prior years but will fluctuate as
a result of concentrate feed source optimization.
Our steelmaking coal production is anticipated to be between 25.5 and 26.5 million tonnes in 2021, as we transition
to full production rates to meet anticipated demand. We continue to advance mining in new areas at our Fording River,
Elkview and Greenhills operations. The new areas are expected to extend the lives of these mines and allow us to
produce 26 to 27 million tonnes in the long term to continue to offset the closure of Coal Mountain and Cardinal
River operations.
We expect our share of Fort Hills’ annual production to be approximately 23,500 to 33,000 barrels per day in 2021.
The midpoint of our guidance represents an increase of approximately 25% when compared to 2020 production.
The Fort Hills partners continue to focus on cost discipline and maintaining the operating and capital cost savings
achieved in 2020, while assessing plans to further increase production to nameplate capacity as the business
environment improves.
Management’s Discussion and Analysis
45
Production Guidance
The table below shows our share of production of our principal products for 2020, our guidance for production in 2021
and our guidance for production for the following three years.
Units in thousand tonnes
(excluding steelmaking coal, molybdenum and bitumen)
2020
2021
Guidance
Three-Year
Guidance
2022–2024
Principal Products
Copper(1)(2)(3)
Highland Valley Copper
Antamina
Carmen de Andacollo
Quebrada Blanca(5)
Zinc(1)(2)(4)
Red Dog
Antamina
Refined zinc
Trail Operations
Steelmaking coal (million tonnes)
Bitumen (million barrels)(2)
Fort Hills
Other Products
Lead(1)
Red Dog
Molybdenum (million pounds)(1)(2)
Highland Valley Copper
Antamina
119.3
85.6
57.4
13.4
128 – 133
91 – 95
46 – 51
10 – 11
135 – 165
90
50 – 60
–
275.7
275 – 290
275 – 315
490.7
96.3
490 – 510
95 – 100
510 – 550
80 – 100
587.0
585 – 610
590 – 650
305.1
300 – 310
305 – 315
21.1
25.5 – 26.5
26.0 – 27.0
8.4
8.6 – 12.1
14
97.5
85 – 95
80 – 90
3.3
1.8
5.1
1.2 – 1.8
1.0 – 1.4
3.0 – 4.5
2.0 – 3.0
2.2 – 3.2
5.0 – 7.5
Notes:
(1) Metal contained in concentrate.
(2) We include 100% of production and sales from our Quebrada Blanca and Carmen de Andacollo mines in our production and sales volumes, even
though we do not own 100% of these operations, because we fully consolidate their results in our financial statements. We include 22.5% and 21.3%
of production and sales from Antamina and Fort Hills, respectively, representing our proportionate ownership interest in these operations.
(3) Copper production includes cathode production at Quebrada Blanca and Carmen de Andacollo.
(4) Total zinc includes co-product zinc production from our 22.5% proportionate interest in Antamina.
(5) Excludes production from QB2 for three-year guidance 2022–2024.
46 Teck 2020 Annual Report | Forward Together
Sales Guidance
The table below shows our sales for the last quarter of 2020 and our sales guidance for the first quarter of 2021 for
selected principal products.
Zinc (thousand tonnes)(1)
Red Dog
Steelmaking coal (million tonnes)
Note:
(1) Metal contained in concentrate.
Unit Cost Guidance
Q4
2020
Q1 2021
Guidance
149
6.1
90 – 100
5.9 – 6.3
The table below reports our unit costs for selected principal products for 2020 and our guidance for unit costs for
selected principal products in 2021.
(Per unit costs)
Copper(1)
Total cash unit costs(5) (US$/lb.)
Net cash unit costs(2)(5) (US$/lb.)
Zinc(3)
Total cash unit costs(5) (US$/lb.)
Net cash unit costs(2)(5) (US$/lb.)
Steelmaking coal(4)
Adjusted site cost of sales(5)
Transportation costs
Inventory write-downs
Unit costs(5) – CAD$/tonne
Energy (bitumen)
Adjusted operating costs(5) (CAD$/barrel)
2020
2021
Guidance
1.57
1.28
$ 1.65 – 1.75
$ 1.30 – 1.40
0.53
0.36
$ 0.54 – 0.59
$ 0.40 – 0.45
$
64
41
3
59 – 64
36 – 39
–
108
$
95 – 103
31.96
$
28 – 32
$
$
$
$
$
$
$
Notes:
(1)
Copper unit costs are reported in U.S. dollars per payable pound of metal contained in concentrate. Copper net cash unit costs include adjusted
cash cost of sales and smelter processing charges, less cash margins for by-products including co-products. Guidance for 2021 assumes a zinc
price of US$1.22 per pound, a molybdenum price of US$8.50 per pound, a silver price of US$20 per ounce, a gold price of US$2,000 per ounce and
a Canadian/U.S. dollar exchange rate of $1.30.
(2) After co-product and by-product margins.
(3) Zinc unit costs are reported in U.S. dollars per payable pound of metal contained in concentrate. Zinc net cash unit costs are mine costs including
adjusted cash cost of sales and smelter processing charges, less cash margins for by-products. Guidance for 2021 assumes a lead price of
US$0.85 per pound, a silver price of US$20 per ounce and a Canadian/U.S. dollar exchange rate of $1.30. By-products include both by-products
and co-products.
(4) Steelmaking coal unit costs are reported in Canadian dollars per tonne.
(5) Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
Management’s Discussion and Analysis
47
Capital Expenditure Guidance
The table below reports our capital expenditures for 2020 and our guidance for capital expenditures in 2021.
(Teck’s share in $ millions)
Sustaining
Copper
Zinc
Steelmaking coal(1)
Energy
Corporate
Growth(2)
Copper(3)
Zinc
Steelmaking coal
Corporate
Total
Copper
Zinc
Steelmaking coal
Energy
Corporate
QB2 capital expenditures
Total before SMM/SC contributions
Estimated SMM/SC contributions to capital expenditures
Estimated QB2 project financing draw
2020
161
188
571
91
12
1,023
41
7
411
4
463
202
195
982
91
16
1,486
1,643
3,129
(660)
(983)
$
$
$
$
$
$
$
2021
Guidance
160
155
430
85
–
830
125
25
390
5
545
285
180
820
85
5
1,375
2,500
3,875
(440)
(1,425)
$
$
$
$
$
$
$
Total, net of partner contributions and project financing
$
1,486
$
2,010
Notes:
(1)
Steelmaking coal sustaining capital 2021 guidance includes $255 million of water treatment capital. 2020 includes $267 million of water
treatment capital.
(2) Growth expenditures include RACE21™ capital expenditures for 2021 of $120 million, of which $80 million relates to steelmaking coal, $30 million
relates to copper, $5 million relates to zinc and $5 million relates to corporate projects.
(3) Copper growth guidance for 2021 includes studies for HVC 2040, Antamina, QB3, Zafranal, San Nicolás and Galore Creek.
48 Teck 2020 Annual Report | Forward Together
Capital Expenditure Guidance — Capitalized Stripping
(Teck’s share in CAD$ millions)
Capitalized Stripping
Copper
Zinc
Steelmaking coal
Other Information
Carbon Pricing Policies and Associated Costs
2020
2021
Guidance
$
$
145
51
303
499
$
$
205
70
295
570
As part of the ongoing efforts to address climate change, regulations to control greenhouse gas emissions continue
to be developed and enhanced in many jurisdictions. Regulatory uncertainty and resulting uncertainty regarding the
costs of technology required to comply with current or anticipated regulations make it difficult to predict the ultimate
costs of compliance. Societal focus on controlling carbon emissions, minimizing climate change and preparing for
climate change adaptation continues to mount.
Embracing our role in combating climate change, we continue to take action to reduce greenhouse gas emissions by
improving our energy efficiency and implementing low-carbon technologies at our operations and by working with
governments and regulators to advocate for effective and efficient carbon pricing. We are focused on responsibly
mining the metals and materials essential for the global transition to a low-carbon economy. In February 2020, we
announced our objective to be carbon neutral across all our operations and activities by 2050.
In 2020, British Columbia’s carbon tax under the Carbon Tax Act remained at $40 per tonne of carbon dioxide-
equivalent (CO2e). The B.C. carbon tax was to increase by $5 per tonne of CO2e per year until reaching $50 per tonne
of CO2e, although the planned increase to $45 per tonne in 2020 was postponed to 2021 due to COVID-19. British
Columbia also continues to implement the CleanBC Program for Industry to address impacts to emissions-intensive,
trade-exposed industries to ensure that B.C. operations maintain their competitiveness and that carbon leakage
is avoided.
Alberta’s Technology Innovation and Emissions Reduction system came into force on January 1, 2020. The system
implements carbon pricing for large industrial facilities in Alberta with CO2e emissions in excess of 100,000 tonnes per
year, which includes our Fort Hills mine. Large industrial emitters are required to reduce emissions by 10% starting in
2020 with a further 1% reduction per year thereafter; emissions above the target will be assessed at the then-prevailing
carbon price. In 2020, the carbon price under the system was $30 per tonne of CO2e.
In 2019, the Government of Canada introduced the Greenhouse Gas Pollution Pricing Act, which establishes a federal
carbon levy for any province or territory that has not implemented a compliant carbon-pricing regime. Federal carbon
tax rates began at $20 per tonne of CO2e in 2019, increasing $10 per year to $50 per tonne of CO2e by 2022. B.C.’s
Carbon Tax Act and the large industrial emitter provisions of the Alberta Technology Innovation and Emissions Reduction
system are considered substantially similar to the federal requirements, and therefore, our B.C. and Alberta operations
will not be subject to those provisions of the federal Greenhouse Gas Pollution Pricing Act. However, effective January 1,
2020, the federal carbon tax on GHG emissions resulting from the combustion of fossil fuels for certain purposes
applied to our Alberta operations.
The Government of Canada took further action in 2020 and introduced Bill C-12, the Canadian Net-Zero Emissions
Accountability Act, intended to formalize Canada’s target to achieve net-zero greenhouse gas emissions by 2050, and
released the “A Healthy Environment and a Healthy Economy” climate plan outlining proposed actions and initiatives
to achieve Canada’s climate goals. That climate plan includes the proposal to increase the price of carbon by $15 per
tonne of CO2e per year, starting in 2023, rising to a rate of $170 per tonne of CO2e by 2030.
Management’s Discussion and Analysis
49
While climate change regulations continue to evolve in most jurisdictions in which we operate, we expect that regional,
national or international regulations that seek to reduce greenhouse gas emissions will continue to be established or
revised. The cost of reducing our emissions or of obtaining the equivalent amount of credits or offsets in the future,
if regulations permit this, remains uncertain. The cost of compliance with various climate change regulations will
ultimately be determined by the regulations themselves and by the markets that evolve for carbon credits and offsets.
Teck’s direct greenhouse gas emissions attributable to our operations for 2020 are estimated to be approximately
2.8 million tonnes (CO2e). The most material indirect emissions associated with our activities are those from the use of
our steelmaking coal by our customers. Based on our 2020 sales volumes, emissions from the use of our steelmaking
coal would have been approximately 64 million tonnes of CO2.
We may in the future face similar taxation for our activities in other jurisdictions. Similarly, customers of some of our
products may also be subject to new carbon costs or taxation in the future in the jurisdictions where the products are
ultimately used.
For 2020, our B.C.-based operations incurred $66.7 million in British Columbia provincial carbon tax. Our Cardinal
River Operations in Alberta paid $0.7 million in carbon costs, and our Fort Hills mine incurred approximately $6 million
(100% basis) in carbon costs under the Alberta system. As a result of the CleanBC Program for Industry, in 2020 we
received back $12.8 million of the $72.8 million we paid under the British Columbia provincial carbon tax in 2019,
and we expect to receive a similar portion of our 2020 expenditures back in 2021.
Financial Instruments and Derivatives
We hold a number of financial instruments, derivatives and contracts containing embedded derivatives, which are
recorded on our consolidated balance sheet at fair value with gains and losses in each period included in other
comprehensive income (loss) in the year and profit for the period on our consolidated statements of income and
consolidated statements of other comprehensive income, as appropriate. The most significant of these instruments are
investments in marketable equity and debt securities, commodity swap contracts, metal-related forward contracts,
settlement receivables and payables, and gold stream and silver stream embedded derivatives. Some of our gains and
losses on metal-related financial instruments are affected by smelter price participation and are taken into account
in determining royalties and other expenses. All are subject to varying rates of taxation, depending on their nature and
jurisdiction. Further information about our financial instruments, derivatives and contracts containing embedded
derivatives and associated risks is outlined in Note 30 to our 2020 audited annual consolidated financial statements.
Areas of Judgment and Critical Accounting Estimates
In preparing our consolidated financial statements, we make judgments in applying our accounting policies. The
judgments that have the most significant effect on the amounts recognized in our financial statements are outlined
below. In addition, we make assumptions about the future in deriving estimates used in preparing our consolidated
financial statements. We have outlined below information about assumptions and other sources of estimation
uncertainty as at December 31, 2020 that have a risk of resulting in a material adjustment to the carrying amounts
of assets and liabilities within the next year.
a) Areas of Judgment
Assessment of Impairment Indicators
Judgment is required in assessing whether certain factors would be considered an indicator of impairment or
impairment reversal. We consider both internal and external information to determine whether there is an indicator of
impairment or impairment reversal present and, accordingly, whether impairment testing is required. The information
we consider in assessing whether there is an indicator of impairment or impairment reversal includes, but is not limited
to, market transactions for similar assets, commodity prices, interest rates, our market capitalization, reserves and
resources, mine plans and operating results.
In the fourth quarter of 2020, updated mine plans for Fort Hills became available, reflecting an earlier-than-planned
restart of the second train of operations, and including operating and capital cost reductions over the life of mine.
These updates to the mine plans indicated a change in the valuation of the asset. This, combined with macroeconomic
conditions, including the cost of capital for oil assets and lower market expectations for long-term WCS heavy oil
50 Teck 2020 Annual Report | Forward Together
prices, required us to perform an impairment test for our interest in Fort Hills under the requirements of IAS 36,
Impairment of Assets.
During the first quarter of 2020, as a result of then-lower market expectations of WCS heavy oil prices over the next
three years, combined with reduced production in the near term, we performed an impairment test for our interest
in Fort Hills.
During 2019, we determined that lower market expectations for future WCS heavy oil prices were an impairment
indicator for our interest in Fort Hills. We also determined that the withdrawal of our Frontier oil sands property from
the regulatory review process was an impairment indicator for the project under the requirements of IFRS 6,
Exploration for and Evaluation of Mineral Resources. We performed impairment tests as a result of these indicators.
Refer to the impairment testing section below for further detail on our impairment testing in 2020 and 2019.
Joint Arrangements
We are a party to a number of arrangements over which we do not have control. Judgment is required in determining
whether joint control over these arrangements exists and, if so, which parties have joint control and whether each
arrangement is a joint venture or joint operation. In assessing whether we have joint control, we analyze the activities
of each arrangement and determine which activities most significantly affect the returns of the arrangement over its
life. These activities are determined to be the relevant activities of the arrangement. If unanimous consent is required
over the decisions about the relevant activities, the parties whose consent is required would have joint control over the
arrangement. The judgments around which activities are considered the relevant activities of the arrangement are
subject to analysis by each of the parties to the arrangement and may be interpreted differently. When performing this
assessment, we generally consider decisions about activities such as managing the asset while it is being designed,
developed and constructed, during its operating life and during the closure period. We may also consider other
activities including the approval of budgets, expansion and disposition of assets, financing, significant operating and
capital expenditures, appointment of key management personnel, representation on the board of directors and other
items. When circumstances or contractual terms change, we reassess the control group and the relevant activities of
the arrangement.
If we have joint control over the arrangement, an assessment of whether the arrangement is a joint venture or joint
operation is required. This assessment is based on whether we have rights to the assets, and obligations for the
liabilities, relating to the arrangement or whether we have rights to the net assets of the arrangement. In making this
determination, we review the legal form of the arrangement, the terms of the contractual arrangement and other facts
and circumstances. In a situation where the legal form and the terms of the contractual arrangement do not give us
rights to the assets and obligations for the liabilities, an assessment of other facts and circumstances is required,
including whether the activities of the arrangement are primarily designed for the provision of output to the parties
and whether the parties are substantially the only source of cash flows contributing to the arrangement. The
consideration of other facts and circumstances may result in the conclusion that a joint arrangement is a joint operation.
This conclusion requires judgment and is specific to each arrangement. Other facts and circumstances have led us to
conclude that Antamina and Fort Hills are joint operations for the purposes of our consolidated financial statements.
The other facts and circumstances considered for both of these arrangements include the provision of output to the
parties of the joint arrangements and the funding obligations. For both Antamina and Fort Hills, we will take our share
of the output from the assets directly over the life of the arrangement. We have concluded that this gives us direct
rights to the assets and obligations for the liabilities of these arrangements proportionate to our ownership interests.
Streaming Transactions
When we enter into a long-term streaming arrangement linked to production at specific operations, judgment is
required in assessing the appropriate accounting treatment for the transaction on the closing date and in future
periods. We consider the specific terms of each arrangement to determine whether we have disposed of an interest in
the reserves and resources of the respective operation or executed some other form of arrangement. This assessment
considers what the counterparty is entitled to and the associated risks and rewards attributable to them over the life
of the operation. These include the contractual terms related to the total production over the life of the arrangement
as compared to the expected production over the life of the mine, the percentage being sold, the percentage of
payable metals produced, the commodity price referred to in the ongoing payment and any guarantee relating to the
upfront payment if production ceases.
Management’s Discussion and Analysis
51
For our silver and gold streaming arrangements at Antamina and Carmen de Andacollo, respectively, there is no
guarantee associated with the upfront payment. We have concluded that control of the rights to the silver and gold
mineral interests were transferred to the buyers when the contracts came into effect. Therefore, we consider these
arrangements a disposition of a mineral interest.
Based on our judgment, control of the interest in the reserves and resources transferred to the buyer when the
contracts were executed. At that time, we recognized the amount of the gain related to the disposition of the reserves
and resources as we had the right to payment, the customer was entitled to the commodities, the buyer had no
recourse in requiring Teck to mine the product, and the buyer had significant risks and rewards of ownership of the
reserves and resources.
We recognize the amount of consideration related to refining, mining and delivery services as the work is performed.
Deferred Tax Assets and Liabilities
Judgment is required in assessing whether deferred tax assets and certain deferred tax liabilities are recognized on
the balance sheet and what tax rate is expected to be applied in the year when the related temporary differences
reverse. We also evaluate the recoverability of deferred tax assets based on an assessment of our ability to use the
underlying future tax deductions before they expire against future taxable income. Deferred tax liabilities arising from
temporary differences on investments in subsidiaries, joint ventures and associates are recognized unless the reversal
of the temporary differences is not expected to occur in the foreseeable future and can be controlled. Judgment is
also required on the application of income tax legislation. These judgments are subject to risk and uncertainty and
could result in an adjustment to the deferred tax provision and a corresponding credit or charge to profit (loss).
b) Sources of Estimation Uncertainty
Impairment Testing
When impairment testing is required, discounted cash flow models are used to determine the recoverable amount of
respective assets. These models are prepared internally or with assistance from third-party advisors when required.
When relevant market transactions for comparable assets are available, these are considered in determining the
recoverable amount of assets. Significant assumptions used in preparing discounted cash flow models include
commodity prices, reserves and resources, mine production, operating costs, capital expenditures, discount rates and
foreign exchange rates. The impairment testing section below outlines the significant inputs used when performing
goodwill and other asset impairment testing in 2020 and 2019. These inputs are based on management’s best
estimates of what an independent market participant would consider appropriate. Changes in these inputs may alter
the results of impairment testing, the amount of the impairment charges or reversals recorded in the statement of
income (loss) and the resulting carrying values of assets.
We allocate goodwill arising from business combinations to the cash-generating unit (CGU) or group of CGUs acquired
that is expected to receive the benefits from the business combination. When performing annual goodwill impairment
tests, we are required to determine the recoverable amount of each CGU or group of CGUs to which goodwill has been
allocated. Our Quebrada Blanca CGU and steelmaking coal group of CGUs have goodwill allocated to them. The
recoverable amount of each CGU or group of CGUs is determined as the higher of its fair value less costs of disposal
(FVLCD) and its value in use.
Asset Impairments
($ in millions)
Fort Hills CGU
Frontier oil sands project
Steelmaking coal CGU
Other
Total
52 Teck 2020 Annual Report | Forward Together
$
2020
1,244
–
–
–
$
2019
1,241
1,129
289
3 1
$
1,244
$
2,690
Asset Impairments – 2020
During 2020, we assessed whether there were any indicators of impairment or impairment reversals for our
assets and did not identify any matters requiring us to perform an impairment test, with the exception of Fort Hills,
as outlined below.
Fort Hills CGU
In the fourth quarter of 2020, updated mine plans for Fort Hills became available, reflecting an earlier-than-planned
restart of the second train of operations, including operating and capital cost reductions over the life of mine. These
updates to the mine plans indicated a change in the valuation of the asset. This, combined with macroeconomic
conditions, including the cost of capital for oil assets and lower market expectations for long-term WCS heavy oil
prices, required us to perform an impairment test for our interest in Fort Hills. As a result, we recorded a non-cash,
pre-tax asset impairment for our interest in Fort Hills of $597 million (after-tax $438 million) in the fourth quarter.
The estimated post-tax recoverable amount of our Fort Hills CGU of $2.1 billion was lower than our carrying value.
Combined with the pre-tax impairment of $647 million (after-tax $474 million) recorded in the first quarter of 2020,
we recorded total pre-tax impairments related to our interest in Fort Hills of $1.2 billion for the year ended
December 31, 2020.
The recoverable amount of our Fort Hills CGU is most sensitive to changes in WCS heavy oil prices, the Canadian/U.S.
dollar exchange rates and discount rates. As at December 31, 2020, in isolation, a US$1 decrease in the real long-term
WCS heavy oil price would result in a reduction in the recoverable amount of approximately $100 million. A $0.01
strengthening of the Canadian dollar against the U.S. dollar would result in a reduction in the recoverable amount of
approximately $30 million. A 25 basis point increase in the discount rate would result in a reduction in the recoverable
amount of approximately $60 million.
Asset Impairments – 2019
Fort Hills CGU
During 2019, we recorded a pre-tax impairment of $1.2 billion (after-tax $910 million) related to our interest in Fort Hills.
The estimated post-tax recoverable amount of our interest in the Fort Hills CGU of $3.1 billion was lower than our
carrying value. This impairment arose as a result of lower market expectations for future WCS heavy oil prices.
Frontier Oil Sands Project
During 2019, we recorded a pre-tax impairment of $1.1 billion (after-tax $944 million) related to our Frontier oil sands
project. This impairment arose as a result of our decision to withdraw Frontier from the regulatory review process.
We wrote down the full carrying value of our interest in the Frontier oil sands project.
Steelmaking Coal CGU
During 2019, we announced that we would not proceed with the MacKenzie Redcap extension at our Cardinal River
Operations and that the operation would close in the second half of 2020. As a result of this decision and the short
remaining mine life of Cardinal River, combined with a reduction in short-term steelmaking coal prices, we recorded a
pre-tax impairment of $289 million (after-tax $184 million) as at December 31, 2019.
Other
During 2019, we recorded other asset impairments of $31 million related to Quebrada Blanca due to the short
remaining life of the cathode operation.
Management’s Discussion and Analysis
53
Annual Goodwill Impairment Testing
In 2020, we performed our annual goodwill impairment testing at October 31 and did not identify any goodwill
impairment losses.
Given the nature of expected future cash flows used to determine the recoverable amount, a material change could
occur over time, as the cash flows are significantly affected by the key assumptions described as follows.
Sensitivity Analysis
Our annual goodwill impairment test carried out at October 31, 2020 resulted in the recoverable amount of our
steelmaking coal group of CGUs exceeding its carrying value by approximately $2.1 billion. The recoverable amount of
our steelmaking coal group of CGUs is most sensitive to the long-term Canadian dollar steelmaking coal price and the
long-term foreign exchange rate assumptions. In isolation, a 5% decrease in the long-term Canadian dollar steelmaking
coal price or a 5% decrease in the long-term foreign exchange rate would result in the recoverable amount of the
steelmaking coal group of CGUs being equal to the carrying value.
The recoverable amount of our Quebrada Blanca CGU exceeded its carrying amount at the date of our annual goodwill
impairment testing. Significant changes to key inputs would be required to result in the recoverable amount being
equal to the carrying amount.
Key Assumptions
The following are the key assumptions used in our impairment testing calculations for the years ended December 31,
2020 and 2019:
WCS heavy oil prices per barrel
Steelmaking coal prices per tonne
Copper prices per pound
2020
2019
Long-term real price in 2025
of US$46
Long-term real price in 2024
of US$50
Long-term real price in 2025
of US$150
Long-term real price in 2024
of US$150
Long-term real price in 2025
of US$3.00
Long-term real price in 2024
of US$3.00
Post-tax real discount rates
6%—8%
5.4%—6.0%
Long-term foreign exchange rates
1 U.S. to 1.30 Canadian dollars
1 U.S. to 1.30 Canadian dollars
Commodity Prices
Commodity price assumptions are based on a number of factors, including forward curves in the near term, and are
benchmarked with external sources of information, including information published by our peers and market transactions,
where possible, to ensure they are within the range of values used by market participants.
Discount Rates
Discount rates are based on market participant mining and oil sands weighted average costs of capital adjusted for
risks specific to the operation or asset where appropriate.
Foreign Exchange Rates
Foreign exchange rates are benchmarked with external sources of information based on a range used by market participants.
Reserves and Resources and Mine Production
Future mineral and oil production is included in projected cash flows based on plant capacities and mineral and oil
reserve and resource estimates and related exploration and evaluation work undertaken by appropriately qualified
persons or qualified reserves evaluators.
54 Teck 2020 Annual Report | Forward Together
Operating Costs and Capital Expenditures
Operating costs and capital expenditures are based on life of mine plans and internal management forecasts. Cost
estimates incorporate management experience and expertise, current operating costs, the nature and location of each
operation, and the risks associated with each operation. Future capital expenditures are based on management’s best
estimate of expected future capital requirements, with input from management’s experts where appropriate. All
committed and anticipated capital expenditures based on future cost estimates have been included in the projected
cash flows. Operating cost and capital expenditure assumptions are subject to ongoing optimization and review
by management.
Recoverable Amount Basis
In the absence of a relevant market transaction, we estimate the recoverable amount of our CGU or group of CGUs on
a FVLCD basis using a discounted cash flow methodology, taking into account assumptions likely to be made by market
participants, unless it is expected that the value-in-use methodology would result in a higher recoverable amount. For
the asset impairment and goodwill impairment analyses performed in 2020 and 2019, we have applied the FVLCD basis.
Estimated Recoverable Reserves and Resources
Mineral and oil reserve and resource estimates are based on various assumptions relating to operating matters as set
forth in National Instrument 43-101, Standards of Disclosure for Mineral Projects and National Instrument 51-101,
Standards of Disclosure for Oil and Gas Activities. Assumptions used include production costs, mining and processing
recoveries, cut-off grades, sales volumes, long-term commodity prices, exchange rates, inflation rates, tax and royalty
rates, and capital costs. Cost estimates are based on prefeasibility or feasibility study estimates or operating history.
Estimates are prepared by or under the supervision of appropriately qualified persons, or qualified reserves evaluators,
but will be affected by forecasted commodity prices, inflation rates, exchange rates, capital and production costs, and
recoveries, among other factors. Estimated recoverable reserves and resources are used in performing impairment
testing, to determine the depreciation of property, plant and equipment at operating mine sites, in accounting for
capitalized production stripping costs, and also in forecasting the timing of settlement of decommissioning and
restoration costs. Changes in reserve and resource estimates are most significant to estimating the recoverable
amount in impairment tests.
Decommissioning and Restoration Provisions
The decommissioning and restoration provision (DRP) is based on future cost estimates using information available
at the balance sheet date that are developed by management’s experts. The DRP represents the present value of
estimated costs of future decommissioning and other site restoration activities, including costs associated with the
management of water and water quality in and around each closed site. The DRP is adjusted at each reporting period
for changes to factors such as the expected amount of cash flows required to discharge the liability, the timing of such
cash flows and the credit-adjusted discount rate. The DRP requires significant estimates and assumptions, including
the requirements of the relevant legal and regulatory framework and the timing, extent and costs of required
decommissioning and restoration activities. Our estimates of the cost associated with the management of water and
water quality in and around each closed site includes assumptions with respect to the volume and location of water to
be treated, the methods used to treat the water and the related water treatment costs. To the extent the actual costs
differ from these estimates, adjustments will be recorded and the statement of income (loss) may be affected.
Provision for Income Taxes
We calculate current and deferred tax provisions for each of the jurisdictions in which we operate. Actual amounts
of income tax expense are not final until tax returns are filed and accepted by the relevant authorities. This occurs
subsequent to the issuance of our financial statements, and the final determination of actual amounts may not be
completed for a number of years. Therefore, profit (loss) in subsequent periods will be affected by the amount that
estimates differ from the final tax return.
Management’s Discussion and Analysis
55
Deferred Tax Assets and Liabilities
Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on
management’s estimates of future production and sales volumes, commodity prices, reserves and resources,
operating costs, decommissioning and restoration costs, capital expenditures, dividends and other capital
management transactions. These estimates could result in an adjustment to the deferred tax provision and
a corresponding credit or charge to profit (loss).
c) Effects of COVID-19
In March 2020, the World Health Organization declared a global pandemic related to COVID-19, and the impacts
on global commerce have been far-reaching. To date there has been significant stock market volatility, volatility in
commodity and foreign exchange markets, and restrictions on the conduct of business in many jurisdictions and on
the global movement of people. There continues to be uncertainty surrounding COVID-19 and the extent and duration
of the impacts it may have on demand and prices for the commodities we produce, on our suppliers, on our employees
and on global financial markets.
We continue to act to protect the safety and health of our employees, contractors and the communities in which we
operate in accordance with guidance from governments and public health authorities. These measures, combined
with commodity market fluctuations, have affected our financial results for 2020.
We applied judgment in determining when to suspend the capitalization of borrowing costs associated with QB2,
which corresponded with the suspension of active development of the project. We similarly applied judgment to
determine when active development of the project resumed and we recommenced capitalization of borrowing costs
at that date. We suspended capitalization of borrowing costs for QB2 at the end of the first quarter and we recommenced
capitalization of borrowing costs on the project in the third quarter, consistent with the return to active construction.
We expensed costs of approximately $434 million relating primarily to the suspension of construction and
remobilization of our QB2 project, of which $282 million was recorded as COVID-19 costs in other operating income
(expense), and $103 million relates to interest that would have been capitalized if QB2 had not been suspended. Of
the remaining $49 million, $41 million was recorded in cost of sales as a result of reduced production levels at our
operations and $8 million was recorded as social responsibility and donations in other operating income (expense).
Further information on the impact of COVID-19 on our adjusted profit attributable to shareholders can be found in
the Financial Overview section of this MD&A.
Adoption of New Accounting Standards and Accounting Developments
Accounting Developments
New IFRS pronouncements that have been issued but are not yet effective are listed below. We plan to apply these
amendments in the annual period for which they are first required.
Amendments to IAS 16 – Property, Plant and Equipment: Proceeds before Intended Use
In May 2020, the IASB issued amendments to IAS 16, Property, Plant and Equipment (IAS 16). The amendments prohibit
a company from deducting from the cost of property, plant and equipment amounts received from selling items
produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales
proceeds and related costs in profit (loss). An entity is required to apply these amendments for annual reporting
periods beginning on or after January 1, 2022. The amendments are applied retrospectively only to items of property,
plant and equipment that are available for use after the beginning of the earliest period presented in the financial
statements in which the entity first applies the amendments. We are currently assessing the effect of this amendment
on our financial statements. We expect this amendment to have an effect on the accounting related to the sale of
products during the commissioning phase of our QB2 project.
56 Teck 2020 Annual Report | Forward Together
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform – Phase 2
In August 2020, the IASB issued amendments to IFRS 9, Financial Instruments (IFRS 9), IAS 39, Financial Instruments:
Recognition and Measurement (IAS 39), IFRS 7, Financial Instruments: Disclosures (IFRS 7), IFRS 4, Insurance Contracts
(IFRS 4), and IFRS 16, Leases (IFRS 16) as a result of Phase 2 of the IASB’s Interest Rate Benchmark Reform project.
The amendments address issues arising during reform of benchmark interest rates including the replacement of
one benchmark rate with an alternative one. The amendments are effective January 1, 2021. On adoption of the
amendments, there will be no immediate effect on our financial statements, as we will not be replacing any of the
benchmark interest rates in our agreements on the adoption date. We will continue to assess the effect of these
amendments throughout 2021.
Outstanding Share Data
As at February 17, 2021, there were approximately 522.8 million Class B subordinate voting shares and 7.8 million
Class A common shares outstanding. In addition, there were approximately 24.6 million share options outstanding
with exercise prices ranging between $5.34 and $53.72 per share. More information on these instruments, and the
terms of their conversion, is set out in Note 25 to our 2020 audited annual consolidated financial statements.
The Toronto Stock Exchange (TSX) accepted our notice of intention to make a normal course issuer bid (NCIB) to
purchase up to 40 million Class B shares during the period starting November 2, 2020 and ending November 1, 2021,
representing approximately 7.6% of the outstanding Class B shares, or 8.7% of the public float, as at October 28, 2020.
Teck is making the normal course issuer bid because it believes that the market price of its Class B subordinate voting
shares may, from time to time, not reflect their underlying value and that the share buyback program may provide
value by reducing the number of shares outstanding at attractive prices. Any purchases made under the NCIB will be
through the facilities of the TSX, the New York Stock Exchange or other alternative trading systems in Canada and the
United States, if eligible, or by such other means as may be permitted under applicable securities laws, including
private agreements under an issuer bid exemption order or block purchases in accordance with applicable regulations.
Any purchases made by way of private agreement under an applicable exemption order issued by a securities regulatory
authority may be at a discount to the prevailing market price, as provided for in such exemption order.
Under the TSX rules, except pursuant to permitted exceptions, the number of Class B Shares purchased on the TSX on
any given day will not exceed 658,302 Class B Shares, which is 25% of the average daily trading volume for the Class B
Shares on the TSX during the six-month period ended September 30, 2020 of 2,633,210, calculated in accordance with
the TSX rules. The actual number of Class B Shares to be purchased and the timing of any such purchases will generally
be determined by us from time to time as market conditions warrant. In addition, we may from time to time repurchase
Class B Shares under an automatic securities repurchase plan, which will enable purchases during times when we
would typically not be permitted to purchase our shares due to regulatory or other reasons. All repurchased shares will
be cancelled. During Teck’s previous normal course issuer bid, which commenced on October 28, 2019 and ended on
October 27, 2020, Teck purchased 23,172,271 Class B subordinate voting shares on the open market at a volume-weighted
average price of $15.34 per Class B subordinate voting share. Security holders may obtain a copy of the notice of
intention, without charge, by request directed to the attention of our Corporate Secretary, at our offices located at
Suite 3300–550 Burrard Street, Vancouver, British Columbia, V6C 0B3.
Management’s Discussion and Analysis
57
Contractual and Other Obligations
($ in millions)
Less than
1 Year
2–3
Years
4–5
Years
More than
5 Years
Total
Debt – Principal and interest payments
$
Leases – Principal and interest payments(1)
Minimum purchase obligations(2)
Concentrate, equipment,
supply and other purchases
Shipping and distribution
Energy contracts
NAB PILT and VIF payments(7)
Pension funding(3)
Other non-pension
post-retirement benefits(4)
Decommissioning and
restoration provision(5)
Other long-term liabilities(6)
385
154
686
355
244
39
19
13
124
49
$
1,030
$
1,205
$
8,133
$ 10,753
184
137
744
1,219
641
539
627
85
–
28
222
153
97
516
756
85
–
30
207
49
31
1,111
5,175
53
–
374
2,789
64
1,455
2,521
6,802
262
19
445
3,342
315
$
2,068
$
3,509
$
3,082
$
18,474
$ 27,133
Notes:
(1) We lease road and port facilities from the Alaska Industrial Development and Export Authority, through which it ships metal concentrates
produced at the Red Dog mine. Minimum lease payments are US$7 million for the next year and US$6 million for the following 18 years and are
subject to deferral and abatement for force majeure events.
(2) The majority of our minimum purchase obligations are subject to continuing operations and force majeure provisions.
(3) As at December 31, 2020, the company had a net pension asset of $182 million, based on actuarial estimates prepared on a going concern basis.
The amount of minimum funding for 2021 in respect of defined benefit pension plans is $19 million. The timing and amount of additional funding
after 2021 is dependent upon future returns on plan assets, discount rates and other actuarial assumptions.
(4) We had a discounted, actuarially determined liability of $445 million in respect of other non-pension post-retirement benefits as at December 31,
2020. Amounts shown are estimated expenditures in the indicated years.
(5) We accrue environmental and reclamation obligations over the life of our mining operations, and amounts shown are estimated expenditures in
the indicated years at fair value, assuming credit-adjusted risk-free discount rates between 4.05% and 5.85% and an inflation factor of 2.00%.
(6) Other long-term liabilities include amounts for post-closure, environmental costs and other items.
(7) On April 25, 2017, Teck Alaska entered into a 10-year agreement with the Northwest Arctic Borough (NAB) for payments in lieu of taxes (PILT).
Payments under the agreement are based on a percentage of land, buildings and equipment at cost less accumulated depreciation. The effective
date of this agreement was January 1, 2016 and this agreement expires on December 31, 2025. On April 25, 2017, Teck Alaska entered into a 10-year
agreement with the NAB for payments to a village improvement fund (VIF). Payments under the agreement are based on a percentage of earnings
before income taxes, with 2017–2025 having minimum payments of $4 million and maximum payments of $8 million. The effective date of this
agreement was January 1, 2016 and this agreement expires on December 31, 2025.
Disclosure Controls and Internal Control Over Financial Reporting
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that information required to be
disclosed in reports filed or submitted by us under U.S. and Canadian securities legislation is recorded, processed,
summarized and reported within the time periods specified in those rules, and include controls and procedures
designed to ensure that information required to be disclosed in reports filed or submitted by us under U.S. and
Canadian securities legislation is accumulated and communicated to management, including the Chief Executive
Officer and Chief Financial Officer, as appropriate, to permit timely decisions regarding required disclosure.
Management, including the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of
the design and operation of our disclosure controls and procedures, as defined in the rules of the U.S. Securities
and Exchange Commission and the Canadian Securities Administrators, as at December 31, 2020. Based on this
evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and
procedures were effective as at December 31, 2020.
58 Teck 2020 Annual Report | Forward Together
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Any system of internal control over financial reporting, no matter how well-designed, has inherent limitations.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Most of our corporate office staff and many site administrative staff
offsite worked remotely for substantially all of 2020. We have retained documentation in electronic form as a result of
remote work through this period. There have been no significant changes in our internal controls during the year ended
December 31, 2020 that have materially affected, or are reasonably likely to materially affect, internal control over
financial reporting.
Management has used the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2013
framework to evaluate the effectiveness of our internal control over financial reporting. Based on this assessment,
management has concluded that as at December 31, 2020, our internal control over financial reporting was effective.
The effectiveness of our internal controls over financial reporting has been audited by PricewaterhouseCoopers LLP,
an independent registered public accounting firm, who have expressed their opinion in their report included with our
annual consolidated financial statements.
Use of Non-GAAP Financial Measures
Our financial results are prepared in accordance with International Financial Reporting Standards (IFRS). This document
refers to a number of Non-GAAP Financial Measures that are not measures recognized under IFRS in Canada and that
do not have a standardized meaning prescribed by IFRS or Generally Accepted Accounting Principles (GAAP) in the
United States.
The Non-GAAP Measures described below do not have standardized meanings under IFRS, may differ from those used
by other issuers, and may not be comparable to such measures as reported by others. These measures have been
derived from our financial statements and applied on a consistent basis as appropriate. We disclose these measures
because we believe they assist readers in understanding the results of our operations and financial position and are
meant to provide further information about our financial results to investors. These measures should not be considered
in isolation or used in substitute for other measures of performance prepared in accordance with IFRS.
We have changed our calculations of adjusted profit attributable to shareholders and adjusted EBITDA to include
additional items that we have not previously included in our adjustments, and have also changed our debt ratios to
compare debt and net debt to adjusted EBITDA rather than to EBITDA. These changes were made from January 1, 2020
onwards, and comparative figures have been restated to conform to the current period presentation. In addition to
items previously adjusted, our adjusted profit attributable to shareholders and adjusted EBITDA now include
adjustments for environmental costs, including changes relating to the remeasurement of decommissioning and
restoration costs for our closed operations due to changes in discount rates, share-based compensation costs,
inventory write-downs and reversals, and commodity derivatives. We believe that by including these items, which
reflect measurement changes on our balance sheet, in our adjustments, our adjusted profit attributable to shareholders
and adjusted EBITDA will reflect the recurring results of our normal operating activities. This revised presentation will
help us and readers to analyze the rest of our results more clearly and to understand the ongoing cash-generating
potential of our business. With respect to our debt ratios, we believe that using adjusted EBITDA will present a more
meaningful basis for us and the reader to understand the debt service capacity of our normal operating activities.
Adjusted profit attributable to shareholders: For adjusted profit, we adjust profit attributable to shareholders as
reported to remove the after-tax effect of certain types of transactions that reflect measurement changes on our
balance sheet or are not indicative of our normal operating activities. We believe that adjusted profit helps us and
readers better understand the results of our normal operating activities and the ongoing cash-generating potential
of our business.
Adjusted basic earnings per share: Adjusted basic earnings per share is adjusted profit divided by average number
of shares outstanding in the period.
Adjusted diluted earnings per share: Adjusted diluted earnings per share is adjusted profit divided by average
number of fully diluted shares in a period.
Management’s Discussion and Analysis
59
EBITDA: EBITDA is profit attributable to shareholders before net finance expense, provision for income taxes, and
depreciation and amortization.
Adjusted EBITDA: Adjusted EBITDA is EBITDA before the pre-tax effect of the adjustments that we make to adjusted
profit attributable to shareholders as described above.
The above adjustments to profit attributable to shareholders and EBITDA highlight items and allow us and readers to
analyze the rest of our results more clearly. We believe that disclosing these measures assists readers in understanding
the ongoing cash-generating potential of our business in order to provide liquidity to fund working capital needs,
service outstanding debt, fund future capital expenditures and investment opportunities, and pay dividends.
Gross profit before depreciation and amortization: Gross profit before depreciation and amortization is gross profit
with the depreciation and amortization expense added back. We believe this measure assists us and readers to assess
our ability to generate cash flow from our business units or operations.
Gross profit margins before depreciation: Gross profit margins before depreciation are gross profit before
depreciation and amortization expense, divided by revenue for each respective business unit. We believe this measure
assists us and readers to compare margins on a percentage basis among our business units.
Unit costs: Unit costs for our steelmaking coal operations are total cost of goods sold, divided by tonnes sold in the
period, excluding depreciation and amortization charges. We include this information as it is frequently requested by
investors and investment analysts who use it to assess our cost structure and margins and compare it to similar
information provided by many companies in the industry.
Adjusted site cash cost of sales: Adjusted site cash cost of sales for our steelmaking coal operations is defined as the
cost of the product as it leaves the mine, excluding depreciation and amortization charges, outbound transportation
costs and any one-time collective agreement charges and inventory write-down provisions.
Total cash unit costs: Total cash unit costs for our copper and zinc operations include adjusted cash costs of sales, as
described below, plus the smelter and refining charges added back in determining adjusted revenue. This presentation
allows a comparison of total cash unit costs, including smelter charges, to the underlying price of copper or zinc in
order to assess the margin for the mine on a per unit basis.
Net cash unit costs: Net cash unit costs of principal product, after deducting co-product and by-product margins,
are also a common industry measure. By deducting the co-product and by-product margin per unit of the principal
product, the margin for the mine on a per unit basis may be presented in a single metric for comparison to other
operations. Readers should be aware that this metric, by excluding certain items and reclassifying cost and revenue
items, distorts our actual production costs as determined under IFRS.
Adjusted cash costs of sales: Adjusted cash cost of sales for our copper and zinc operations is defined as the cost
of the product delivered to the port of shipment, excluding depreciation and amortization charges, any one-time
collective agreement charges or inventory write-down provisions, and by-product cost of sales. It is common practice
in the industry to exclude depreciation and amortization, as these costs are non-cash, and discounted cash flow
valuation models used in the industry substitute expectations of future capital spending for these amounts.
Adjusted operating cost: Adjusted operating costs for our energy business unit are defined as the costs of product as
it leaves the mine, excluding depreciation and amortization charges, cost of diluent for blending to transport our bitumen
by pipeline, cost of non-proprietary product purchased, transportation costs of our product and non-proprietary
product, and any one-time collective agreement charges or inventory write-down provisions.
Cash margins for by-products: Cash margins for by-products is revenue from by-products and co-products, less any
associated cost of sales of the by-product and co-product. In addition, for our copper operations, by-product cost of
sales also includes cost recoveries associated with our streaming transactions.
Adjusted revenue: Adjusted revenue for our copper and zinc operations excludes the revenue from co-products and
by-products, but adds back the processing and refining charges to arrive at the value of the underlying payable pounds
of copper and zinc. Readers may compare this on a per unit basis with the price of copper and zinc on the LME.
Adjusted revenue for our energy business unit excludes the cost of diluent for blending and non-proprietary product
revenues, but adds back Crown royalties to arrive at the value of the underlying bitumen.
60 Teck 2020 Annual Report | Forward Together
Blended bitumen revenue: Blended bitumen revenue is revenue as reported for our energy business unit, but excludes
non-proprietary product revenue, and adds back Crown royalties that are deducted from revenue.
Blended bitumen price realized: Blended bitumen price realized is blended bitumen revenue divided by blended
bitumen barrels sold in the period.
Operating netback: Operating netbacks per barrel in our energy business unit are calculated as blended bitumen
sales revenue net of diluent expenses (also referred to as bitumen price realized), less Crown royalties, transportation
and operating expenses divided by barrels of bitumen sold. We include this information, as investors and investment
analysts use it to measure our profitability on a per barrel basis and to compare it to similar information provided by
other companies in the oil sands industry.
The debt-related measures outlined below are disclosed as we believe they provide readers with information that
allows them to assess our credit capacity and the ability to meet our short- and long-term financial obligations.
Net debt: Net debt is total debt, less cash and cash equivalents.
Debt to debt-plus-equity ratio: Debt to debt-plus-equity ratio takes total debt as reported and divides that by the
sum of total debt plus total equity, expressed as a percentage.
Net debt to net debt-plus-equity ratio: Net debt to net debt-plus-equity ratio is net debt divided by the sum of net
debt plus total equity, expressed as a percentage.
Debt to EBITDA ratio: Debt to EBITDA ratio takes total debt as reported and divides that by EBITDA for the 12 months
ended at the reporting period, expressed as the number of times EBITDA needs to be earned to repay all of the
outstanding debt.
Net debt to EBITDA ratio: Net debt to EBITDA ratio is the same calculation as the debt to EBITDA ratio, but using net
debt as the numerator.
Net debt to capitalization ratio: Net debt to capitalization ratio is net debt plus Obligation to Neptune divided by the
sum of total debt plus Obligation to Neptune plus equity attributable to shareholders. The ratio is a financial covenant
under our revolving credit facility.
Profit (Loss) and Adjusted Profit
($ in millions, except per share data)
2020
2019
2018
Profit (loss) attributable to shareholders
$
(864)
$
(605)
$
3,107
Add (deduct):
Asset impairments
COVID-19 costs
Environmental costs
Inventory write-downs
Share-based compensation
Commodity derivative losses (gains)
Debt prepayment option loss (gain)
Loss on debt redemption or purchase
Gain on sale of Waneta Dam
Taxes and other
Adjusted profit attributable to shareholders
Adjusted basic earnings per share
Adjusted diluted earnings per share
Weighted average diluted shares outstanding (millions)
912
233
210
91
34
(46)
–
8
–
(17)
561
1.05
1.04
534.4
$
$
$
2,052
–
142
41
3
(13)
(77)
166
–
12
1,697
3.03
3.00
559.8
$
$
$
30
–
16
57
43
26
31
19
(812)
(16)
$
$
$
2,501
4.36
4.30
582.1
Management’s Discussion and Analysis
61
Reconciliation of Basic Earnings (Loss) per share to Adjusted Basic Earnings per share
(Per share amounts)
2020
2019
2018
Basic earnings (loss) per share
$
(1.62)
$
(1.08)
$
5.41
Add (deduct):
Asset impairments
COVID-19 costs
Environmental costs
Inventory write-downs
Share-based compensation
Commodity derivative losses (gains)
Debt prepayment option loss (gain)
Loss on debt redemption or purchase
Gain on sale of Waneta Dam
Taxes and other
1.71
0.44
0.39
0.17
0.06
(0.09)
–
0.01
–
(0.02)
3.67
–
0.25
0.07
0.01
(0.02)
(0.13)
0.29
–
(0.03)
0.05
–
0.03
0.10
0.07
0.05
0.05
0.03
(1.41)
(0.02)
Adjusted basic earnings per share
$
1.05
$
3.03
$
(4.36)
Reconciliation of Diluted Earnings (Loss) per share to Adjusted Diluted Earnings per share
(Per share amounts)
2020
2019
2018
Diluted earnings (loss) per share
$
(1.62)
$
(1.08)
$
5.34
Add (deduct):
Asset impairments
COVID-19 costs
Environmental costs
Inventory write-downs
Share-based compensation
Commodity derivative losses (gains)
Debt prepayment option loss (gain)
Debt redemption loss
Gain on sale of Waneta Dam
Taxes and other
1.70
0.43
0.39
0.17
0.07
(0.09)
–
0.01
–
(0.02)
3.63
–
0.25
0.07
0.01
(0.02)
(0.13)
0.29
–
(0.02)
0.05
–
0.03
0.10
0.07
0.04
0.05
0.03
(1.39)
(0.02)
Adjusted diluted earnings per share
$
1.04
$
3.00
$
4.30
62 Teck 2020 Annual Report | Forward Together
Reconciliation of EBITDA, Adjusted EBITDA, Net Debt to Adjusted EBITDA and Net Debt to
Capitalization Ratio
($ in millions)
Profit (loss)
Finance expense net of finance income
Provision for income taxes
Depreciation and amortization
EBITDA
Add (deduct):
Asset impairments
COVID-19 costs
Environmental costs
Inventory write-downs
Share-based compensation
Commodity derivative gains
Debt prepayment option gain
Loss on debt redemption or purchase
Taxes and other
Adjusted EBITDA
Total debt at period end
Less: cash and cash equivalents at period end
Net debt
Debt to adjusted EBITDA ratio
Net Debt to adjusted EBITDA ratio
Equity attributable to shareholders of the company
Adjusted Net debt to capitalization ratio
$
2020
(944)
268
(192)
1,510
2019
$
(588)
218
120
1,619
$
642
$
1,369
1,244
336
270
134
47
(62)
–
11
(52)
2,570
2,690
–
197
60
4
(17)
(105)
224
51
4,473
$
6,947
(450)
$
4,834
(1,026)
$ 6,497
$
3,808
2.7
2.5
20,039
0.24
1.1
0.9
21,304
0.15
Management’s Discussion and Analysis
63
Reconciliation of Gross Profit (Loss) Before Depreciation and Amortization
($ in millions)
Gross profit
Depreciation and amortization
2020
1,333
1,510
$
2019
$
3,340
$
1,619
2018
4,621
1,483
Gross profit before depreciation and amortization
$
2,843
$
4,959
$
6,104
Reported as:
Copper
Highland Valley Copper
Antamina
Carmen de Andacollo
Quebrada Blanca
Other
Zinc
Trail Operations
Red Dog
Pend Oreille
Other
Steelmaking coal
Energy
$
476
566
170
30
–
$
$
395
614
89
(18)
–
343
794
193
26
(1)
1,242
1,080
1,355
65
717
–
33
815
1,009
(223)
–
837
(4)
(2)
831
2,904
144
91
990
(5)
9
1,085
3,770
(106)
Gross profit before depreciation and amortization
$
2,843
$
4,959
$
6,104
64 Teck 2020 Annual Report | Forward Together
Copper Unit Cost Reconciliation
(CAD$ in millions, except where noted)
Revenue as reported
By-product revenue (A)
Smelter processing charges (B)
Adjusted revenue
Cost of sales as reported
Less:
Depreciation and amortization
Inventory write-downs
Labour settlement and strike costs
By-product cost of sales (C)
Adjusted cash cost of sales (D)
Payable pounds sold (millions) (E)
Per unit amounts — CAD$/pound
Adjusted cash cost of sales (D/E)
Smelter processing charges (B/E)
Total cash unit costs — CAD$/pound
Cash margins for by-products — ((A−C)/E)
Net cash unit costs — CAD$/pound
US$ amounts(1)
Average exchange rate (CAD$ per US$1.00)
Per unit amounts — US$/pound
Adjusted cash cost of sales
Smelter processing charges
Total cash unit costs — US$/pound
Cash margins for by-products
Net cash unit costs — US$/pound
Note:
(1) Average period exchange rates are used to convert to US$/pound equivalent.
2020
2019
$ 2,419
(300)
140
$
2,469
(311)
164
$ 2,259
$
2,322
$
1,560
$
1,852
(383)
–
–
(71)
(463)
(24)
(35)
(58)
$
1,106
$
1,272
591.7
641.7
$
$
1.87
0.23
2.10
(0.39)
$
1.98
0.26
$
2.24
(0.39)
$
1.71
$
1.85
$
$
$
1.34
1.39
0.18
1.57
(0.29)
$
$
$
1.33
1.49
0.19
1.68
(0.29)
$
1.28
$
1.39
Management’s Discussion and Analysis
65
Zinc Unit Cost Reconciliation (Mining Operations(1))
(CAD$ in millions, except where noted)
Revenue as reported
Less:
Trail Operations revenues as reported
Other revenues as reported
Add back: Intra-segment revenues as reported
By-product revenues (A)
Smelter processing charges (B)
Adjusted revenue
Cost of sales as reported
Less:
Trail Operations cost of sales as reported
Other costs of sales as reported
Add back: Intra-segment purchases as reported
Less:
Depreciation and amortization
Severance charge
Royalty costs
By-product cost of sales (C)
Adjusted cash cost of sales (D)
Payable pounds sold (millions) (E)
Per unit amounts — CAD$/pound
Adjusted cash cost of sales (D/E)
Smelter processing charges (B/E)
Total cash unit costs — CAD$/pound
Cash margins for by-products — ((A−C)/E)
Net cash unit costs — CAD$/pound
US$ amounts(2)
Average exchange rate (CAD$ per US$1.00)
Per unit amounts — US$/pound
Adjusted cash cost of sales
Smelter processing charges
Total cash unit costs — US$/pound
Cash margins for by-products
Net cash unit costs — US$/pound
Notes:
(1) Pend Oreille (closed in July 2019) and Red Dog.
(2) Average period exchange rates are used to convert to US$/pound equivalent.
66 Teck 2020 Annual Report | Forward Together
2020
2019
$ 2,700
$
2,968
(1,761)
(9)
464
1,394
(316)
370
$
(1,829)
(8)
519
$
1,650
(317)
308
$
1,448
$
1,641
$
2,177
$
2,367
(1,784)
24
464
$
881
$
(204)
–
(231)
(78)
(1,915)
(10)
519
961
(144)
(4)
(307)
(75)
$
368
$
431
1,040.3
1,094.2
$
$
0.35
0.36
0.71
(0.23)
$
0.40
0.28
$
0.68
(0.22)
$
0.48
$
0.46
$
$
$
1.34
0.26
0.27
0.53
(0.17)
$
$
$
1.33
0.30
0.21
0.51
(0.17)
$
0.36
$
0.34
Steelmaking Coal Unit Cost Reconciliation
(CAD$ in millions, except where noted)
Cost of sales as reported
Less:
Transportation
Depreciation and amortization
Inventory write-downs
Labour settlement
Adjusted site cost of sales
Tonnes sold (millions)
Per unit amounts — CAD$/tonne
Adjusted site cost of sales
Transportation
Inventory write-downs
Unit costs — CAD$/tonne
US$ amounts(1)
Average exchange rate (CAD$ per US$1.00)
Per unit amounts — US$/tonne
Adjusted site cost of sales
Transportation
Inventory write-downs
Unit costs — US$/tonne
Note:
(1) Average period exchange rates are used to convert to US$/tonne equivalent.
2020
2019
$ 3,098
$
3,410
(905)
(732)
(59)
(4)
(976)
(792)
(32)
–
$
1,398
$
1,610
21.9
25.0
$
$
64
41
3
65
39
1
$
108
$
105
$
$
$
1.34
47
31
2
80
$
$
$
1.33
49
29
1
79
Management’s Discussion and Analysis
67
Energy Business Unit — Operating Netback, Bitumen and Blended Bitumen Price Realized Reconciliations,
and Adjusted Operating Costs(1)
(CAD$ in millions, except where noted)
Revenue as reported
Less:
Cost of diluent for blending
Non-proprietary product revenue
Add back: Crown royalties (D)
Adjusted revenue (A)
Cost of sales as reported
Less:
Depreciation and amortization
Inventory write-downs
Cash cost of sales
Less:
Cost of diluent for blending
Cost of non-proprietary product purchased
Transportation for non-proprietary product
Purchased(3)
Transportation costs for FRB (C)
Adjusted operating costs (E)
Blended bitumen barrels sold (thousands)
Less diluent barrels included in blended bitumen (thousands)
Bitumen barrels sold (thousands) (B)
Per barrel amounts — CAD$
Bitumen price realized (A/B)(2)
Crown royalties (D/B)
Transportation costs for FRB (C/B)
Adjusted operating costs (E/B)
Operating netback — CAD$ per barrel
2020
2019
$
454
$
975
(217)
(21)
4
$
220
$
780
$
$
(103)
(54)
(322)
(32)
18
639
965
(134)
-
$
623
$
831
(217)
(17)
(8)
(103)
(322)
(31)
(2)
(118)
$
278
$
358
11,641
(2,949)
8,692
16,023
(3,788)
12,235
$ 25.27
(0.49)
(11.84)
(31.96)
$
52.21
(1.50)
(9.62)
(29.24)
$
(19.02)
$
11.85
Notes:
(1) Calculated per unit amounts may differ due to rounding.
(2) Bitumen price realized represents the realized petroleum revenue (blended bitumen sales revenue) net of diluent expense, expressed on a per
barrel basis. Blended bitumen sales revenue represents revenue from our share of the heavy crude oil blend known as Fort Hills Reduced Carbon
Life Cycle Dilbit Blend (FRB), sold at the Hardisty and U.S. Gulf Coast market hubs. FRB is comprised of bitumen produced from Fort Hills blended
with purchased diluent. The cost of blending is affected by the amount of diluent required and the cost of purchasing, transporting and blending
the diluent. A portion of diluent expense is effectively recovered in the sales price of the blended product. Diluent expense is also affected by
Canadian and U.S. benchmark pricing and changes in the value of the Canadian dollar relative to the U.S. dollar.
(3) Reflects adjustments for costs not directly attributed to the production of Fort Hills bitumen, including transportation for non-proprietary
product purchased.
68 Teck 2020 Annual Report | Forward Together
Blended Bitumen Price Realized Reconciliation(1)
(CAD$ in millions, except where noted)
2020
2019
Revenue as reported
Less: non-proprietary product revenue
Add back: Crown royalties
Blended bitumen revenue (A)
Blended bitumen barrels sold (thousands) (B)
Blended bitumen price realized — (CAD$/barrel) (A/B) = D(1)
Average exchange rate (CAD$ per US$1.00) (C)
Blended bitumen price realized — (US$/barrel) (D/C)(1)
Note:
(1) Calculated per unit amounts may differ due to rounding.
$
454
(21)
4
$
437
11,641
$ 37.55
1.34
$ 27.99
$
975
(32)
18
$
961
16,023
$
59.97
1.33
$
45.20
Management’s Discussion and Analysis
69
Cautionary Statement on Forward-Looking Statements
This document contains certain forward-looking information and forward-looking statements as defined in
applicable securities laws (collectively referred to as forward-looking statements). These statements relate to
future events or our future performance. All statements other than statements of historical fact are forward-
looking statements. The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”,
“project”, “predict”, “potential”, “should”, “believe” and similar expressions is intended to identify forward-looking
statements. These statements involve known and unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those anticipated in such forward-looking statements. These
statements speak only as of the date of this document.
These forward-looking statements include, but are not limited to, statements concerning: our focus and strategy;
anticipated global and regional supply, demand and market outlook for our commodities; the potential impact of
COVID-19 on our business and operations, including our ability to continue operations at our sites and progress
our projects and strategy; our ability to manage challenges presented by COVID-19, including the effectiveness of
our management protocols implemented to protect the health and safety of our employees; expected impacts of
COVID-19 on our 2021 operating plans; expectation that we will be well positioned as the rollout of vaccines and
stimulus in the event of global economic recovery and associated commodity demand; QB2 ramp-up plans and
expectations; estimated COVID-19 related costs on our QB2 project; impact of the construction suspension
period at our QB2 project; estimated timing of first production from QB2; expectation that QB2 will be a long-life,
low-cost operation with major expansion potential; effectiveness of our tailings and water-related projects to
manage increased water volumes at Red Dog, including the expectation that they will minimize potential
constraints on production in the future; expectations regarding the Neptune facility upgrade including costs,
capital expenditures, benefits and timing of completion of the upgrade, our expectations regarding the continued
impact of costs associated with COVID-19 response measures on unit costs; expectations regarding the benefits
of CP and CN Rail infrastructure improvements to support increased volumes through Neptune; expectation
regarding mining in new areas at Fording River, Elkview and Greenhills operations and anticipated long-term
production from these operations; coal sales to China targets; benefits of the agreements with Westshore and
Ridley Terminals, including that they will provide greater flexibility and optionality and contribute to reduced costs
and improved performance and reliability; timing of construction and completion of our Fording AWTF and our
SRFs; our expectation that Fording River AWTF will be the last full-scale AWTF and that future treatment facilities
will be SRFs; expected Elk Valley water treatment spending, capital and operating costs, and plans; expected cost
of implementing incremental measures required under the October 2020 Direction issued by Environment and
Climate Change Canada; expected benefits that will be generated from our RACE21™ innovation-driven business
transformation program; Fort Hills focus on cost discipline and ability to ramp up production; liquidity and
availability of borrowings under our credit facilities and the QB2 project finance facility; timing of Teck’s next
contributions to QB2 project capital; and all guidance appearing in this document including but not limited to the
production, sales, cost, unit cost, capital expenditure, cost reduction and other guidance under the heading
“Guidance” and discussed in the various business unit sections; the amount of potential taxes, interest and
penalties relating to the Antamina tax dispute and our share thereof; the availability of our credit facilities,
sources of liquidity and capital resources; our expectation that we will receive a portion of our carbon tax
expenditures back under the CleanBC program; our expectations regarding the amount of Class B subordinate
voting shares that might be purchased under the normal course issuer bid and the mechanics thereof;
expectations regarding our dividend policy and our capital allocation framework; our expectations, projections
and sensitivities under the heading “Commodity Prices and Sensitivities”; expectations regarding carbon
legislation and climate change regulations; and the impact of certain accounting initiatives and estimates.
These statements are based on a number of assumptions, including, but not limited to, assumptions regarding
general business and economic conditions, interest rates, commodity and power prices, acts of foreign or
domestic governments and the outcome of legal proceedings, the supply and demand for, deliveries of, and the
level and volatility of prices of copper, coal, zinc and blended bitumen and our other metals and minerals, as well
as oil, natural gas and other petroleum products, the timing of the receipt of regulatory and governmental
approvals for our development projects and other operations, including mine extensions; positive results from the
studies on our expansion and development projects; our ability to secure adequate transportation, including rail,
70 Teck 2020 Annual Report | Forward Together
pipeline and port service, for our products; our costs of production and our production and productivity levels, as
well as those of our competitors, continuing availability of water and power resources for our operations, our
ability to secure adequate transportation, pipeline and port services for our products; changes in credit market
conditions and conditions in financial markets generally, the availability of funding to refinance our borrowings as
they become due or to finance our development projects on reasonable terms; our ability to procure equipment
and operating supplies in sufficient quantities and on a timely basis; the availability of qualified employees and
contractors for our operations, including our new developments and our ability to attract and retain skilled
employees; the satisfactory negotiation of collective agreements with unionized employees; the impact of changes
in Canadian-U.S. dollar and other foreign exchange rates on our costs and results; engineering and construction
timetables and capital costs for our development and expansion projects; the benefits of technology for our
operations and development projects, including the impact of our RACE21™ program; costs of closure, and
environmental compliance costs generally, of operations; market competition; the accuracy of our mineral
reserve and resource estimates (including with respect to size, grade and recoverability) and the geological,
operational and price assumptions on which these are based; tax benefits and tax rates; the outcome of our coal
price and volume negotiations with customers; the outcome of our copper, zinc and lead concentrate treatment
and refining charge negotiations with customers; any new curtailment measures on oil production taken by the
Government of Alberta; the resolution of environmental and other proceedings or disputes; the future supply of
low-cost power to the Trail smelting and refining complex; our ability to obtain, comply with and renew permits in
a timely manner; and our ongoing relations with our employees and with our business and joint venture partners.
Assumptions regarding our Red Dog tailings and water-related projects include assumptions regarding the
effectiveness of the projects and future water volumes. Our Guidance tables include footnotes with further
assumptions relating to our guidance.
In addition, assumptions regarding the Elk Valley Water Quality Plan include assumptions that additional treatment
will be effective at scale, and that the technology and facilities operate as expected, as well as additional
assumptions discussed under the heading “Management’s Discussion and Analysis — Steelmaking Coal — Elk Valley
Water Management Update”. Assumptions regarding QB2 include current project assumptions and assumptions
regarding the final feasibility study, a CLP/USD exchange rate of 775, as well as there being no unexpected material
and negative impact to various contractors, supplies and subcontractors for the QB2 project relating to COVID-19
or otherwise that would impair their ability to provide goods and services as anticipated during the suspension
period or ramp-up of construction activities. Assumptions regarding the costs and benefits of the Neptune
expansion and other projects include assumptions that the relevant project is constructed and operated in
accordance with current expectations. Expectations regarding our operations are based on numerous assumptions
regarding the operations. Our Guidance tables include footnotes with further assumptions relating to our guidance.
Expectations regarding the impact of foreign exchange rates are based on the assumptions set out in this document.
Statements regarding the availability of our credit facilities are based on assumptions that we will be able to satisfy
the conditions for borrowing at the time of a borrowing request and that the credit facilities are not otherwise
terminated or accelerated due to an event of default. Statements concerning future production costs or volumes
are based on numerous assumptions of management regarding operating matters and on assumptions that
demand for products develops as anticipated, that customers and other counterparties perform their contractual
obligations, that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability
of parts and supplies, labour disturbances, interruption in transportation or utilities, adverse weather conditions,
and that there are no material unanticipated variations in the cost of energy or supplies. Statements regarding
anticipated steelmaking coal sales volumes and average steelmaking coal prices depend on timely arrival of
vessels and performance of our steelmaking coal-loading facilities, as well as the level of spot pricing sales. The
foregoing list of assumptions is not exhaustive. Events or circumstances could cause actual results to vary materially.
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 for our products, changes in interest and currency exchange rates,
acts of governments and the outcome of legal proceedings, inaccurate geological and metallurgical 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 and equipment, government action or delays in the
receipt of government approvals, changes in tax or royalty rates, industrial disturbances or other job action,
Management’s Discussion and Analysis
71
adverse weather conditions and unanticipated events related to health, safety and environmental matters), union
labour disputes, political risk, social unrest, failure of customers or counterparties (including logistics suppliers) 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 or
environmental impact assessments, and changes or further deterioration in general economic conditions. The
amount and timing of capital expenditures is depending upon, among other matters, being able to secure permits,
equipment, supplies, materials and labour on a timely basis and at expected costs. Certain operations and
projects are not controlled by us; schedules and costs may be adjusted by our partners, and timing of spending
and operation of the operation or project is not in our control. Certain of our other operations and projects are
operated through joint arrangements where we may not have control over all decisions, which may cause outcomes
to differ from current expectation. Current and new technologies relating to our Elk Valley water treatment efforts
may not perform as anticipated, and ongoing monitoring may reveal unexpected environmental conditions
requiring additional remedial measures. QB2 costs, construction progress and timing of first production is
dependent on, among other matters, our continued ability to successfully manage through the impacts of
COVID-19. QB2 costs may also be affected by claims and other proceedings that might be brought against us
relating to costs and impacts of the COVID-19 pandemic. Purchases of Class B subordinate voting shares under
the normal course issuer bid may be affected by, among other things, availability of Class B subordinate voting
shares, share price volatility and availability of funds to purchase shares. Further factors associated with our Elk
Valley Water Quality Plan are discussed under the heading “Management’s Discussion and Analysis — Steelmaking
Coal — Elk Valley Water Management Update”. Declaration and payment of dividends is in the discretion of the
Board, and our dividend policy will be reviewed regularly and may change. Red Dog production may also be
impacted by water levels at site.
The forward-looking statements and actual results will also be impacted by the effects of COVID-19 and related
matters. The overall effects of COVID-19-related matters on our business and operations and projects will
depend on the ability of our sites to maintain normal operations, and on the duration of impacts on our suppliers,
customers and markets for our products, all of which are unknown at this time. Continuing operating activities is
highly dependent on the progression of the pandemic and the success of measures taken to prevent transmission,
which will influence when health and government authorities remove various restrictions on business activities.
We assume no obligation to update forward-looking statements except as required under securities laws. Further
information concerning risks, assumptions and uncertainties associated with these forward-looking statements
and our business can be found in our Annual Information Form for the year ended December 31, 2020, filed under
our profile on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov) under cover of Form 40-F, as well as
subsequent filings that can also be found under our profile.
Scientific and technical information in this document regarding our coal properties, which for this purpose does
not include the discussion under “Elk Valley Water Management Update”, was reviewed, approved and verified by
Jo-Anna Singleton P.Geo. and Robin Gold P.Eng., each an employee of Teck Coal Limited and a Qualified Person
as defined under National Instrument 43-101. Scientific and technical information in this quarterly report regarding
our other properties was reviewed, approved and verified by Rodrigo Alves Marinho, P.Geo., an employee of Teck
and a Qualified Person as defined under National Instrument 43-101.
72 Teck 2020 Annual Report | Forward Together
CONSOLIDATED
FINANCIAL STATEMENTS
For the Years Ended December 31, 2020 and 2019
Consolidated Financial Statements
73
Management’s Responsibility for
Financial Reporting
Management is responsible for the integrity and fair presentation of the financial information contained in this annual
report. Where appropriate, the financial information, including financial statements, reflects amounts based on the best
estimates and judgments of management. The financial statements have been prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board. Financial information presented
elsewhere in the annual report is consistent with that disclosed in the financial statements.
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Any system
of internal control over financial reporting, no matter how well-designed, has inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation
and presentation. The system of controls is also supported by a professional staff of internal auditors who conduct periodic
audits of many aspects of our operations and report their findings to management and the Audit Committee.
Management has a process in place to evaluate internal control over financial reporting based on the criteria established
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2013 framework.
The Board of Directors oversees management’s responsibility for financial reporting and internal control systems through
an Audit Committee, which is composed entirely of independent directors. The Audit Committee meets periodically with
management, our internal auditors and independent auditors to review the scope and results of the annual audit, and to
review the financial statements and related financial reporting and internal control matters before the financial statements
are approved by the Board of Directors and submitted to the shareholders.
PricewaterhouseCoopers LLP, an independent registered public accounting firm, appointed by the shareholders, have
audited our financial statements in accordance with the standards of the Public Company Accounting Oversight Board
(United States) and have expressed their opinion in the Report of Independent Registered Public Accounting Firm.
Donald R. Lindsay
President and Chief Executive Officer
Jonathan H. Price
Senior Vice President and Chief Financial Officer
February 17, 2021
74
Teck 2020 Annual Report | Forward Together
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Teck Resources Limited
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Teck Resources Limited and its subsidiaries
(together, the Company) as of December 31, 2020 and 2019, and the related consolidated statements of income (loss),
comprehensive income (loss), cash flows and changes in equity for the years then ended, including the related notes
(collectively referred to as the consolidated financial statements). We also have audited the Company's internal
control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows
for the years then ended in conformity with International Financial Reporting Standards as issued by the International
Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note 21 to the consolidated financial statements, the Company changed the manner in which it
accounts for leases in 2019.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in Management's Report on Internal Control over Financial Reporting, appearing in Management's
Discussion and Analysis. Our responsibility is to express opinions on the Company’s consolidated financial statements
and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting
was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. Our audit of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating
the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide
a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
Consolidated Financial Statements
75
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that
(i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating
the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
Steelmaking coal goodwill impairment test
As described in Notes 3, 4, 8, and 17 to the consolidated financial statements, management performs its annual
impairment test of its steelmaking coal goodwill as of October 31 of each year, or more frequently if events or
circumstances indicate that the carrying value of goodwill may be impaired. The total carrying value of the steelmaking
coal goodwill as of December 31, 2020 was $702 million. An impairment loss exists if the steelmaking coal operations
group of cash generating units’ (the steelmaking coal CGU) carrying amount, including goodwill, exceeds its
recoverable amount. Management used a discounted cash flow model to determine the recoverable amount of the
steelmaking coal CGU. The recoverable amount determined by management exceeded the carrying value of the
steelmaking coal CGU, and as a result no impairment loss was recognized. Significant assumptions are used in the
discounted cash flow model, which include: commodity prices, mineral reserves and resources, mine production,
operating costs, capital expenditures, the discount rate, and the foreign exchange rate. The Company’s mineral reserves
and resources have been prepared by or under the supervision of qualified persons (management’s specialists).
The principal considerations for our determination that performing procedures relating to the steelmaking coal
goodwill impairment test is a critical audit matter are: (i) significant judgment by management when determining the
recoverable amount of the steelmaking coal CGU; (ii) management’s specialists were used to prepare the mineral
reserves and resources; (iii) a high degree of auditor judgment, subjectivity and effort was required in performing
procedures to evaluate significant assumptions used in the discounted cash flow model, relating to: commodity prices,
mineral reserves and resources, mine production, operating costs, capital expenditures, the discount rate, and the
foreign exchange rate; and (iv) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to management's goodwill impairment test, including controls over the determination of the recoverable
amount of the steelmaking coal CGU. These procedures also included, among others, testing management’s process
for determining the recoverable amount of the steelmaking coal CGU, including evaluating the appropriateness
of the discounted cash flow model, testing the completeness and accuracy of underlying data and evaluating the
reasonableness of the significant assumptions used in the discounted cash flow model. Evaluating the reasonableness
of management’s assumptions involved considering their consistency with: (i) external market and industry data for
commodity prices and the foreign exchange rate, and (ii) recent actual results, market data and when available, other
76
Teck 2020 Annual Report | Forward Together
third-party information, for mine production, operating costs and capital expenditures. The work of management’s
specialists was used in performing the procedures to evaluate the reasonableness of mineral reserves and resources.
As a basis for using this work, management’s specialists’ qualifications were understood and the Company’s
relationship with management’s specialists was assessed. The procedures performed also included evaluation of the
methods and assumptions used by management’s specialists, tests of the data used, and an evaluation of their
findings. Professionals with specialized skill and knowledge were used to assist in the evaluation of the discount rate.
Quebrada Blanca goodwill impairment test
As described in Notes 3, 4, 8, and 17 to the consolidated financial statements, management performs its annual
impairment test of its Quebrada Blanca goodwill as of October 31 of each year, or more frequently if events or
circumstances indicate that the carrying value of goodwill may be impaired. The total carrying value of the Quebrada
Blanca goodwill as of December 31, 2020 was $391 million. An impairment loss exists if the Quebrada Blanca CGU’s
(QB CGU) carrying amount, including goodwill, exceeds its recoverable amount. Management used a discounted cash
flow model to determine the recoverable amount of the QB CGU. The recoverable amount determined by management
exceeded the carrying value of the QB CGU, and as a result no impairment loss was recognized. Significant assumptions
are used in the discounted cash flow model, which include: commodity prices, mineral reserves and resources, mine
production, operating costs, capital expenditures, the discount rate, and the foreign exchange rate. The Company’s
mineral reserves and resources and estimates of capital expenditures for the QB CGU have been prepared by or under
the supervision of qualified persons and management’s experts (management’s specialists).
The principal considerations for our determination that performing procedures relating to the Quebrada Blanca goodwill
impairment test is a critical audit matter are: (i) significant judgment by management when determining the recoverable
amount of the QB CGU; (ii) management’s specialists were used to prepare the reserves and resources and estimates
of capital expenditures; (iii) a high degree of auditor judgment, subjectivity and effort was required in performing
procedures to evaluate significant assumptions used in the discounted cash flow model, relating to: commodity prices,
mineral reserves and resources, mine production, operating costs, capital expenditures, the discount rate, and the
foreign exchange rate; and (iv) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to management's QB CGU goodwill impairment test, including controls over the determination of the
recoverable amount of the QB CGU. These procedures also included, among others, testing management’s process
for determining the recoverable amount of the QB CGU, including evaluating the appropriateness of the discounted
cash flow model, testing the completeness and accuracy of underlying data and evaluating the reasonableness of the
significant assumptions used in the discounted cash flow model. Evaluating the reasonableness of management’s
assumptions involved considering their consistency with: (i) external market and industry data for commodity prices
and the foreign exchange rate, (ii) recent actual capital expenditures incurred for capital expenditures, and (iii) market
and industry data and when available, other third-party information, for operating costs and mine production.
The work of management’s specialists was used in performing the procedures to evaluate the reasonableness of
mineral reserves and resources, and management’s estimates of capital expenditures. As a basis for using this work,
management’s specialists’ qualifications were understood and the Company’s relationship with management’s
specialists was assessed. The procedures performed also included evaluation of the methods and assumptions
used by management’s specialists, tests of the data used, and an evaluation of their findings. Professionals with
specialized skill and knowledge were used to assist in the evaluation of the discount rate.
Impairment test of the Fort Hills CGU
As described in Notes 3, 4, and 8 to the consolidated financial statements, management performed assessments of
its Fort Hills CGU (Fort Hills CGU) for indicators of impairment whenever facts and circumstance indicated that the
carrying amounts were less than the recoverable amounts and during 2020 indicators of impairment were identified.
As a result, management performed impairment testing of the Fort Hills CGU, and its recoverable amount was
estimated by management to determine the extent of impairment. Management used a discounted cash flow model
to determine the recoverable amount of the Fort Hills CGU. The recoverable amount as at December 31, 2020 was
lower than the carrying value and as a result, a pre-tax impairment loss of $1,244 million was recorded for the year
Consolidated Financial Statements
77
then ended. In determining the recoverable amount, management used significant assumptions such as: commodity
prices, oil reserves, mine production, operating costs, capital expenditures, the discount rate and the foreign exchange
rate. Oil reserves were prepared by qualified reserves evaluators (management’s specialists).
The principal considerations for our determination that performing procedures relating to the impairment test of the
Fort Hills CGU is a critical audit matter are: (i) significant judgment by management when determining the recoverable
amount of the Fort Hills CGU; (ii) the use of management’s specialists in the preparation of oil reserves; (iii) a high
degree of auditor judgment, subjectivity and effort was required in performing procedures to evaluate significant
assumptions used in the discounted cash flow model relating to: commodity prices, oil reserves, mine production,
operating costs, capital expenditures, the discount rate and the foreign exchange rate; and (iv) the audit effort involved
the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to management’s impairment test, including controls over the determination of the recoverable amount of the
Fort Hills CGU. These procedures also included, among others, testing management’s process for determining the
recoverable amount of the Fort Hills CGU, including evaluating the appropriateness of the discounted cash flow
model, testing the completeness and accuracy of underlying data and evaluating the reasonableness of the significant
assumptions used in the discounted cash flow model. Evaluating the reasonableness of management’s assumptions
involved considering their consistency with (i) external market and industry data for commodity prices and the foreign
exchange rate, and (ii) recent actual results, market data and when available, other third-party information, for mine
production, operating costs and capital expenditures. The work of management’s specialists was used in performing
the procedures to evaluate the reasonableness of oil reserves. As a basis for using this work, management’s specialists’
qualifications were understood and the Company’s relationship with management’s specialists was assessed. The
procedures performed also included evaluation of the methods and assumptions used by management’s specialists,
tests of the data used, and an evaluation of their findings. Professionals with specialized skill and knowledge were
used to assist in the evaluation of the discount rate.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, Canada
February 17, 2021
We have served as the Company’s auditor since 1964.
78 Teck 2020 Annual Report | Forward Together
Consolidated Statements of Income (Loss) Years ended December 31
(CAD$ in millions, except for share data)
Revenues (Note 6)
Cost of sales
Gross profit
Other operating income (expenses)
General and administration
Exploration
Research and innovation
Asset impairments (Note 8(a))
Other operating income (expense) (Note 9)
Profit (loss) from operations
Finance income (Note 10)
Finance expense (Note 10)
Non-operating income (expense) (Note 11)
Share of loss of associates and joint ventures (Note 15)
Profit (loss) before taxes
Recovery of (provision for) income taxes (Note 22(a))
2020
2019
$
8,948
$
11,934
(7,615)
1,333
(132)
(45)
(97)
(1,244)
(725)
(910)
10
(278)
43
(1)
(1,136)
192
(8,594)
3,340
(161)
(67)
(67)
(2,690)
(505)
(150)
48
(266)
(97)
(3)
(468)
(120)
Profit (loss) for the year
$
(944)
$
(588)
Profit (loss) attributable to:
Shareholders of the company
Non-controlling interests
Profit (loss) for the year
Earnings (loss) per share (Note 25(f))
Basic
Diluted
Weighted average shares and diluted shares outstanding (millions)
Shares outstanding at end of year (millions)
The accompanying notes are an integral part of these financial statements.
$
$
$
$
(864)
(80)
$
(605)
17
(944)
$
(588)
(1.62)
(1.62)
$
$
534.4
531.1
(1.08)
(1.08)
559.8
547.3
Consolidated Financial Statements
79
Consolidated Statements of Comprehensive Income (Loss) Years ended December 31
(CAD$ in millions)
Profit (loss) for the year
2020
2019
$
(944)
$
(588)
Other comprehensive income (loss) for the year
Items that may be reclassified to profit (loss)
Currency translation differences (net of taxes of $(17) and $(26))
Change in fair value of debt securities (net of taxes of $nil and $nil)
Items that will not be reclassified to profit (loss)
Change in fair value of marketable equity securities
(net of taxes of $(3) and $(1))
Remeasurements of retirement benefit plans (net of taxes of $29 and $(31))
Total other comprehensive income (loss) for the year
(100)
–
(100)
24
(50)
(26)
(126)
Total comprehensive income (loss) for the year
$
(1,070)
$
(312)
1
(311)
6
74
80
(231)
(819)
(201)
(30)
(231)
$
(112)
(14)
(126)
$
$
$
$
$
(976)
(94)
(806)
(13)
$
(1,070)
$
(819)
Total other comprehensive income (loss) attributable to:
Shareholders of the company
Non-controlling interests
Total comprehensive income (loss) attributable to:
Shareholders of the company
Non-controlling interests
The accompanying notes are an integral part of these financial statements.
80 Teck 2020 Annual Report | Forward Together
Consolidated Statements of Cash Flows Years ended December 31
(CAD$ in millions)
Operating activities
Profit (loss) for the year
Depreciation and amortization
Provision for (recovery of) income taxes
Asset impairments
Gain on sale of investments and assets
Loss on debt redemption or purchase
Gain on debt prepayment option
Net finance expense
Income taxes paid
Remeasurement of decommissioning and
restoration provisions for closed operations
Other
Net change in non-cash working capital items
Investing activities
Expenditures on property, plant and equipment
Capitalized production stripping costs
Expenditures on investments and other assets
Proceeds from investments and assets
Financing activities
Proceeds from debt
Redemption or purchase and repayment of debt
Revolving credit facilities
Repayment of lease liabilities
QB2 advances from SMM/SC
QB2 equity contributions by SMM/SC
QB2 partnering and financing transaction costs paid
Interest and finance charges paid
Issuance of Class B subordinate voting shares
Purchase and cancellation of Class B subordinate voting shares
Dividends paid
Distributions to non-controlling interests
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
$
2020
2019
(944)
1,510
(192)
1,244
(75)
11
–
268
(233)
169
46
(241)
$
(588)
1 ,619
120
2,690
(17)
224
(105)
218
(595)
104
(26)
(160)
1,563
3,484
(3,129)
(499)
(190)
146
(3,672)
2,426
(457)
363
(163)
41
–
(8)
(355)
1
(207)
(106)
(7)
1,528
5
(576)
1,026
(2,788)
(680)
(178)
80
(3,566)
–
(835)
–
(150)
938
797
(113)
(386)
10
(661)
(111)
(26)
(537)
(89)
(708)
1,734
Cash and cash equivalents at end of year
$
450
$
1,026
Supplemental cash flow information (Note 12)
The accompanying notes are an integral part of these financial statements.
Consolidated Financial Statements
81
2020
2019
$
450
14
1 ,312
1,872
352
4,000
1,269
1,067
33,578
271
1,093
$
1,026
95
1,062
1,981
331
4,495
1,109
1,079
31,355
211
1 , 1 0 1
$
41,278
$
39,350
$
2,909
115
119
102
3,245
6,140
573
934
5,383
564
3,731
$
2,498
29
160
89
2,776
4,133
512
912
5,902
505
2,536
20,570
17,276
20,039
669
21,304
770
20,708
22,074
$
41,278
$
39,350
Consolidated Balance Sheets As at December 31
(CAD$ in millions)
Assets
Current assets
Cash and cash equivalents (Note 12)
Current income taxes receivable
Trade and settlement receivables
Inventories (Note 13)
Prepaids and other current assets
Financial and other assets (Note 14)
Investments in associates and joint ventures (Note 15)
Property, plant and equipment (Note 16)
Deferred income tax assets (Note 22(b))
Goodwill (Note 17)
Liabilities and Equity
Current liabilities
Trade accounts payable and other liabilities (Note 18)
Current portion of debt (Note 19)
Current portion of lease liabilities (Note 21(c))
Current income taxes payable
Debt (Note 19)
Lease liabilities (Note 21(c))
QB2 advances from SMM/SC (Note 20)
Deferred income tax liabilities (Note 22(b))
Retirement benefit liabilities (Note 23(a))
Provisions and other liabilities (Note 24)
Equity
Attributable to shareholders of the company
Attributable to non-controlling interests (Note 26)
Contingencies (Note 27)
Commitments (Note 28)
The accompanying notes are an integral part of these financial statements.
Approved on behalf of the Board of Directors
Una M. Power
Chair of the Audit Committee
Tracey L. McVicar
Director
82 Teck 2020 Annual Report | Forward Together
Consolidated Statements of Changes in Equity Years ended December 31
(CAD$ in millions)
Class A common shares
Class B subordinate voting shares
Beginning of year
Share repurchases
Issued on exercise of options
End of year
Retained earnings
Beginning of year
IFRS 16 transition adjustment on January 1, 2019
Profit (loss) for the year attributable to shareholders of the company
Dividends paid (Note 25(g))
Share repurchases
Adjustment from SMM/SC transaction
Remeasurements of retirement benefit plans
End of year
Contributed surplus
Beginning of year
Share option compensation expense (Note 25(c))
Transfer to Class B subordinate voting shares on exercise of options
End of year
Accumulated other comprehensive income attributable
to shareholders of the company (Note 25(e))
Beginning of year
Other comprehensive income (loss)
Less remeasurements of retirement benefit plans recorded in retained earnings
End of year
Non-controlling interests (Note 26)
Beginning of year
Profit (loss) for the year attributable to non-controlling interests
Other comprehensive income (loss) attributable to non-controlling interests
Adjustments from SMM/SC transaction
Distributions
End of year
Total equity
The accompanying notes are an integral part of these financial statements.
2020
$
6
$
6,323
(190)
1
6,134
14,447
–
(864)
(106)
(17)
–
(50)
13,410
219
23
–
242
309
(112)
50
247
770
(80)
(14)
–
(7)
669
2019
6
6,595
(285)
13
6,323
15,495
(43)
(605)
(111)
(367)
4
74
14,447
204
18
(3)
219
584
(201)
(74)
309
134
17
(30)
675
(26)
770
$
20,708
$
22,074
Consolidated Financial Statements
83
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
1. Nature of Operations
Teck Resources Limited and its subsidiaries (Teck, we, us or our) are engaged in mining and related activities including
research, exploration and development, processing, smelting, refining and reclamation. Our major products are
steelmaking coal, copper, zinc and blended bitumen. We also produce lead, precious metals, molybdenum, fertilizers
and other metals. Metal products are sold as refined metals or concentrates.
Teck is a Canadian corporation and our registered office is at Suite 3300, 550 Burrard Street, Vancouver, British
Columbia, Canada, V6C 0B3.
2. Basis of Preparation and New IFRS Pronouncements
a) Basis of Preparation
These annual consolidated financial statements have been prepared by management in accordance with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and were approved
by the Board of Directors on February 17, 2021.
b) New IFRS Pronouncements
New IFRS pronouncements that have been issued but are not yet effective at the date of these financial statements
are listed below. We plan to apply these amendments in the annual period for which they are first required.
Amendments to IAS 16 – Property, Plant and Equipment: Proceeds before Intended Use
In May 2020, the IASB issued amendments to IAS 16, Property, Plant and Equipment (IAS 16). The amendments prohibit
a company from deducting from the cost of property, plant and equipment amounts received from selling items
produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales
proceeds and related costs in profit (loss). An entity is required to apply these amendments for annual reporting
periods beginning on or after January 1, 2022. The amendments are applied retrospectively only to items of property,
plant and equipment that are available for use after the beginning of the earliest period presented in the financial
statements in which the entity first applies the amendments. We are currently assessing the effect of this amendment
on our financial statements. We expect this amendment to have an effect on the accounting related to the sale of
products during the commissioning phase of our Quebrada Blanca Phase 2 project (QB2).
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform – Phase 2
In August 2020, the IASB issued amendments to IFRS 9, Financial Instruments (IFRS 9), IAS 39, Financial Instruments:
Recognition and Measurement (IAS 39), IFRS 7, Financial Instruments: Disclosures (IFRS 7), IFRS 4, Insurance Contracts
(IFRS 4), and IFRS 16, Leases (IFRS 16) as a result of Phase 2 of the IASB’s Interest Rate Benchmark Reform project. The
amendments address issues arising during reform of benchmark interest rates including the replacement of one benchmark
rate with an alternative one. The amendments are effective January 1, 2021. On adoption of the amendments, there will
be no immediate effect on our financial statements as we will not be replacing any of the benchmark interest rates in
our agreements on the adoption date. We will continue to assess the effect of these amendments throughout 2021.
3. Summary of Significant Accounting Policies
The significant accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all periods presented, unless otherwise stated.
Basis of Presentation
Our consolidated financial statements include the accounts of Teck and all of its subsidiaries. Our significant
operating subsidiaries include Teck Metals Ltd. (TML), Teck Alaska Incorporated (TAK), Teck Highland Valley Copper
84 Teck 2020 Annual Report | Forward Together
Partnership (Highland Valley Copper), Teck Coal Partnership (Teck Coal), Compañía Minera Teck Quebrada Blanca S.A.
(QBSA or Quebrada Blanca) and Compañía Minera Teck Carmen de Andacollo (Carmen de Andacollo).
All subsidiaries are entities that we control, either directly or indirectly. Control is defined as the exposure, or rights,
to variable returns from involvement with an investee and the ability to affect those returns through power over the
investee. Power over an investee exists when our existing rights give us the ability to direct the activities that significantly
affect the investee’s returns. This control is generally evidenced through owning more than 50% of the voting rights
or currently exercisable potential voting rights of a company’s share capital. All of our intra-group balances and
transactions, including unrealized profits and losses arising from intra-group transactions, have been eliminated in full.
For subsidiaries that we control but do not own 100% of, the net assets and net profit (loss) attributable to outside
shareholders are presented as amounts attributable to non-controlling interests in the consolidated balance sheet
and consolidated statements of income (loss) and comprehensive income (loss).
Certain of our business activities are conducted through joint arrangements. Our interests in joint operations include
Galore Creek Partnership (Galore Creek, 50% share) and Fort Hills Energy L.P. (Fort Hills, 21.3% share), which operate
in Canada, and Compañia Minera Antamina S.A. (Antamina, 22.5% share), which operates in Peru. We account for our
interests in these joint operations by recording our share of the respective assets, liabilities, revenue, expenses and
cash flows. We also have an interest in a joint venture, NuevaUnión SPA (NuevaUnión, 50% share), in Chile that we account
for using the equity method (Note 15).
All dollar amounts are presented in Canadian dollars unless otherwise specified.
Interests in Joint Arrangements
A joint arrangement can take the form of a joint venture or joint operation. All joint arrangements involve a contractual
arrangement that establishes joint control, which exists only when decisions about the activities that significantly
affect the returns of the investee require unanimous consent of the parties sharing control. A joint operation is a joint
arrangement in which we have rights to the assets and obligations for the liabilities relating to the arrangement. A joint
venture is a joint arrangement in which we have rights to only the net assets of the arrangement.
Joint ventures are accounted for in accordance with the policy “Investments in Associates and Joint Ventures”. Joint
operations are accounted for by recognizing our share of the assets, liabilities, revenue, expenses and cash flows of
the joint operation in our consolidated financial statements.
Investments in Associates and Joint Ventures
Investments over which we exercise significant influence but do not control or jointly control are associates. Investments
in associates are accounted for using the equity method, except when classified as held for sale. Investments in joint
ventures as determined in accordance with the policy “Interests in Joint Arrangements” are also accounted for using
the equity method.
The equity method involves recording the initial investment at cost and subsequently adjusting the carrying value of
the investment for our proportionate share of the profit (loss), other comprehensive income (loss) and any other changes
in the associate’s or joint venture’s net assets, such as further investments or dividends.
Our proportionate share of the associate’s or joint venture’s profit (loss) and other comprehensive income (loss) is based
on its most recent financial statements. Adjustments are made to align any inconsistencies between our accounting
policies and our associate’s or joint venture’s policies before applying the equity method. Adjustments are also made
to account for depreciable assets based on their fair values at the acquisition date of the investment and for any
impairment losses recognized by the associate or joint venture.
If our share of the associate’s or joint venture’s losses were equal to or exceeded our investment in the associate or
joint venture, recognition of further losses would be discontinued. After our interest is reduced to zero, additional
losses would be provided for and a liability recognized only to the extent that we have incurred legal or constructive
obligations to provide additional funding or make payments on behalf of the associate or joint venture. If the associate
or joint venture subsequently reports profits, we resume recognizing our share of those profits only when we have a
positive interest in the entity.
Consolidated Financial Statements
85
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
3. Summary of Significant Accounting Policies (continued)
At each balance sheet date, we consider whether there is objective evidence of impairment in associates and joint
ventures. If there is such evidence, we determine the amount of impairment to record, if any, in relation to the associate
or joint venture.
Foreign Currency Translation
The functional currency of each of our subsidiaries and our joint operations, joint ventures and associates is the
currency of the primary economic environment in which the entity operates. Transactions in foreign currencies are
translated to the functional currency of the entity at the exchange rate in existence at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated at the
period end date exchange rates.
The functional currency of Teck, the parent entity, is the Canadian dollar, which is also the presentation currency of our
consolidated financial statements.
Foreign operations are translated from their functional currencies, generally the U.S. dollar, into Canadian dollars on
consolidation. Items in the statements of income (loss) and other comprehensive income (loss) are translated using
weighted average exchange rates that reasonably approximate the exchange rate at the transaction date. Items on the
balance sheet are translated at the closing spot exchange rate. Exchange differences on the translation of the net
assets of entities with functional currencies other than the Canadian dollar, and any offsetting exchange differences
on debt used to hedge those assets, are recognized in a separate component of equity through other comprehensive
income (loss).
Exchange differences that arise relating to long-term intra-group balances that form part of the net investment in a
foreign operation are also recognized in this separate component of equity through other comprehensive income (loss).
On disposition or partial disposition of a foreign operation, the cumulative amount of related exchange differences
recorded in a separate component of equity is recognized in the statement of income (loss).
Revenue
Our revenue consists of sales of steelmaking coal, copper, zinc and lead concentrates, refined zinc, lead and silver, and
blended bitumen. We also sell other by-products, including molybdenum concentrates, various refined specialty metals,
chemicals and fertilizers. Our performance obligations relate primarily to the delivery of these products to our customers,
with each separate shipment representing a separate performance obligation.
Revenue, including revenue from the sale of by-products, is recognized at the point in time when the customer obtains
control of the product. Control is achieved when a product is delivered to the customer, we have a present right to
payment for the product, significant risks and rewards of ownership have transferred to the customer according to
contract terms and there is no unfulfilled obligation that could affect the customer’s acceptance of the product.
Steelmaking coal
For steelmaking coal, control of the product generally transfers to the customer when an individual shipment parcel is
loaded onto a carrier accepted by or directly contracted by the customer. For a majority of steelmaking coal sales we
are not responsible for the provision of shipping or product insurance after the transfer of control. For certain sales we
arrange shipping on behalf of our customers and are the agent to these shipping transactions.
Steelmaking coal is sold under spot or average pricing contracts. For spot price contracts, pricing is final when revenue
is recognized. For average pricing contracts, the final pricing is determined based on quoted steelmaking coal price
assessments over a specific period. Control of the goods may transfer and revenue may be recognized before, during
or subsequent to the period in which final average pricing is determined. For all steelmaking coal sales under average
pricing contracts where pricing is not finalized when revenue is recognized, revenue is recorded based on estimated
consideration to be received at the date of sale with reference to steelmaking coal price assessments. For average
86 Teck 2020 Annual Report | Forward Together
pricing contracts, adjustments are made to settlement receivables in subsequent periods based on published price
assessments up to the date of final pricing. This adjustment mechanism is based on the market price of the commodity
and accordingly, the changes in value of the settlement receivables are not considered to be revenue from contracts
with customers. The changes in fair value of settlement receivables are recorded in other operating income (expense).
Steelmaking coal sales are billed based on final quality and quantity measures upon the passage of control to the
customer. If pricing is not finalized when control of the product is transferred, a subsequent invoice is issued when
pricing is finalized. The payment terms generally require prompt collection from customers; however, payment terms
are customer specific and subject to change based on market conditions and other factors. We generally retain title to
these products until we receive the first contracted payment, which is typically received shortly after loading, solely to
manage the credit risk of the amounts due to us. This retention of title does not preclude the customer from obtaining
control of the product.
Base metal concentrates
For copper, lead and zinc concentrates, control of the product generally transfers to the customer when an individual
shipment parcel is loaded onto a carrier accepted by the customer. We sell a majority of our concentrates on
commercial terms where we are responsible for providing freight services after the date at which control of the
product passes to the customer. We are the principal to this freight performance obligation. A minority of zinc and lead
concentrate sales are made on consignment. For consignment transactions, control of the product transfers to the
customer and revenue is recognized at the time the product is consumed in the customers’ process.
The majority of our metal concentrates are sold under pricing arrangements where final prices are determined by
quoted market prices in a period subsequent to the date of sale. For these sales, revenue is recorded based on the
estimated consideration to be received at the date of sale with reference to relevant commodity market prices.
Adjustments are made to settlement receivables in subsequent periods based on movements in quoted commodity
prices up to the date of final pricing. This adjustment mechanism is based on the market price of the commodity and
accordingly, the changes in value of the settlement receivables are not considered to be revenue from contracts with
customers. The changes in fair value of settlement receivables are recorded in other operating income (expense).
Metal concentrate sales are billed based on provisional weights and assays upon the passage of control to the
customer. The first provisional invoice is billed to the customer at the time of transfer of control. As final prices, weights
and assays are received, additional invoices are issued and collected. In general, consideration is promptly collected
from customers; however, the payment terms are customer specific and subject to change based on market conditions
and other factors. We generally retain title to these products until we receive the first contracted payment, which is
typically received shortly after loading or shortly after arrival at the destination port, solely to manage the credit risk of
the amounts due to us. This retention of title does not preclude the customer from obtaining control of the product.
Refined metals
For sales of refined metals, control of the product transfers to the customer when the product is loaded onto a carrier
accepted by the customer. For these products, loading generally coincides with the transfer of title.
Our refined metals are sold under spot or average pricing contracts. For spot sales contracts, pricing is final when
revenue is recognized. For refined metal sales contracts where pricing is not finalized when revenue is recognized,
revenue is recorded based on the estimated consideration to be received at the date of sale with reference to
commodity market prices. Adjustments are made to settlement receivables in subsequent periods based on
movements in quoted commodity prices up to the date of final pricing. This adjustment mechanism is based on the
market price of the commodity and accordingly, the changes in value of the settlement receivables are not considered
to be revenue from contracts with customers. The changes in fair value of settlement receivables are recorded in other
operating income (expense).
We sell a portion of our refined metals on commercial terms where we are responsible for providing freight services after
the date at which control of the product passes to the customer. We are the principal to this freight performance obligation.
Consolidated Financial Statements
87
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
3. Summary of Significant Accounting Policies (continued)
Refined metal sales are billed based on final specification measures upon the passage of control to the customer. If
pricing is not finalized when control of the product is transferred, a subsequent invoice is issued when pricing is finalized.
In general, consideration is promptly collected from customers; however, the payment terms are customer specific
and subject to change based on market conditions and other factors.
Blended bitumen
For blended bitumen, control of the product generally transfers to the customer when the product passes the delivery
point as specified in the contract, which normally coincides with title and risk transfer to the customer. The majority of
our blended bitumen is sold under pricing arrangements where final prices are determined based on commodity price
indices that are finalized at or near the date of sale. Payments for blended bitumen sales are usually due and settled
within 30 days. Our revenue for blended bitumen is net of royalty payments to governments.
Financial Instruments
We recognize financial assets and liabilities on the balance sheet when we become a party to the contractual
provisions of the instrument.
Cash and cash equivalents
Cash and cash equivalents include cash on account, demand deposits and money market investments with maturities
from the date of acquisition of three months or less, which are readily convertible to known amounts of cash and are
subject to insignificant changes in value. Cash is classified as a financial asset that is subsequently measured at
amortized cost. Cash equivalents are classified as subsequently measured at amortized cost, except for money market
investments, which are classified as subsequently measured at fair value through profit (loss).
Trade receivables
Trade receivables relate to amounts owing from sales under our spot pricing contracts for steelmaking coal, refined
metals, blended bitumen, chemicals and fertilizers. These receivables are non-interest bearing and are recognized at
face amount, except when fair value is materially different, and are subsequently measured at amortized cost. Trade
receivables recorded are net of lifetime expected credit losses.
Settlement receivables
Settlement receivables arise from average pricing steelmaking coal contracts and base metal concentrate sales
contracts where amounts receivable vary based on steelmaking coal price assessments or underlying commodity
prices. Settlement receivables are classified as fair value through profit (loss) and are recorded at fair value at each
reporting period based on published price assessments or quoted commodity prices up to the date of final pricing.
The changes in fair value are recorded in other operating income (expense).
Investments in marketable equity securities
Investments in marketable equity securities are classified, at our election, as subsequently measured at fair value
through other comprehensive income (loss). For new investments in marketable equity securities, we can elect the
same classification as subsequently measured at fair value through other comprehensive income (loss), or we can
elect to classify an investment as at fair value through profit (loss). This election can be made on an investment-by-
investment basis and is irrevocable. Investment transactions are recognized on the trade date with transaction costs
included in the underlying balance. Fair values are determined by reference to quoted market prices at the balance
sheet date.
When investments in marketable equity securities subsequently measured at fair value through other comprehensive
income (loss) are disposed of, the cumulative gains and losses recognized in other comprehensive income (loss) are
88 Teck 2020 Annual Report | Forward Together
not recycled to profit (loss) and remain within equity. Dividends are recognized in profit (loss) and these investments
are not assessed for impairment.
Investments in debt securities
Investments in debt securities are classified as subsequently measured at fair value through other comprehensive income
(loss) and recorded at fair value. Investment transactions are recognized on the trade date with transaction costs included
in the underlying balance. Fair values are determined by reference to quoted market prices at the balance sheet date.
Unrealized gains and losses on debt securities are recognized in other comprehensive income (loss) until investments
are disposed of and the cumulative gains and losses recognized in other comprehensive income (loss) are reclassified
from equity to profit (loss) at that time. Loss allowances and interest income are recognized in profit (loss).
Trade payables
Trade payables are non-interest bearing if paid when due and are recognized at face amount, except when fair value is
materially different. Trade payables are subsequently measured at amortized cost.
Debt
Debt is initially recorded at fair value, less transaction costs. Debt is subsequently measured at amortized cost, calculated
using the effective interest rate method.
Derivative instruments
Derivative instruments, including embedded derivatives in executory contracts or financial liability contracts, are
classified as at fair value through profit (loss) and, accordingly, are recorded on the balance sheet at fair value.
Unrealized gains and losses on derivatives not designated in a hedging relationship are recorded as part of other
operating income (expense) or non-operating income (expense) in profit (loss) depending on the nature of the
derivative. Fair values for derivative instruments are determined using inputs based on market conditions existing at
the balance sheet date or settlement date of the derivative. Derivatives embedded in non-derivative contracts are
recognized separately unless they are closely related to the host contract.
Expected credit losses
For trade receivables, we apply the simplified approach to determining expected credit losses, which requires expected
lifetime losses to be recognized upon initial recognition of the receivables.
Loss allowances on investments in debt securities are initially assessed based on the expected 12-month credit loss.
At each reporting date, we assess whether the credit risk for our debt securities has increased significantly since initial
recognition. If the credit risk has increased significantly since initial recognition, the loss allowance is adjusted to be
based on the lifetime expected credit losses.
Hedging
Certain derivative investments may qualify for hedge accounting. At inception of hedge relationships, we document
the economic relationship between hedging instruments and hedged items and our risk management objective and
strategy for undertaking the hedge transactions.
For fair value hedges, any gains or losses on both the hedged item and the hedging instrument are recognized in the
same line item in profit (loss).
For cash flow hedges, any unrealized gains or losses on the hedging instrument relating to the effective portion of the
hedge are initially recorded in other comprehensive income (loss). Where a cash flow hedge relates to a transaction
where a non-financial asset or liability is recognized, accumulated gains or losses are recognized directly in the
carrying amount of the non-financial asset or liability. The gains or losses are reclassified to profit (loss) in the same
period or periods in which the hedged expected future cash flows affect profit (loss), when the hedged item ceases to
exist, or when the hedge is determined to be ineffective.
Consolidated Financial Statements
89
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
3. Summary of Significant Accounting Policies (continued)
For hedges of net investments in foreign operations, any foreign exchange gains or losses on the hedging instrument
relating to the effective portion of the hedge are initially recorded in other comprehensive income (loss). Gains and
losses are recognized in profit (loss) on the ineffective portion of the hedge, or when there is a disposition or partial
disposition of a foreign operation being hedged.
Inventories
Finished products, work in process, raw materials and supplies inventories are valued at the lower of weighted average
cost and net realizable value. Raw materials include concentrates for use at smelting and refining operations. Work in
process inventory includes inventory in the milling, smelting or refining process and stockpiled ore at mining operations.
For our oil sands mining and processing operation, raw materials consist of diluent used in blending, work in process
inventory consists of raw bitumen and finished products consist of blended bitumen.
For work in process and finished product inventories, cost includes all direct costs incurred in production, including
direct labour and materials, freight, depreciation and amortization, and directly attributable overhead costs. Production
stripping costs that are not capitalized are included in the cost of inventories as incurred. Depreciation and amortization
of capitalized production stripping costs are included in the cost of inventory.
When our operations are producing at reduced levels, fixed overhead costs are only allocated to inventory based on
normal production levels.
When inventories have been written down to net realizable value, we make a new assessment of net realizable value in
each subsequent period. If the circumstances that caused the write-down no longer exist, the remaining amount of
the write-down on inventory not yet sold is reversed.
We use both joint-product and by-product costing for work in process and finished product inventories. Joint-product
costing is applied to primary products where the profitability of the operations is dependent upon the production of
these products. Joint-product costing allocates total production costs based on the relative values of the products.
By-product costing is used for products that are not the primary products produced by the operation. The by-products
are allocated only the incremental costs of processes that are specific to the production of that product.
Supplies inventory is valued at the lower of weighted average cost and net realizable value. Cost includes acquisition,
freight and other directly attributable costs.
Property, Plant and Equipment
Land, buildings, plant and equipment
Land is recorded at cost and buildings, plant and equipment are recorded at cost less accumulated depreciation and
impairment losses. Cost includes the purchase price and the directly attributable costs to bring the assets to the
location and condition necessary for them to be capable of operating in the manner intended by management.
Depreciation of mobile equipment, buildings used for production, and plant and processing equipment at our mining
operations is calculated on a units-of-production basis. Depreciation of buildings not used for production, and of plant
and equipment at our smelting operations is calculated on a straight-line basis over the assets’ estimated useful lives.
Where components of an asset have different useful lives, depreciation is calculated on each component separately.
Depreciation commences when an asset is ready for its intended use. Estimates of remaining useful lives and residual
values are reviewed annually. Changes in estimates are accounted for prospectively.
The expected useful lives are as follows:
• Buildings and equipment (not used for production)
1—45 years
• Plant and equipment (smelting operations)
3—30 years
90 Teck 2020 Annual Report | Forward Together
Mineral properties and mine development costs
The cost of acquiring and developing mineral properties or property rights, including pre-production waste rock stripping
costs related to mine development and costs incurred during production to increase future output, are capitalized.
Waste rock stripping costs incurred in the production phase of a surface mine are recorded as capitalized production
stripping costs within property, plant and equipment when it is probable that the stripping activity will improve access
to the orebody, when the component of the orebody or pit to which access has been improved can be identified, and
when the costs relating to the stripping activity can be measured reliably. When the actual waste-to-ore stripping ratio
in a period is greater than the expected life-of-component waste-to-ore stripping ratio for that component, the excess
is recorded as capitalized production stripping costs.
Once available for use, mineral properties and mine development costs are depreciated on a units-of-production basis
over the proven and probable reserves to which they relate. Since the stripping activity within a component of a mine
improves access to the reserves of the same component, capitalized production stripping costs incurred during the
production phase of a mine are depreciated on a units-of-production basis over the proven and probable reserves
expected to be mined from the same component.
Exploration and evaluation costs
Property acquisition costs are capitalized. Other exploration and evaluation costs are capitalized if they relate to
specific properties for which resources, as defined under National Instrument 43-101, Standards of Disclosure for
Mineral Projects, exist or are near a specific property with a defined resource, and it is expected that the expenditure
can be recovered by future exploitation or sale. All other costs are charged to profit (loss) in the year in which they are
incurred. Capitalized exploration and evaluation costs are considered to be tangible assets. These assets are not
depreciated as they are not currently available for use. When proven and probable reserves are determined and
development is approved, capitalized exploration and evaluation costs are reclassified to mineral properties within
property, plant and equipment.
Costs of oil sands properties
The costs of acquiring, exploring, evaluating and developing oil sands properties are capitalized when it is expected
that these costs will be recovered through future exploitation or sale of the property. Capitalized development costs
of oil sands properties are tangible assets. Assets that are not yet available for use are not depreciated. When proven
and probable reserves are determined and development is approved, capitalized development costs for oil sands
properties are reclassified to mineral properties within property, plant and equipment.
Construction in progress
Assets in the course of construction are capitalized as construction in progress. On completion, the cost of construction
is transferred to the appropriate category of property, plant and equipment, and depreciation commences when the
asset is available for its intended use.
Repairs and maintenance
Repairs and maintenance costs, including shutdown maintenance costs, are charged to expense as incurred, except
when these repairs significantly extend the life of an asset or result in a significant operating improvement. In these
instances, the portion of these repairs relating to the betterment is capitalized as part of plant and equipment.
Borrowing costs
We capitalize borrowing costs that are directly attributable to the acquisition, construction or production of an asset
that takes a substantial period of time to construct or prepare for its intended use. We begin capitalizing borrowing
costs when there are borrowings, expenditures are incurred, and activities are undertaken to prepare the asset for its
intended use. The amount of borrowing costs capitalized cannot exceed the actual amount of borrowing costs
incurred during the period. All other borrowing costs are expensed as incurred.
Consolidated Financial Statements
91
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
3. Summary of Significant Accounting Policies (continued)
We suspend the capitalization of borrowing costs when we suspend the active development of a qualifying asset for
an extended period. Capitalization recommences when active development resumes. We discontinue the capitalization
of borrowing costs when substantially all of the activities necessary to prepare the qualifying asset for its intended use
or sale are complete. Capitalized borrowing costs are amortized over the useful life of the related asset.
Impairment of non-current assets
The carrying amounts of assets included in property, plant and equipment and intangible assets are reviewed for
impairment whenever facts and circumstances indicate that the carrying amounts are less than the recoverable
amounts. If there are indicators of impairment, the recoverable amount of the asset is estimated in order to determine
the extent of any impairment. Where the asset does not generate cash flows that are independent from other assets,
the recoverable amount of the cash-generating unit (CGU) to which the asset belongs is determined. The recoverable
amount of an asset or CGU is determined as the higher of its fair value less costs of disposal (FVLCD) and its value in
use. An impairment loss exists if the asset’s or CGU’s carrying amount exceeds the estimated recoverable amount, and
is recorded as an expense immediately.
Fair value is the price that would be received from selling an asset in an orderly transaction between market participants
at the measurement date. Costs of disposal are incremental costs directly attributable to the disposal of an asset. For
mining assets, when a binding sale agreement is not readily available, FVLCD is usually estimated using a discounted
cash flow approach, unless comparable market transactions on which to estimate fair value are available. Estimated
future cash flows are calculated using estimated future commodity prices, reserves and resources, and operating and
capital costs. All inputs used are those that an independent market participant would consider appropriate. Value in
use is determined as the present value of the future cash flows expected to be derived from continuing use of an asset
or CGU in its present form. These estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset
or CGU for which estimates of future cash flows have not been adjusted. A value in use calculation uses a pre-tax
discount rate and a FVLCD calculation uses a post-tax discount rate.
Indicators of impairment for exploration and evaluation assets are assessed on a project-by-project basis or as part of
the mining operation to which they relate.
Tangible or intangible assets that have been impaired in prior periods are tested for possible reversal of impairment
whenever events or significant changes in circumstances indicate that the impairment may have reversed. Indicators
of a potential reversal of an impairment loss mainly mirror the indicators present when the impairment was originally
recorded. If the impairment has reversed, the carrying amount of the asset is increased to its recoverable amount, but
not beyond the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognized for the asset in prior periods. A reversal of an impairment loss is recognized in profit (loss) immediately.
Intangible Assets
Intangible assets are mainly internally generated and primarily relate to our innovation and technology initiatives.
Development costs for internally generated intangible assets are capitalized when the product or process is clearly
defined, the technical feasibility and usefulness of the asset has been established, we are committed and have the
resources, to complete the project and the costs can be reliably measured.
Intangible assets are recorded at cost less accumulated depreciation and impairment losses. Cost includes directly
attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner
intended by management.
Finite life intangible assets are amortized on a straight-line basis over their useful lives. Amortization commences when
an asset is ready for its intended use. Estimates of remaining useful lives are reviewed annually. Changes in estimates
are accounted for prospectively. The expected useful lives of our finite life intangible assets are between 7—40 years.
92 Teck 2020 Annual Report | Forward Together
Goodwill
We allocate goodwill arising from business combinations to each CGU or group of CGUs that are expected to receive
the benefits from the business combination. The carrying amount of the CGU or group of CGUs to which goodwill has
been allocated is tested annually for impairment or when there is an indication that the goodwill may be impaired. Any
impairment is recognized as an expense immediately. Should there be a recovery in the value of a CGU or group of
CGUs, any impairment of goodwill previously recorded is not subsequently reversed.
Leases
At inception of a contract, we assess whether a contract is, or contains, a lease. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. We assess whether the contract involves the use of an identified asset, whether we have the right to
obtain substantially all of the economic benefits from use of the asset during the term of the arrangement and if
we have the right to direct the use of the asset. At inception or on reassessment of a contract that contains a lease
component, we allocate the consideration in the contract to each lease component on the basis of their relative
stand-alone prices.
As a lessee, we recognize a right-of-use asset, which is included in property, plant and equipment, and a lease liability
at the commencement date of a lease. The right-of-use asset is initially measured at cost, which is comprised of the
initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus
any decommissioning and restoration costs, less any lease incentives received.
The right-of-use asset is subsequently depreciated from the commencement date to the earlier of the end of the lease
term, or the end of the useful life of the asset. In addition, the right-of-use asset may be reduced due to impairment
losses, if any, and adjusted for certain remeasurements of the lease liability.
A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted by the interest rate implicit in the lease, or if that rate cannot be readily determined, our incremental
borrowing rate. Lease payments included in the measurement of the lease liability are comprised of:
•
•
fixed payments, including in-substance fixed payments, less any lease incentives receivable;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
• amounts expected to be payable under a residual value guarantee;
• exercise prices of purchase options if we are reasonably certain to exercise that option; and
•
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to
terminate the lease.
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is
a change in future lease payments arising from a change in an index or rate, or if there is a change in our estimate or
assessment of the expected amount payable under a residual value guarantee, purchase, extension or termination
option. Variable lease payments not included in the initial measurement of the lease liability are charged directly
to profit (loss).
We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term
of 12 months or less and leases of low-value assets. The lease payments associated with these leases are charged
directly to profit (loss) on a straight-line basis over the lease term.
Consolidated Financial Statements
93
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
3. Summary of Significant Accounting Policies (continued)
Income Taxes
Taxes, comprising both income taxes and resource taxes, are accounted for as income taxes under IAS 12, Income Taxes
and are recognized in the statement of income (loss), except where they relate to items recognized in other comprehensive
income (loss) or directly in equity, in which case the related taxes are recognized in other comprehensive income
(loss) or equity.
Current taxes receivable or payable are based on estimated taxable income for the current year at the statutory tax
rates enacted or substantively enacted less amounts paid or received on account.
Deferred tax assets and liabilities are recognized based on temporary differences (the difference between the tax and
accounting values of assets and liabilities) and are calculated using enacted or substantively enacted tax rates for the
periods in which the differences are expected to reverse. The effect of changes in tax legislation, including changes in
tax rates, is recognized in the period of substantive enactment.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profits of the relevant entity
or group of entities in a particular jurisdiction will be available, against which the assets can be utilized.
Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries, joint
ventures and associates. However, we do not recognize such deferred tax liabilities where the timing of the reversal of
the temporary differences can be controlled without affecting our operations or business, and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are not recognized if the temporary differences arise from the initial recognition of
goodwill or an asset or liability in a transaction, other than in a business combination, which will affect neither accounting
profit nor taxable profit.
We are subject to assessments by various taxation authorities, who may interpret tax legislation differently than we do.
The final amount of taxes to be paid depends on a number of factors, including the outcomes of audits, appeals or
negotiated settlements. We account for such differences based on our best estimate of the probable outcome of
these matters.
Employee Benefits
Defined benefit pension plans
Defined benefit pension plan obligations are based on actuarial determinations. The projected unit credit method,
which sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit
separately to build up the final obligation, is used to determine the defined benefit obligations, the related current
service costs and, where applicable, the past service costs. Actuarial assumptions used in the determination of
defined benefit pension plan assets and liabilities are based upon our best estimates, including discount rates, salary
escalation, expected healthcare costs and retirement dates of employees.
Vested and unvested costs arising from past service following the introduction of changes to a defined benefit plan
are recognized immediately as an expense when the changes are made.
Actuarial gains and losses can arise from differences between expected and actual outcomes or changes in actuarial
assumptions. Actuarial gains and losses, changes in the effect of the asset ceiling and return on plan assets are
collectively referred to as remeasurements of retirement benefit plans and are recognized immediately through other
comprehensive income (loss) and directly into retained earnings. Measurement of our net defined benefit asset is
limited to the lower of the surplus of assets less liabilities in the defined benefit plan and the asset ceiling less liabilities
in the defined benefit plan. The asset ceiling is the present value of the expected economic benefit available to us in
the form of refunds from the plan or reductions in future contributions to the plan.
94 Teck 2020 Annual Report | Forward Together
We apply one discount rate to the net defined benefit asset or liability for the purposes of determining the interest
component of the defined benefit cost. This interest component is recorded as part of finance expense. Depending on
the classification of the salary of plan members, current service costs and past service costs are included in cost of
sales, general and administration expenses, exploration expenses or research and innovation expenses.
Defined contribution pension plans
The cost of providing benefits through defined contribution plans is charged to profit (loss) as the obligation to
contribute is incurred.
Non-pension post-retirement plans
We provide healthcare benefits for certain employees when they retire. Non-pension post-retirement plan obligations
are based on actuarial determinations. The cost of these benefits is expensed over the period in which the employees
render services. We fund these non-pension post-retirement benefits as they become due.
Termination benefits
We recognize a liability and an expense for termination benefits when we have demonstrably committed to terminate
employees. We are demonstrably committed to a termination when, and only when, there is a formal plan for the
termination with no realistic possibility of withdrawal. The plan should include, at a minimum, the location, function
and approximate number of employees whose services are to be terminated, the termination benefits for each job
classification or function, and the time at which the plan will be implemented without significant changes.
Share-Based Payments
The fair value method of accounting is used for share-based payment transactions. Under this method, the cost of
share options and other equity-settled share-based payment arrangements is recorded based on the estimated fair
value at the grant date, including an estimate of the forfeiture rate, and charged to other operating income (expense)
over the vesting period. For employees eligible for normal retirement prior to vesting, the expense is charged to other
operating income (expense) over the period from the grant date to the date they are eligible for retirement.
Share-based payment expense relating to cash-settled awards, including deferred, restricted, performance and
performance deferred share units, is accrued over the vesting period of the units based on the quoted market value
of Class B subordinate voting shares. Performance share units (PSUs) and performance deferred share units (PDSUs)
have two additional vesting factors determined by our total shareholder return in comparison to a group of specified
companies and by the ratio of the change in our earnings before interest, taxes, depreciation and amortization
(EBITDA) over the vesting period of the share unit to the change in a specified weighted commodity price index. As
these awards will be settled in cash, the expense and liability are adjusted each reporting period for changes in the
underlying share price as well as changes to the above-noted vesting factors, as applicable.
Share Repurchases
Where we repurchase any of our equity share capital, the excess of the consideration paid over book value is deducted
from retained earnings.
Provisions
Decommissioning and restoration provisions
Future obligations to retire an asset and to restore a site, including dismantling, remediation and ongoing treatment
and monitoring of the site related to normal operations, are initially recognized and recorded as a provision based on
estimated future cash flows discounted at a credit-adjusted risk-free rate. This decommissioning and restoration provision
is adjusted at each reporting period for changes to factors including the expected amount of cash flows required to
discharge the liability, the timing of such cash flows and the discount rate.
Consolidated Financial Statements
95
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
3. Summary of Significant Accounting Policies (continued)
The provisions are also accreted to full value over time through periodic charges to profit (loss). This unwinding of the
discount is charged to finance expense in the statement of income (loss).
The amount of the decommissioning and restoration provision initially recognized is capitalized as part of the related
asset’s carrying value. The method of depreciation follows that of the underlying asset. For a closed site or where the
asset that generated a decommissioning and restoration provision no longer exists, there is no longer any future
benefit related to the costs, and as such, the amounts are expensed through other operating income (expense). For
operating sites, a revision in estimates or a new disturbance will result in an adjustment to the provision with an
offsetting adjustment to the capitalized asset retirement cost.
During the operating life of an asset, events such as infractions of environmental laws or regulations may occur. These
events are not related to the normal operation of the asset. The costs associated with these provisions are accrued
and charged to other operating income (expense) in the period in which the event giving rise to the liability occurs.
Changes in the estimated liability resulting in an adjustment to these provisions are also charged to other operating
income (expense) in the period in which the estimate changes.
Other provisions
Provisions are recognized when a present legal or constructive obligation exists as a result of past events, and it is
probable that an outflow of resources that can be reliably estimated will be required to settle the obligation. Where
the effect is material, the provision is discounted using an appropriate credit-adjusted risk-free rate.
Research and Innovation
Costs associated with scientific research are expensed as incurred. Costs associated with our innovation-driven
transformation program where the process is not clearly defined and technical feasibility is not established are also
expensed as incurred.
Earnings (Loss) per Share
Earnings (loss) per share is calculated based on the weighted average number of shares outstanding during the year.
For diluted earnings per share, dilution is calculated based upon the net number of common shares issued should
“in-the-money” options and warrants be exercised and the proceeds be used to repurchase common shares at the
average market price in the year. In periods of loss, the loss per share and diluted loss per share are the same since
the effect of the issuance of additional common shares would be anti-dilutive.
4. Areas of Judgment and Estimation Uncertainty
In preparing our consolidated financial statements, we make judgments in applying our accounting policies. The
judgments that have the most significant effect on the amounts recognized in our financial statements are outlined
below. In addition, we make assumptions about the future in deriving estimates used in preparing our consolidated
financial statements. We have outlined below information about assumptions and other sources of estimation
uncertainty as at December 31, 2020 that have a risk of resulting in a material adjustment to the carrying amounts of
assets and liabilities within the next year.
a) Areas of Judgment
Assessment of Impairment Indicators
Judgment is required in assessing whether certain factors would be considered an indicator of impairment or
impairment reversal. We consider both internal and external information to determine whether there is an indicator of
impairment or impairment reversal present and, accordingly, whether impairment testing is required. The information
96 Teck 2020 Annual Report | Forward Together
we consider in assessing whether there is an indicator of impairment or impairment reversal includes, but is not limited
to, market transactions for similar assets, commodity prices, interest rates, our market capitalization, reserves and
resources, mine plans and operating results.
In the fourth quarter of 2020, updated mine plans for Fort Hills became available, reflecting an earlier than planned
restart of the second train of operations and including operating and capital cost reductions over the life of mine.
These updates to the mine plans indicated a change in the valuation of the asset. This, combined with macroeconomic
conditions including the cost of capital for oil assets and lower market expectations for long-term Western Canadian
Select (WCS) heavy oil prices required us to perform an impairment test for our interest in Fort Hills under the
requirements of IAS 36, Impairment of Assets (Note 8(a)).
During the first quarter of 2020, as a result of then lower market expectations of WCS heavy oil prices over the next
three years combined with reduced production in the near term, we performed an impairment test for our interest in
Fort Hills (Note 8(a)).
During 2019, we determined that lower market expectations for future WCS heavy oil prices was an impairment
indicator for our interest in Fort Hills. We also determined that the withdrawal of our Frontier oil sands property from the
regulatory review process was an impairment indicator for the project under the requirements of IFRS 6, Exploration for
and Evaluation of Mineral Resources. We performed impairment tests as a result of these indicators (Note 8(a)).
Joint Arrangements
We are a party to a number of arrangements over which we do not have control. Judgment is required in determining
whether joint control over these arrangements exists and, if so, which parties have joint control and whether each
arrangement is a joint venture or joint operation. In assessing whether we have joint control, we analyze the activities
of each arrangement and determine which activities most significantly affect the returns of the arrangement over its
life. These activities are determined to be the relevant activities of the arrangement. If unanimous consent is required
over the decisions about the relevant activities, the parties whose consent is required would have joint control over the
arrangement. The judgments around which activities are considered the relevant activities of the arrangement are
subject to analysis by each of the parties to the arrangement and may be interpreted differently. When performing this
assessment, we generally consider decisions about activities such as managing the asset while it is being designed,
developed and constructed, during its operating life and during the closure period. We may also consider other
activities including the approval of budgets, expansion and disposition of assets, financing, significant operating and
capital expenditures, appointment of key management personnel, representation on the board of directors and other
items. When circumstances or contractual terms change, we reassess the control group and the relevant activities of
the arrangement.
If we have joint control over the arrangement, an assessment of whether the arrangement is a joint venture or joint
operation is required. This assessment is based on whether we have rights to the assets, and obligations for the
liabilities, relating to the arrangement or whether we have rights to the net assets of the arrangement. In making this
determination, we review the legal form of the arrangement, the terms of the contractual arrangement and other facts
and circumstances. In a situation where the legal form and the terms of the contractual arrangement do not give us
rights to the assets and obligations for the liabilities, an assessment of other facts and circumstances is required,
including whether the activities of the arrangement are primarily designed for the provision of output to the parties and
whether the parties are substantially the only source of cash flows contributing to the arrangement. The consideration
of other facts and circumstances may result in the conclusion that a joint arrangement is a joint operation. This
conclusion requires judgment and is specific to each arrangement. Other facts and circumstances have led us to
conclude that Antamina and Fort Hills are joint operations for the purposes of our consolidated financial statements.
The other facts and circumstances considered for both of these arrangements include the provision of output to the
parties of the joint arrangements and the funding obligations. For both Antamina and Fort Hills, we will take our share
of the output from the assets directly over the life of the arrangement. We have concluded that this gives us direct
rights to the assets and obligations for the liabilities of these arrangements proportionate to our ownership interests.
Consolidated Financial Statements
97
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
4. Areas of Judgment and Estimation Uncertainty (continued)
Streaming Transactions
When we enter into a long-term streaming arrangement linked to production at specific operations, judgment is
required in assessing the appropriate accounting treatment for the transaction on the closing date and in future
periods. We consider the specific terms of each arrangement to determine whether we have disposed of an interest in
the reserves and resources of the respective operation or executed some other form of arrangement. This assessment
considers what the counterparty is entitled to and the associated risks and rewards attributable to them over the life
of the operation. These include the contractual terms related to the total production over the life of the arrangement
as compared to the expected production over the life of the mine, the percentage being sold, the percentage of
payable metals produced, the commodity price referred to in the ongoing payment and any guarantee relating to the
upfront payment if production ceases.
For our silver and gold streaming arrangements at Antamina and Carmen de Andacollo, respectively, there is no
guarantee associated with the upfront payment. We have concluded that control of the rights to the silver and gold
mineral interests were transferred to the buyers when the contracts came into effect. Therefore, we consider these
arrangements a disposition of a mineral interest.
Based on our judgment, control of the interest in the reserves and resources transferred to the buyer when the
contracts were executed. At that time, we recognized the amount of the gain related to the disposition of the reserves
and resources as we had the right to payment, the customer was entitled to the commodities, the buyer had no
recourse in requiring Teck to mine the product, and the buyer had significant risks and rewards of ownership of the
reserves and resources.
We recognize the amount of consideration related to refining, mining and delivery services as the work is performed.
Deferred Tax Assets and Liabilities
Judgment is required in assessing whether deferred tax assets and certain deferred tax liabilities are recognized on
the balance sheet and what tax rate is expected to be applied in the year when the related temporary differences
reverse. We also evaluate the recoverability of deferred tax assets based on an assessment of our ability to use the
underlying future tax deductions before they expire against future taxable income. Deferred tax liabilities arising from
temporary differences on investments in subsidiaries, joint ventures and associates are recognized unless the reversal
of the temporary differences is not expected to occur in the foreseeable future and can be controlled. Judgment is
also required on the application of income tax legislation. These judgments are subject to risk and uncertainty and
could result in an adjustment to the deferred tax provision and a corresponding credit or charge to profit (loss).
b) Sources of Estimation Uncertainty
Impairment Testing
When impairment testing is required, discounted cash flow models are used to determine the recoverable amount
of respective assets. These models are prepared internally or with assistance from third-party advisors when required.
When relevant market transactions for comparable assets are available, these are considered in determining the
recoverable amount of assets. Significant assumptions used in preparing discounted cash flow models include
commodity prices, reserves and resources, mine production, operating costs, capital expenditures, discount rates
and foreign exchange rates. Note 8(c) outlines the significant inputs used when performing goodwill and other asset
impairment testing. These inputs are based on management’s best estimates of what an independent market
participant would consider appropriate. Changes in these inputs may alter the results of impairment testing,
the amount of the impairment charges or reversals recorded in the statement of income (loss) and the resulting
carrying values of assets.
98 Teck 2020 Annual Report | Forward Together
Estimated Recoverable Reserves and Resources
Mineral and oil reserve and resource estimates are based on various assumptions relating to operating matters as
set forth in National Instrument 43-101, Standards of Disclosure for Mineral Projects and National Instrument 51-101,
Standards of Disclosure for Oil and Gas Activities. Assumptions used include production costs, mining and processing
recoveries, cut-off grades, sales volumes, long-term commodity prices, exchange rates, inflation rates, tax and royalty
rates and capital costs. Cost estimates are based on prefeasibility or feasibility study estimates or operating history.
Estimates are prepared by or under the supervision of appropriately qualified persons, or qualified reserves evaluators,
but will be affected by forecasted commodity prices, inflation rates, exchange rates, capital and production costs, and
recoveries, among other factors. Estimated recoverable reserves and resources are used in performing impairment
testing, to determine the depreciation of property, plant and equipment at operating mine sites, in accounting for
capitalized production stripping costs, and also in forecasting the timing of settlement of decommissioning and
restoration costs. Changes in reserve and resource estimates are most significant to estimating the recoverable
amount in impairment tests.
Decommissioning and Restoration Provisions
The decommissioning and restoration provision (DRP) is based on future cost estimates using information available
at the balance sheet date that are developed by management’s experts (Note 24(a)). The DRP represents the present
value of estimated costs of future decommissioning and other site restoration activities including costs associated
with the management of water and water quality in and around each closed site. The DRP is adjusted at each reporting
period for changes to factors such as the expected amount of cash flows required to discharge the liability, the timing
of such cash flows and the credit-adjusted discount rate. The DRP requires significant estimates and assumptions,
including the requirements of the relevant legal and regulatory framework and the timing, extent and costs of required
decommissioning and restoration activities. Our estimates of the cost associated with the management of water and
water quality in and around each closed site includes assumptions with respect to the volume and location of water to
be treated, the methods used to treat the water and the related water treatment costs. To the extent the actual costs
differ from these estimates, adjustments will be recorded and the statement of income (loss) may be affected.
Provision for Income Taxes
We calculate current and deferred tax provisions for each of the jurisdictions in which we operate. Actual amounts
of income tax expense are not final until tax returns are filed and accepted by the relevant authorities. This occurs
subsequent to the issuance of our financial statements, and the final determination of actual amounts may not be
completed for a number of years. Therefore, profit (loss) in subsequent periods will be affected by the amount that
estimates differ from the final tax return.
Deferred Tax Assets and Liabilities
Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on management’s
estimates of future production and sales volumes, commodity prices, reserves and resources, operating costs,
decommissioning and restoration costs, capital expenditures, dividends and other capital management transactions.
These estimates could result in an adjustment to the deferred tax provision and a corresponding credit or charge
to profit (loss).
c) Effects of COVID-19
In March 2020, the World Health Organization declared a global pandemic related to COVID-19 and the impacts on
global commerce have been far-reaching. To date there has been significant stock market volatility, volatility in
commodity and foreign exchange markets and restrictions on the conduct of business in many jurisdictions and the
global movement of people. There continues to be uncertainty surrounding COVID-19 and the extent and duration of
the impacts it may have on demand and prices for the commodities we produce, on our suppliers, on our employees
and on global financial markets.
Consolidated Financial Statements
99
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
4. Areas of Judgment and Estimation Uncertainty (continued)
We continue to act to protect the safety and health of our employees, contractors and the communities in which we
operate in accordance with guidance from governments and public health authorities. These measures, combined
with commodity market fluctuations, have affected our financial results for 2020.
We applied judgment in determining when to suspend the capitalization of borrowing costs associated with QB2,
which corresponded with the suspension of active development of the project. We similarly applied judgment to
determine when active development of the project resumed and we recommenced capitalization of borrowing costs
at that date. We suspended capitalization of borrowing costs for QB2 at the end of the first quarter, and we
recommenced capitalization of borrowing costs on the project in the third quarter consistent with the return to
active construction.
We expensed costs of approximately $434 million relating primarily to the suspension of construction and
remobilization of our QB2 project, of which $282 million was recorded as COVID-19 costs in other operating income
(expense) (Note 9) and $103 million relates to interest that would have been capitalized if QB2 had not been suspended.
Of the remaining $49 million, $41 million was recorded in cost of sales as a result of reduced production levels at our
operations and $8 million was recorded as social responsibility and donations in other operating income (expense).
5. Transactions
On March 29, 2019, Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation (together referred to as SMM/SC)
subscribed for a 30% indirect interest in QBSA, which owns QB2. Post-transaction, QBSA’s effective ownership is 60%
Teck, 30% SMM/SC and 10% Empresa Nacional de Minería (ENAMI). ENAMI, a Chilean State agency, holds a preference
share interest in QBSA, which does not require ENAMI to make contributions toward QBSA capital spending.
To subscribe for the indirect 30% interest in QBSA, SMM/SC initially made $900 million (US$673 million) of loan
advances, net of financing fees of $7 million (US$6 million), and $797 million (US$600 million) of equity contributions
during 2019. Together, these loan advances and equity contributions totalled $1.704 billion (US$1.279 billion).
SMM/SC have agreed to make a supplemental payment of US$50 million if QB2 mill throughput reaches 154,000 tonnes
per day prior to the earlier of the sanctioning of a major expansion or December 31, 2025, for which we recorded a
financial receivable. SMM/SC have also agreed to make an additional supplemental payment if they elect to
participate in the funding of a major expansion project (QB3), if it is sanctioned before December 31, 2031, by contributing
an additional amount equal to 8% of the incremental net present value of QB3 at the expansion sanction date in
addition to their pro rata share of expansion project costs. We will record a financial receivable if and when QB3 is
sanctioned and SMM/SC choose to participate.
Based on the provisions of the shareholders agreement, we control QBSA and consolidate its results. This transaction
was considered a change in the ownership interest of a subsidiary that we control and accordingly, we accounted for
this as an equity transaction in 2019. We have correspondingly recorded a non-controlling interest for SMM/SC’s
interest in QBSA.
In conjunction with the process to bring in an additional funding partner for QB2, we amended the terms of the QBSA
shareholders agreement with ENAMI. The revised terms clarified shareholders’ rights and responsibilities regarding the
development and financing of QB2 and any major project expansion. The revised terms provide ENAMI with a preferential
dividend stream, which is partly determined by the amount of interest on subordinated loans provided to QBSA by
us and SMM/SC. Concurrent with the closing of the SMM/SC transaction described above, the preferential dividend
stream was initially recorded as a financial liability within provisions and other liabilities. The initial recognition of the
liability was recorded as a reduction to non-controlling interests, as it arose from a transaction between shareholders
of QBSA. The financial liability was initially measured at a fair value of $118 million using a discounted cash flow model
based on the estimated subordinated financing provided by us and SMM/SC. Significant assumptions used in the
valuation include the interest rate on the subordinated loans and copper prices, which affect the timing of when QBSA
repays the subordinated loans. The liability is subsequently measured at amortized cost.
100 Teck 2020 Annual Report | Forward Together
6. Revenues
a) Total Revenues by Major Product Type and Business Unit
The following table shows our revenues disaggregated by major product type and by business unit. Our business units
are reported based on the primary products that they produce and are consistent with our reportable segments
(Note 29) that have revenue from contracts with customers. A business unit can have revenue from more than one
commodity, as it can include an operation that produces more than one product. Intra-segment revenues are accounted
for at current market prices as if the sales were made to arm’s-length parties and are eliminated on consolidation.
(CAD$ in millions)
Copper
Zinc
Steelmaking coal
Blended bitumen
Silver
Lead
Other
Intra-segment
(CAD$ in millions)
Copper
Zinc
Steelmaking coal
Blended bitumen
Silver
Lead
Other
Intra-segment
2020
Steelmaking
Coal
Zinc
Copper
$ 2 , 119
$
–
$
189
2,062
$
–
–
–
–
35
5
71
–
–
–
432
356
314
(464)
3,375
–
–
–
–
–
Energy
Total
–
–
–
454
–
–
–
–
$ 2 , 1 1 9
2 , 251
3,375
454
467
361
385
(464)
$ 2,419
$ 2,700
$ 3,375
$
454
$ 8,948
2019
Steelmaking
Coal
Zinc
Copper
$ 2 , 15 8
$
–
$
163
2,366
–
–
24
5
119
–
–
–
376
395
350
(519)
$
–
–
5,522
–
–
–
–
–
Energy
Total
–
–
–
975
–
–
–
–
$ 2 , 1 5 8
2,529
5,522
975
400
400
469
(519)
$ 2,469
$ 2,968
$
5,522
$
975
$ 11,934
Consolidated Financial Statements
101
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
6. Revenues (continued)
b) Total Revenues by Regions
The following table shows our revenues disaggregated by geographical region. Revenues are attributed to regions
based on the destination port or delivery location as designated by the customer.
(CAD$ in millions)
Asia
China
Japan
South Korea
India
Other
Americas
United States
Canada
Latin America
Europe
Germany
Finland
Spain
Other
2020
2019
$
1,861
1 , 2 1 1
982
588
757
1,189
1,027
166
610
124
163
270
$
1 ,983
1 , 81 3
1 , 1 74
947
1 ,077
1 ,6 1 7
1 ,376
236
486
263
224
738
$
8,948
$
11 ,934
102 Teck 2020 Annual Report | Forward Together
7. Expenses by Nature
(CAD$ in millions)
Employment-related costs:
Wages and salaries
Employee benefits and other wage-related costs
Bonus payments
Post-employment benefits and pension costs
Transportation
Depreciation and amortization
Raw material purchases
Fuel and energy
Operating supplies consumed
Maintenance and repair supplies
Contractors and consultants
Overhead costs
Royalties
Other operating costs
Adjusted for:
Capitalized production stripping costs
Change in inventory
Total cost of sales, general and administration,
exploration and research and innovation expenses
$
2020
2019
971
272
128
124
1,495
1,378
1,510
715
697
620
648
648
268
266
62
8,307
(499)
81
$
1,057
280
207
105
1,649
1,476
1,619
974
881
743
742
768
277
343
45
9, 5 1 7
(680)
52
$
7,889
$
8,889
Approximately 23% (2019 – 24%) of our costs are incurred at our foreign operations where the functional currency is the
U.S. dollar.
8. Asset and Goodwill Impairment Testing
a) Asset Impairments
The following pre-tax asset impairments were recorded in the statement of income (loss):
Asset Impairments
(CAD$ in millions)
Fort Hills CGU
Frontier oil sands project
Steelmaking coal CGU
Other
Total
$
$
2020
1,244
–
–
–
2019
1 , 241
1 ,129
289
31
$
1,244
$
2,690
Consolidated Financial Statements
103
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
8. Asset and Goodwill Impairment Testing (continued)
Asset Impairments – 2020
During 2020, we assessed whether there were any indicators of impairment or impairment reversals for our assets and
did not identify any matters requiring us to perform an impairment test, with the exception of Fort Hills, as outlined below.
Fort Hills CGU
In the fourth quarter, updated mine plans for Fort Hills became available, reflecting an earlier than planned restart of
the second train of operations and including operating and capital cost reductions over the life of mine. These updates
to the mine plans indicated a change in the valuation of the asset. This, combined with macroeconomic conditions
including the cost of capital for oil assets and lower market expectations for long-term WCS heavy oil prices, required
us to perform an impairment test for our interest in Fort Hills. As a result, we recorded a non-cash, pre-tax asset
impairment for our interest in Fort Hills of $597 million (after-tax $438 million) in the fourth quarter. The estimated
post-tax recoverable amount of our Fort Hills CGU of $2.1 billion was lower than our carrying value.
Cash flow projections used in the analysis as at December 31, 2020 were based on a life of mine plan with cash flows
covering a period of 45 years.
Combined with the pre-tax impairment of $647 million (after-tax $474 million) recorded in the first quarter of
2020, we recorded total pre-tax impairments related to our interest in Fort Hills of $1.2 billion for the year ended
December 31, 2020.
These impairments affected the profit (loss) of our energy operating segment (Note 29).
Asset Impairments – 2019
Fort Hills CGU
During 2019, we recorded a pre-tax impairment of $1.2 billion (after-tax $910 million) related to our interest in Fort Hills.
The estimated post-tax recoverable amount of our interest in the Fort Hills CGU of $3.1 billion was lower than our
carrying value. This impairment arose as a result of lower market expectations for future WCS heavy oil prices. The
impairment affected the profit (loss) of our energy operating segment (Note 29).
Cash flow projections used in the 2019 analysis were based on current life of mine plans at the testing date and cash
flows covered a period of 40 years.
Frontier Oil Sands Project
During 2019, we recorded a pre-tax impairment of $1.1 billion (after-tax $944 million) related to our Frontier oil sands
project. This impairment arose as a result of our decision to withdraw Frontier from the regulatory review process.
We wrote down the full carrying value of our interest in the Frontier oil sands project. The impairment affected the
profit (loss) of our energy operating segment (Note 29).
Steelmaking Coal CGU
As a result of our decision not to proceed with the MacKenzie Redcap extension and the short remaining mine life,
combined with a decrease in short-term steelmaking coal prices, we recorded a pre-tax impairment of $289 million
(after-tax $184 million) of our Cardinal River Operations as at December 31, 2019. The impairment affected the profit
(loss) of our steelmaking coal operating segment (Note 29). Our Cardinal River Operations was written down to the
residual value of the remaining mobile equipment.
104 Teck 2020 Annual Report | Forward Together
Other
During 2019, we recorded an asset impairment of $31 million related to our remaining cathode operations at Quebrada
Blanca (Note 29).
Sensitivity Analysis for Fort Hills Impairment as at December 31, 2020
The key inputs used in our determination of recoverable amounts interrelate significantly with each other and with our
operating plans. For example, a decrease in long-term commodity prices would result in us making amendments to
the mine plans that would partially offset the effect of lower prices through lower operating and capital costs. It is
difficult to determine how all of these factors would interrelate, but in estimating the effect of changes in these
assumptions on fair values, we believe that all of these factors need to be considered together. A linear extrapolation
of these effects becomes less meaningful as the change in assumption increases.
The recoverable amount of our Fort Hills CGU is most sensitive to changes in WCS heavy oil prices, the Canadian/U.S.
dollar exchange rates and discount rates. Based on the recoverable amount as at December 31, 2020, ignoring the
above-described interrelationships, a US$1 decrease in the real long-term WCS heavy oil price would result in a
reduction in the recoverable amount of approximately $100 million. A $0.01 strengthening of the Canadian dollar
against the U.S. dollar would result in a reduction in the recoverable amount of approximately $30 million. A 25 basis
point increase in the discount rate would result in a reduction in the recoverable amount of approximately $60 million.
b) Annual Goodwill Impairment Testing
The allocation of goodwill to CGUs or groups of CGUs reflects how goodwill is monitored for internal management
purposes. Our Quebrada Blanca CGU and steelmaking coal group of CGUs have goodwill allocated to them (Note 17).
We did not identify any goodwill impairment indicators during 2020. We performed our annual goodwill impairment
testing at October 31, 2020, calculating the recoverable amount on a FVLCD basis and did not identify any goodwill
impairment losses.
Cash flow projections are based on expected mine life. For our steelmaking coal operations, the cash flows cover
periods of 14 to 50 years, with a steady state thereafter until reserves and resources are exhausted. For Quebrada
Blanca, the cash flow covers the current 28 year mine life of the QB2 project and a projected expansion, totalling
42 years, with an estimate of in situ value applied to the remaining resources.
Given the nature of expected future cash flows used to determine the recoverable amount, a material change could
occur over time, as the cash flows are significantly affected by the key assumptions described below in Note 8(c).
Sensitivity Analysis for Annual Goodwill Impairment Testing
Our annual goodwill impairment test carried out at October 31, 2020 resulted in the recoverable amount of our
steelmaking coal group of CGUs exceeding its carrying value by approximately $2.1 billion. The recoverable amount
of our steelmaking coal group of CGUs is most sensitive to the long-term steelmaking coal price and the long-term
foreign exchange rate assumptions. In isolation, a 5% decrease in the long-term steelmaking coal price or a 5%
decrease in the long-term foreign exchange rate would result in the recoverable amount of the steelmaking coal
group of CGUs being equal to the carrying value.
The recoverable amount of our Quebrada Blanca CGU exceeded its carrying amount at the date of our annual goodwill
impairment testing. Significant changes to key inputs would be required to result in the recoverable amount being
equal to the carrying amount.
Consolidated Financial Statements
105
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
8. Asset and Goodwill Impairment Testing (continued)
c) Key Assumptions
The following are the key assumptions used in our impairment testing calculations for the years ended December 31,
2020 and 2019:
WCS heavy oil prices per barrel
Steelmaking coal prices per tonne
Copper prices per pound
2020
2019
Long-term real price in 2025
of US$46
Long-term real price in 2024
of US$50
Long-term real price in 2025
of US$150
Long-term real price in 2024
of US$150
Long-term real price in 2025
of US$3.00
Long-term real price in 2024
of US$3.00
Post-tax real discount rates
6%—8%
5.4%—6.0%
Long-term foreign exchange rates
1 U.S. to 1.30 Canadian dollars
1 U.S. to 1.30 Canadian dollars
Commodity Prices
Commodity price assumptions are based on a number of factors, including forward curves in the near term, and are
benchmarked with external sources of information, including information published by our peers and market transactions,
where possible, to ensure they are within the range of values used by market participants.
Discount Rates
Discount rates are based on market participant mining and oil sands weighted average costs of capital adjusted for
risks specific to the operation or asset where appropriate.
Foreign Exchange Rates
Foreign exchange rates are benchmarked with external sources of information based on a range used by market participants.
Reserves and Resources and Mine Production
Future mineral and oil production is included in projected cash flows based on plant capacities and mineral and oil reserve
and resource estimates and related exploration and evaluation work undertaken by appropriately qualified persons or
qualified reserves evaluators.
Operating Costs and Capital Expenditures
Operating costs and capital expenditures are based on life of mine plans and internal management forecasts. Cost
estimates incorporate management experience and expertise, current operating costs, the nature and location of
each operation, and the risks associated with each operation. Future capital expenditures are based on management’s
best estimate of expected future capital requirements, with input from management’s experts where appropriate.
All committed and anticipated capital expenditures based on future cost estimates have been included in the
projected cash flows. Operating cost and capital expenditure assumptions are subject to ongoing optimization
and review by management.
106 Teck 2020 Annual Report | Forward Together
Recoverable Amount Basis
In the absence of a relevant market transaction, we estimate the recoverable amount of our CGU or group of CGUs
on a FVLCD basis using a discounted cash flow methodology, taking into account assumptions likely to be made by
market participants unless it is expected that the value-in-use methodology would result in a higher recoverable
amount. For the asset impairment and goodwill impairment analyses performed in 2020 and 2019, we have applied
the FVLCD basis. These estimates are classified as a Level 3 measurement within the fair value measurement
hierarchy (Note 31).
9. Other Operating Income (Expense)
(CAD$ in millions)
Settlement pricing adjustments (Note 30(b))
Share-based compensation
Environmental costs and remeasurement of decommissioning and restoration
provisions for closed operations
Care and maintenance costs
Social responsibility and donations
Gain (loss) on sale of assets
Commodity derivatives (Note 30(b))
Take or pay contract costs
COVID-19 costs (Note 4(c))
Other
10. Finance Income and Finance Expense
(CAD$ in millions)
Finance income
Investment income
Total finance income
Finance expense
Debt interest
Interest on advances from SMM/SC
Interest on lease liabilities (Note 21(c))
Letters of credit and standby fees
Net interest expense on retirement benefit plans
Accretion on decommissioning and restoration provisions (Note 24(a))
Other
Less capitalized borrowing costs
Total finance expense
2020
$
$
47
(47)
(270)
(52)
(23)
34
62
(104)
(282)
(90)
2019
(49)
(4)
(197)
(36)
(18)
(20)
17
(123)
–
(75)
$
(725)
$
(505)
2020
2019
$
$
$
$
$
$
10
10
275
42
37
48
5
114
8
529
(251)
$
278
$
48
48
276
41
39
51
7
112
15
541
(275)
266
Consolidated Financial Statements
107
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
11. Non-Operating Income (Expense)
(CAD$ in millions)
Foreign exchange losses
Gain on debt prepayment option (Note 30(b))
Loss on debt redemption or purchase (Note 19(b))
Other
12. Supplemental Cash Flow Information
(CAD$ in millions)
Cash and cash equivalents
Cash
Investments with maturities from the date of acquisition of three months or less
2020
2019
(2)
–
(11)
56
43
$
$
(4)
105
(224)
26
(97)
$
$
December 31, December 31,
2019
2020
$
$
137
313
450
$
$
149
877
1,026
Cash and cash equivalents as at December 31, 2020 includes $82 million held in QBSA and $26 million held in
Antamina. These cash and cash equivalent balances are to be used within the entity for operating purposes and
cannot be transferred to other entities within the group.
(CAD$ in millions)
Net change in non-cash working capital items
Trade and settlement receivables
Prepaids and other current assets
Inventories
Trade accounts payable and other liabilities
13. Inventories
(CAD$ in millions)
Supplies
Raw materials
Work in process
Finished products
Less long-term portion (Note 14)
2020
2019
$
$
(294)
(102)
100
55
$
(241)
$
97
(69)
16
(204)
(160)
December 31, December 31,
2019
2020
$
$
757
197
592
410
1,956
(84)
721
271
491
573
2,056
(75)
$
1,872
$
1,981
Cost of sales of $7.6 billion (2019 – $8.6 billion) includes $7.0 billion (2019 – $7.9 billion) of inventories recognized as an
expense during the year.
108 Teck 2020 Annual Report | Forward Together
Total inventories held at net realizable value amounted to $75 million at December 31, 2020 (December 31, 2019 –
$95 million). Total inventory write-downs in 2020 were $134 million (2019 – $60 million) and were included as part
of cost of sales.
Long-term inventories consist of ore stockpiles and other in-process materials that are not expected to be processed
within one year.
14. Financial and Other Assets
(CAD$ in millions)
Long-term receivables and deposits
Marketable equity and debt securities carried at fair value
Pension plans in a net asset position (Note 23(a))
Derivative assets
Long-term portion of inventories (Note 13)
Finite life intangibles
Other
15. Investments in Associates and Joint Ventures
(CAD$ in millions)
At January 1, 2019
Contributions
Changes in foreign exchange rates
Share of loss
Other
At December 31, 2019
Contributions
Changes in foreign exchange rates
Share of income (loss)
Other
At December 31, 2020
December 31, December 31,
2019
2020
$
$
289
178
301
77
84
309
31
268
183
360
28
75
162
33
$
1,269
$
1,109
NuevaUnión
Other
Total
$
1,058
$
67
(52)
(2)
–
$
1 , 07 1
$
11
(22)
1
–
13
1
–
(1)
(5)
8
1
–
(2)
(1)
$
1 ,07 1
68
(52)
(3)
(5)
$
1,079
12
(22)
(1)
(1)
$
1 ,061
$
6
$
1,067
Consolidated Financial Statements
109
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
16. Property, Plant and Equipment
(CAD$ in millions)
At December 31, 2018
Cost
Accumulated depreciation
Exploration
and
Evaluation
Land, Capitalized
Buildings, Production
Plant and
Properties Equipment
Mineral
Costs
Stripping Construction
In Progress
Total
$
1,908
–
$ 20,444
(5,739)
$
17,452
(8,095)
$ 5,435
(2,869)
$
2,514
–
$ 47,753
(16,703)
Net book value
$
1,908
$ 14,705
$ 9,357
$ 2,566
$ 2,514
$ 31,050
$
Year ended December 31, 2019
Opening net book value
Additions
Disposals
Asset impairments
Depreciation and amortization
Transfers between classifications
Decommissioning and restoration
provision change in estimate
Capitalized borrowing costs
Changes in foreign
exchange rates
1,908
119
–
(1,129)
–
5
–
–
$
14,705
–
(2)
(485)
(325)
(112)
444
115
$
$ 9,637
201
(53)
(1,008)
(774)
418
45
–
2,566
757
–
(68)
(592)
13
–
–
$
2,514
3,076
–
–
–
(324)
–
160
$ 31,330
4,153
(55)
(2,690)
(1,691)
–
489
275
(18)
(158)
(114)
(32)
(134)
(456)
Closing net book value
$
885
$ 14,182
$ 8,352
$ 2,644
$ 5,292
$ 31,355
At December 31, 2019
Cost
Accumulated depreciation
$
885
–
$ 20,155
(5,973)
$ 16,951
(8,599)
$ 6,073
(3,429)
$
5,292
–
$ 49,356
(18,001)
Net book value
$
885
$ 14,182
$ 8,352
$ 2,644
$ 5,292
$ 31,355
$
Year ended December 31, 2020
Opening net book value
Additions
Disposals
Asset impairments
Depreciation and amortization
Transfers between classifications
Decommissioning and restoration
provision change in estimate
Capitalized borrowing costs
Changes in foreign
exchange rates
885
22
(1)
–
–
–
–
–
(3)
$
14,182
–
–
(261)
(288)
65
814
84
$
$ 8,352
368
(54)
(983)
(774)
652
$ 2,644
563
(5)
–
(546)
–
56
–
–
–
5,292
3,353
(7)
–
–
(717)
–
167
$ 31,355
4,306
(67)
(1,244)
(1,608)
–
870
251
(61)
(40)
(12)
(169)
(285)
Closing net book value
$
903
$ 14,535
$
7,577
$ 2,644
$
7,919
$ 33,578
At December 31, 2020
Cost
Accumulated depreciation
$
903
–
$ 20,758
(6,223)
$ 16,722
(9,145)
$ 6,598
(3,954)
$
7,919
–
$ 52,900
(19,322)
Net book value
$
903
$ 14,535
$
7,577
$ 2,644
$
7,919
$ 33,578
110 Teck 2020 Annual Report | Forward Together
a) Exploration and Evaluation
Significant exploration and evaluation projects in property, plant and equipment include the Galore Creek and
Zafranal projects.
b) Borrowing Costs
Borrowing costs are capitalized at a rate based on our weighted average cost of borrowing or at the rate on the
project-specific debt, as applicable. Capitalized borrowing costs are classified with the asset they relate to within
mineral properties, land, buildings, plant and equipment, or construction in progress. Our weighted average borrowing
rate used for capitalization of borrowing costs in 2020 was 5.4% (2019 – 5.9%).
17. Goodwill
(CAD$ in millions)
January 1, 2019
Changes in foreign exchange rates
December 31, 2019
Changes in foreign exchange rates
December 31, 2020
Steelmaking
Coal Operations
Quebrada
Blanca
Total
$
$
$
702
$
–
419
(20)
$
1 , 1 2 1
(20)
702
$
399
$
1 , 101
–
(8)
(8)
702
$
391
$
1,093
The results of our annual goodwill impairment analysis and key assumptions used in the analysis are outlined in Notes
8(b) and 8(c).
18. Trade Accounts Payable and Other Liabilities
(CAD$ in millions)
Trade accounts payable and accruals
Capital project accruals
Payroll-related liabilities
Accrued interest
Commercial and government royalties
Current portion of provisions (Note 24(a))
Settlement payables (Note 30(b))
Other
December 31, December 31,
2019
2020
$
1,428
599
266
104
229
173
61
49
$
1,307
432
274
96
198
125
16
50
$
2,909
$
2,498
Consolidated Financial Statements
111
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
19. Debt
($ in millions)
December 31, 2020
December 31, 2019
Face
Value
(US$)
Fair
Carrying
Value
Value
(CAD$) (CAD$)
Face
Value
(US$)
Carrying
Value
(CAD$)
Fair
Value
(CAD$)
4.5% notes due January 2021 (b)
$
–
$
4.75% notes due January 2022 (b)
3.75% notes due February 2023 (b)
3.9% notes due July 2030 (a)
6.125% notes due October 2035
6.0% notes due August 2040
6.25% notes due July 2041
5.2% notes due March 2042
5.4% notes due February 2043
150
108
550
609
490
795
399
377
–
190
139
690
764
622
1,001
502
475
$
–
195
144
781
1,005
782
1,309
596
571
$
117
202
220
–
609
490
795
399
377
$
152
262
289
–
779
634
1,021
512
484
$
155
273
298
–
932
712
1,187
537
520
3,478
4,383
5,383
3,209
4,133
4,614
QB2 project financing facility (c)
1,147
1,423
Revolving credit facilities (d)
Antamina credit facilities (e)
262
90
334
115
1,459
334
115
–
–
23
–
–
29
–
–
29
$ 4,977
$ 6,255
$ 7,291
$ 3,232
$ 4,162
$ 4,643
Less current portion of debt
(90)
(115)
(115)
(23)
(29)
(29)
$ 4,887
$ 6,140
$ 7, 176
$ 3,209
$ 4,133
$ 4,614
The fair values of debt are determined using market values, if available, and discounted cash flows based on our cost
of borrowing where market values are not available. The latter are considered Level 2 fair value measurements with
significant other observable inputs on the fair value hierarchy (Note 31).
a) Notes Issued
During the year ended December 31, 2020, we issued US$550 million principal amount of senior unsecured notes due
July 2030 (2030 Notes). The 2030 Notes have a coupon of 3.9% per annum and an effective interest rate, after taking
into account issuance costs, of 4.08%. These notes were issued at 99.513% of face value.
Prior to April 15, 2030, the 2030 Notes can be redeemed, in whole or in part, at a redemption price equal to the greater
of (i) 100% of the principal amount and (ii) a make-whole amount, plus in each case, accrued and unpaid interest to the
redemption date. On or after April 15, 2030, the 2030 Notes are redeemable at a price equal to 100% of the principal
amount plus accrued and unpaid interest to the redemption date.
Net proceeds from this issuance, after underwriting and issuance costs, were US$542 million. The net proceeds and
available cash were used to finance the note tender offer described below in Note 19(b) and to reduce amounts
outstanding on our US$4.0 billion revolving credit facility.
In October 2020, we executed an exchange offer for the 2030 Notes that allowed the holders to exchange their
unregistered notes for publicly registered notes. There was no change in the aggregate principal amount of the 2030
Notes as a result of the exchange offer.
b) Notes Purchased or Redeemed
All of our outstanding notes are redeemable at any time by repaying the greater of the principal amount and the present
value of the sum of the remaining scheduled principal and interest amounts discounted at a comparable treasury yield
112 Teck 2020 Annual Report | Forward Together
plus a stipulated spread, plus, in each case, accrued interest to, but not including, the date of redemption. In addition,
all of our outstanding notes, except for notes due October 2035, are callable at 100% (plus accrued interest to, but not
including, the date of redemption) within three to six months of maturity.
During the year ended December 31, 2020, we purchased US$268 million aggregate principal amount of our outstanding
notes pursuant to cash tender offers and a private purchase, the latter of which had a US$13 million principal amount
(2020 Tender Offer). The purchased notes comprised US$104 million of 4.5% notes due 2021, US$52 million of 4.75%
notes due 2022 and US$112 million of 3.75% notes due 2023. The total cost of the purchases, including the premium
for the purchase, was US$276 million. We recorded a pre-tax expense of $11 million in non-operating income (expense)
(Note 11) in connection with the 2020 Tender Offer.
During the year ended December 31, 2020, we redeemed all of the outstanding 4.5% notes due 2021 that were not purchased
as a part of the 2020 Tender Offer. The total cost of the redemption, including the premium, was US$13 million.
During the year ended December 31, 2019, we redeemed all of the US$600 million principal amount of our outstanding
8.5% notes due in June 2024. The total cost of the redemption, which was funded from cash on hand, including the
premiums, was US$638 million. We recorded a pre-tax expense of $224 million in non-operating income (expense)
(Note 11) in connection with this redemption, of which $174 million was non-cash, relating to the derecognition of the
embedded prepayment option derivative.
c) QB2 Project Financing Facility
As at December 31, 2020, US$1.15 billion was outstanding under the US$2.5 billion limited recourse QB2 project
financing facility. Amounts drawn under the facility bear interest at the London Interbank Offered Rate (LIBOR) plus
applicable margins that vary over time, and will be repaid in 17 semi-annual instalments starting the earlier of six
months after project completion or June 2023. The facility is guaranteed pre-completion on a several basis by SMM/SC
pro rata to the respective equity interests in the Series A shares of QBSA. The facility is secured by pledges of Teck’s
and SMM/SC’s interests in QBSA and by security over QBSA’s assets, which consist primarily of QB2 project assets.
d) Revolving Facilities
As at December 31, 2020, we had two committed revolving facilities in amounts of US$4.0 billion and US$1.0 billion.
Any amounts drawn under these facilities can be repaid at any time and are due in full at their maturities in November
2024 and June 2022, respectively. As at December 31, 2020, US$262 million was outstanding on our US$4.0 billion
revolving credit facility and the US$1.0 billion facility was undrawn. Amounts outstanding under the facilities bear
interest at LIBOR plus an applicable margin based on credit ratings. These facilities require that our total net debt-to-
capitalization ratio, which was 0.24 to 1.0 at December 31, 2020, to not exceed 0.60 to 1.0 (Note 32). Neither facility
has an earnings or cash flow-based financial covenant, a credit rating trigger or a general material adverse effect
borrowing condition.
We maintain uncommitted bilateral credit facilities primarily for the issuance of letters of credit to support our future
reclamation obligations. As at December 31, 2020, we were party to various uncommitted credit facilities providing for
a total of $1.9 billion of capacity, and the aggregate outstanding letters of credit issued thereunder were $1.6 billion. In
addition to the letters of credit outstanding under these uncommitted credit facilities, we also had stand-alone letters
of credit of $459 million outstanding at December 31, 2020, which were not issued under a credit facility.
We also had $840 million in surety bonds outstanding at December 31, 2020 to support current and future
reclamation obligations.
e) Antamina Credit Facilities
During the year ended December 31, 2020, the Antamina term loan agreement matured and Antamina entered into
three new U.S. dollar credit facilities. Our 22.5% share of the three new facilities is US$90 million, all of which was
outstanding at December 31, 2020. Amounts outstanding under these facilities bear interest of LIBOR plus applicable
margins. The loans are non-recourse to us and the other Antamina owners, and all mature in 2021.
Consolidated Financial Statements
113
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
19. Debt (continued)
f) Scheduled Principal Payments
At December 31, 2020, the scheduled principal payments during the next five years and thereafter are as follows:
($ in millions)
2021
2022
2023
2024
2025
Thereafter
g) Debt Continuity
($ in millions)
As at January 1
Cash flows
Issuance of debt
Debt redemption or purchase
Scheduled debt repayments
Revolving credit facilities
Non-cash changes
Loss on debt redemption or purchase
Changes in foreign exchange rates
Finance fees and discount amortization
Other
As at December 31
20. QB2 Advances from SMM/SC
$
US$
90
150
243
397
135
CAD$
Equivalent
$
115
190
310
505
172
3,962
5,045
$
4,977
$
6,337
US$
CAD$ Equivalent
2020
2019
2020
$
3,204
$
3,798
$
4,162
$
1,802
(315)
(23)
262
8
–
(29)
4
–
(638)
–
–
38
–
–
6
2,426
(426)
(31)
363
11
(216)
(39)
5
2019
5,181
–
(835)
–
–
50
(244)
–
10
$
4,913
$
3,204
$
6,255
$
4,162
In conjunction with the subscription arrangement with SMM/SC, QBSA entered into a subordinated loan facility
agreement with SMM/SC to advance QBSA up to US$1.3 billion. The advances are due to be repaid in full at maturity
on January 15, 2038. Amounts outstanding under the facility bear interest at LIBOR plus an applicable margin.
($ in millions)
December 31, 2020
December 31, 2019
QB2 Advances from SMM/SC
$
739
$
934
$
941
$
708
$
912
$
912
Face
Value
(US$)
Fair
Carrying
Value
Value
(CAD$) (CAD$)
Face
Value
(US$)
Carrying
Value
(CAD$)
Fair
Value
(CAD$)
114 Teck 2020 Annual Report | Forward Together
The fair value of the advances is determined using discounted cash flows based on our cost of borrowing. This is
considered a Level 2 fair value measurement with significant observable inputs on the fair value hierarchy (Note 31).
The continuity for the advances is as follows:
($ in millions)
US$
CAD$ Equivalent
As at January 1
$
702
$
–
$
912
$
2020
2019
2020
Cash flows
Advances
Finance fees paid
Non-cash changes
Finance fee amortization
Changes in foreign exchange rates
31
–
1
–
708
(6)
–
–
41
–
1
(20)
As at December 31
$
734
$
702
$
934
$
2019
–
946
(8)
–
(26)
912
21. Leases
In 2019 we adopted IFRS 16 with an effective date of January 1, 2019, using a cumulative catch-up approach where we
recorded leases from that date forward and did not restate comparative information. We recorded certain right-of-use
assets at an amount equal to the carrying amount as if IFRS 16 had been applied since the commencement date and
the remaining right-of-use assets at an amount equal to the lease liability. The net of tax difference between right-of-
use assets and lease liabilities recognized on transition was a retained earnings adjustment on January 1, 2019.
a) Right-of-Use Assets
Our significant lease arrangements include contracts for leasing office premises, mining equipment, railcars, pipelines
and road and port facilities. As at December 31, 2020, $730 million (2019 – $762 million) of right-of-use assets are
recorded as part of land, buildings, plant and equipment within property, plant and equipment.
(CAD$ in millions)
Opening net book value
Additions
Depreciation
Changes in foreign exchange rates and other
Closing net book value
b) Significant Individual Lease Arrangements
2020
2019
$
$
762
312
(166)
(178)
$
730
$
784
155
(145)
(32)
762
Fort Hills entered into a service agreement in 2017 with TC Energy Corp. for the operation of the Northern Courier
Pipeline and associated tanks to transport bitumen between Fort Hills and Fort McMurray, Alberta, for a period of 25
years with an option to renew for four additional five-year periods. We have assumed the extensions will be exercised
in our determination of the lease liability. As at December 31, 2020, our share of the related lease liability was $199
million (2019 – $203 million).
TAK leases road and port facilities from the Alaska Industrial Development and Export Authority, through which it ships
all concentrates produced at the Red Dog mine. The lease requires TAK to pay a minimum annual user fee of US$7 million
for the next year and US$6 million for the following 18 years. The lease is also subject to variable lease payments
based on tonnage shipped and market prices for zinc over the lease term. As at December 31, 2020, the related lease
liability was $99 million (2019 – $119 million).
Consolidated Financial Statements
115
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
21. Leases (continued)
c) Lease Liability Continuity
(CAD$ in millions)
As at January 1
Cash flows
Principal payments
Interest payments
Non-cash changes
Additions
Interest expense (Note 10)
Changes in foreign exchange and other
As at December 31
Less current portion
Long-term lease liabilities
22. Income Taxes
2020
$
672
$
(163)
(37)
319
37
(136)
$
$
692
$
(119)
573
$
2019
680
(150)
(39)
170
39
(28)
672
(160)
512
a)
Reconciliation of income taxes calculated at the Canadian statutory income tax rate to the actual provision for
income taxes is as follows:
(CAD$ in millions)
2020
2019
Tax expense (recovery) at the Canadian statutory income tax rate of 26.58% (2019 – 26.94%)
$
(302)
$
(126)
Tax effect of:
Resource taxes
Resource and depletion allowances
Non-deductible expenses (non-taxable income)
Impact of initial recognition exemption related to the Frontier oil sands project
Tax pools not recognized (recognition of previously unrecognized tax pools)
Effect due to tax legislative changes
Withholding taxes on foreign earnings
Difference in tax rates in foreign jurisdictions
Revisions to prior year estimates
Other
Total income taxes
Represented by:
Current income taxes
Deferred income taxes
Total income taxes
116 Teck 2020 Annual Report | Forward Together
106
(68)
28
–
5
3
40
1
(4)
(1)
226
(85)
(6)
117
(2)
(39)
39
(2)
2
(4)
$
$
$
(192)
$
120
$
374
(566)
(192)
$
576
(456)
120
b) The continuity related to deferred tax assets and liabilities is as follows:
(CAD$ in millions)
January 1,
2020
Through
Profit
(Loss)
Through
OCI
Through December 31,
2020
Equity
Net operating loss carryforwards
$
190
$
57
$
Property, plant and equipment
Decommissioning and restoration provisions
Other temporary differences
Deferred income tax assets
Net operating loss carryforwards
Property, plant and equipment
Decommissioning and restoration provisions
Unrealized foreign exchange
Withholding taxes
Inventories
Other temporary differences
$
$
$
$
(144)
123
42
211
(642)
7, 101
(637)
(116)
91
91
14
$
$
(22)
35
(13)
57
(408)
294
(327)
11
6
19
(104)
$
$
$
–
(2)
–
5
3
12
(26)
2
17
(2)
–
(13)
Deferred income tax liabilities
$ 5,902
$
(509)
$
(10)
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
$
247
(168)
158
34
271
$
(1,038)
7,369
(962)
(88)
95
110
(103)
$ 5,383
(CAD$ in millions)
January 1,
2019
Through
Profit
(Loss)
Through
OCI
Through December 31,
2019
Equity
Net operating loss carryforwards
$
139
$
Property, plant and equipment
Decommissioning and restoration provisions
Other temporary differences
Deferred income tax assets
Net operating loss carryforwards
Property, plant and equipment
Decommissioning and restoration provisions
U.S. alternative minimum tax credits
Unrealized foreign exchange
Withholding taxes
Inventories
Other temporary differences
$
$
$
$
(130)
94
57
160
(750)
7,402
(474)
(38)
(146)
104
97
116
$
$
$
54
(13)
29
20
90
111
(232)
(170)
37
4
(8)
(5)
(103)
$
$
$
(3)
(1)
–
(26)
(30)
3
(69)
7
1
26
(5)
(1)
1
–
–
–
(9)
(9)
(6)
–
–
–
–
–
–
–
$
$
$
190
(144)
123
42
211
(642)
7, 1 0 1
(637)
–
(116)
91
91
14
Deferred income tax liabilities
$ 6,311
$
(366)
$
(37)
$
(6)
$ 5,902
Consolidated Financial Statements
117
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
22. Income Taxes (continued)
c) Deferred Tax Assets and Liabilities Not Recognized
We have not recognized $296 million (2019 – $293 million) of deferred tax assets associated with unused tax credits
and tax pools in entities and jurisdictions that do not have established sources of taxable income. The majority of
these unused tax credits and tax pools do not expire.
Deferred tax liabilities of approximately $731 million (2019 – $759 million) have not been recognized on the unremitted
foreign earnings associated with investments in subsidiaries and interests in joint arrangements where we control the
timing of the reversal of the temporary differences, and it is probable that such differences will not reverse in the
foreseeable future.
d) Loss Carryforwards
At December 31, 2020, we had $3.81 billion (2019 – $2.56 billion) of Canadian net operating loss carryforwards. These
loss carryforwards expire at various dates between 2029 and 2040. We also had $847 million (2019 – $426 million) of
Chilean net operating losses with an indefinite carryforward period. The deferred tax benefit of these pools have
been recognized.
e) Alberta Tax Rate Reform
In 2019, legislation was enacted to reduce the Alberta corporate tax rate from 12% to 8% over the next two and a half
years and as a result, we recognized a deferred tax recovery of $39 million. On July 1, 2020, further legislation was
enacted to reduce the Alberta corporate tax rate to 8% with immediate effect.
f) Scope of Antamina’s Peruvian Tax Stability Agreement
The Peruvian tax authority, La Superintendencia Nacional de Aduanas y de Administración Tributaria (SUNAT) issued
income tax assessments for the 2013 and 2014 taxation years to Antamina (our joint operation in which we own a
22.5% share), denying accelerated depreciation claimed by Antamina in respect of a mill expansion and other assets,
on the basis that the expansion was not covered by Antamina’s tax stability agreement. Antamina objected to the
assessments, but lost its appeal with SUNAT. The issue also affects the 2015 to 2017 taxation years and we expect that
it will be raised by SUNAT in those years as well.
Antamina is pursuing the issue in the Peruvian courts. However, based on opinions of counsel, we have provided for
the tax on this issue for all years possibly affected. The denial of accelerated depreciation claimed is a timing issue in
our tax provision.
Further, based on opinions of counsel, we believe that Antamina’s position that interest and penalties are not owing in
relation to this matter will more likely than not prevail for all taxation years in question. As a result, we have not provided
for our share of interest and penalties for any years as at December 31, 2020.
23. Retirement Benefit Plans
We have defined contribution pension plans for certain groups of employees. Our share of contributions to these plans
is expensed in the year earned by employees.
We have multiple defined benefit pension plans registered in various jurisdictions that provide benefits based principally
on employees’ years of service and average annual remuneration. These plans are only available to certain qualifying
employees, and some are now closed to additional members. The plans are “flat-benefit” or “final-pay” plans and may
provide for inflationary increases in accordance with certain plan provisions. All of our registered defined benefit
pension plans are governed and administered in accordance with applicable pension legislation in either Canada or
the United States. Actuarial valuations are performed at least every three years to determine minimum annual contribution
requirements as prescribed by applicable legislation. For the majority of our plans, current service costs are funded
based on a percentage of pensionable earnings or as a flat dollar amount per active member depending on the
provisions of the pension plans. Actuarial deficits are funded in accordance with minimum funding regulations in each
applicable jurisdiction. All of our defined benefit pension plans were actuarially valued within the past three years.
118 Teck 2020 Annual Report | Forward Together
While the majority of benefit payments are made from registered held-in-trust funds, there are also several
unregistered and unfunded plans where benefit payment obligations are met as they fall due.
We also have several post-retirement benefit plans that provide post-retirement medical, dental and life insurance
benefits to certain qualifying employees and surviving spouses. These plans are unfunded, and we meet benefit
obligations as they come due.
a) Actuarial Valuation of Plans
(CAD$ in millions)
2020
2019
Defined Non-Pension
Post-
Benefit
Retirement
Pension
Plans Benefit Plans
Defined Non-Pension
Post-
Benefit
Retirement
Pension
Plans Benefit Plans
Defined benefit obligation
Balance at beginning of year
Current service cost
Benefits paid
Interest expense
Obligation experience adjustments
Effect from change in financial assumptions
Effect from change in demographic assumptions
Changes in foreign exchange rates
Balance at end of year
Fair value of plan assets
Fair value at beginning of year
Interest income
Return on plan assets, excluding amounts
included in interest income
Benefits paid
Contributions by the employer
Changes in foreign exchange rates
Fair value at end of year
Funding surplus (deficit)
Less effect of the asset ceiling
Balance at beginning of year
Interest on asset ceiling
Change in asset ceiling
Balance at end of year
$
2,337
$
55
(146)
69
27
221
1
(6)
2,558
2,659
79
204
(146)
21
(5)
2,812
254
63
2
7
72
404
19
(17)
13
(3)
33
(3)
(1)
445
–
–
–
(17)
17
–
–
(445)
–
–
–
–
$
2,125
$
392
47
(137)
78
5
220
5
(6)
17
(19)
16
4
45
(43)
(8)
2,337
404
2,423
90
265
(137)
23
(5)
2,659
322
134
5
(76)
63
–
–
–
(19)
19
–
–
(404)
–
–
–
–
Net accrued retirement benefit asset (liability)
Represented by:
Pension assets (Note 14)
Accrued retirement benefit liability
Net accrued retirement benefit asset (liability)
$
$
$
182
$
(445)
$
259
$
(404)
$
301
(119)
$
–
(445)
$
360
(101)
182
$
(445)
$
259
$
–
(404)
(404)
Consolidated Financial Statements
119
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
23. Retirement Benefit Plans (continued)
A number of the plans have a surplus totalling $72 million at December 31, 2020 (December 31, 2019 – $63 million),
which is not recognized on the basis that future economic benefits are not available to us in the form of a reduction
in future contributions or a cash refund.
In 2019, we recorded a $43 million gain through other comprehensive income (loss) as a result of changes in assumptions
related to a reduction in future Medical Services Plan premiums required for post-retirement benefit plan members in
the province of British Columbia.
We expect to contribute $19 million to our defined benefit pension plans in 2021 based on minimum funding requirements.
The weighted average duration of the defined benefit pension obligation is 15 years and the weighted average duration
of the non-pension post-retirement benefit obligation is 15 years.
Defined contribution expense for 2020 was $50 million (2019 – $50 million).
b) Significant Assumptions
The discount rate used to determine the defined benefit obligations and the net interest cost was determined by
reference to the market yields on high-quality debt instruments at the measurement date with durations similar to
the duration of the expected cash flows of the plans.
Weighted average assumptions used to calculate the defined benefit obligation at the end of each year are as follows:
Discount rate
Rate of increase in future compensation
Medical trend rate
2020
2019
Defined Non-Pension
Benefit
Post-
Retirement
Pension
Plans Benefit Plans
Defined Non-Pension
Benefit
Post-
Retirement
Pension
Benefit Plans
Plans
2.39%
3.25%
–
2.50%
3.25%
5.00%
3.04%
3.25%
–
3.10%
3.25%
5.00%
c) Sensitivity of the Defined Benefit Obligation to Changes in the Weighted Average Assumptions
Discount rate
Rate of increase in future compensation
Medical cost claim trend rate
2020
Effect on Defined Benefit Obligation
Change in
Assumption
Increase in
Assumption
Decrease in
Assumption
1.0%
1.0%
1.0%
Decrease by 12%
Increase by 14%
Increase by 1%
Decrease by 1%
Increase by 1%
Decrease by 1%
120 Teck 2020 Annual Report | Forward Together
2019
Effect on Defined Benefit Obligation
Change in
Assumption
Increase in
Assumption
Decrease in
Assumption
Discount rate
Rate of increase in future compensation
Medical cost claim trend rate
1.0%
1.0%
1.0%
Decrease by 12%
Increase by 14%
Increase by 1%
Increase by 1%
Decrease by 1%
Decrease by 1%
The above sensitivity analyses are based on a change in each actuarial assumption while holding all other assumptions
constant. The sensitivity analyses on our defined benefit obligation are calculated using the same methods as those
used for calculating the defined benefit obligation recognized on our balance sheet. The methods and types of
assumptions used in preparing the sensitivity analyses did not change from the prior period.
d) Mortality Assumptions
Assumptions regarding future mortality are set based on management’s best estimate in accordance with published
mortality tables and expected experience. These assumptions translate into the following average life expectancies
for an employee retiring at age 65:
2020
2019
Male
Female
Male
Female
Retiring at the end of the reporting period
Retiring 20 years after the end of the reporting period
85.3 years
86.4 years
87.7 years
88.7 years
85.3 years
87.7 years
86.3 years
88.6 years
e) Significant Risks
The defined benefit pension plans and post-retirement benefit plans expose us to a number of risks, the most significant
of which include asset volatility risk, changes in bond yields, and any changes in life expectancy.
Asset volatility risk
The discount rate used to determine the defined benefit obligations is based on AA-rated corporate bond yields. If our
plan assets underperform this yield, the deficit will increase. Our strategic asset allocation includes a significant proportion
of equities that increases volatility in the value of our assets, particularly in the short term. We expect equities to outperform
corporate bonds in the long term.
Changes in bond yields
A decrease in bond yields increases plan liabilities, which are partially offset by an increase in the value of the plans’
bond holdings.
Life expectancy
The majority of the plans’ obligations are to provide benefits for the life of the member. Increases in life expectancy
will result in an increase in the plans’ liabilities.
f)
Investment of Plan Assets
The assets of our defined benefit pension plans are managed by external asset managers under the oversight of the
Teck Resources Limited Executive Pension Committee.
Our pension plan investment strategies support the objectives of each defined benefit plan and are related to each
plan’s demographics and timing of expected benefit payments to plan members. The objective for the plan asset
portfolios is to achieve annualized portfolio returns over five-year periods in excess of the annualized percentage
change in the Consumer Price Index plus a certain premium.
Consolidated Financial Statements
121
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
23. Retirement Benefit Plans (continued)
Strategic asset allocation policies have been developed for each defined benefit plan to achieve this objective. The
policies also reflect an asset/liability matching framework that seeks to reduce the effect of interest rate changes on
each plan’s funded status by matching the duration of the bond investments with the duration of the pension liabilities.
We do not use derivatives to manage interest rate risk. Asset allocation is monitored at least quarterly and rebalanced
if the allocation to any asset class exceeds its allowable allocation range. Portfolio and investment manager performance
is monitored quarterly and the investment guidelines for each plan are reviewed at least annually.
The defined benefit pension plan assets at December 31, 2020 and 2019 are as follows:
(CAD$ in millions)
2020
2019
Quoted
Unquoted
Total %
Quoted
Unquoted
Total %
Equity securities
Debt securities
Real estate and other
$
$
$
1,058
1,385
62
$
$
$
–
–
307
38%
49%
13%
$
$
$
957
1,322
63
$
$
$
–
–
317
36%
50%
14%
24. Provisions and Other Liabilities
(CAD$ in millions)
Provisions (a)
Obligation to Neptune Bulk Terminals (b)
Derivative liabilities (net of current portion of $6 (2019 – $2))
ENAMI preferential dividend
IMSA payable
Other
a) Provisions
December 31, December 31,
2019
2020
$
3,484
111
26
30
60
20
$
2,345
-
31
82
58
20
$
3,731
$
2,536
The following table summarizes the movements in provisions for the year ended December 31, 2020:
(CAD$ in millions)
As at January 1, 2020
Settled during the year
Change in discount rate
Change in amount and timing of cash flows
Accretion (Note 10)
Other
Changes in foreign exchange rates
As at December 31, 2020
Less current portion of provisions (Note 18)
Decommissioning and
Restoration Provisions
Other
Total
$
2,234
$
(58)
649
390
114
18
(5)
3,342
(124)
236
(39)
–
116
4
–
(2)
315
(49)
$
2,470
(97)
649
506
118
18
(7)
3,657
(173)
Long-term provisions
$
3,218
$
266
$
3,484
122 Teck 2020 Annual Report | Forward Together
During the year ended December 31, 2020, we recorded $101 million (2019 – $78 million) of additional study and
environmental costs arising from legal obligations through other provisions.
Decommissioning and Restoration Provisions
The decommissioning and restoration provisions represent the present value of estimated costs for required future
decommissioning and other site restoration activities. These activities include removal of site structures and
infrastructure, recontouring and revegetation of previously mined areas and the management of water and water
quality in and around each closed site. The majority of the decommissioning and site restoration expenditures occur
near the end of, or after, the life of the related operation.
After the end of the life of certain operations, water quality management costs may extend for periods in excess of
100 years. Of the total, our provision for these expenditures was $1.2 billion as at December 31, 2020 (2019 – $745 million),
of which $673 million (2019 – $411 million) relates to our steelmaking coal business unit.
For our steelmaking coal operations, the current and future requirements for water quality management are
established under a regional permit issued by the provincial government of British Columbia. This permit references
the Elk Valley Water Quality Plan (EVWQP). In October 2020, Environment and Climate Change Canada issued a
Direction under the Fisheries Act (the Direction) requiring us to undertake certain additional measures to address water
quality and fish habitat impacts in the upper Fording River and certain tributaries, and stipulating deadlines for
implementation of certain measures contemplated by the EVWQP. The Direction does not require construction of any
additional water treatment facilities beyond those already contemplated by the EVWQP, but sets out requirements
with respect to water management such as diversions, mine planning, fish monitoring and calcite prevention measures,
as well as the installation by December 31, 2030, of a 200-hectare geo-synthetic cover trial in the Greenhills creek
drainage. Certain of the measures in the Direction, including the cover trial, will require incremental spending beyond
that already associated with the EVWQP. The estimated costs of the Direction have been included in our decommissioning
and restoration provisions as at December 31, 2020.
In 2020, the decommissioning and restoration provision was calculated using nominal discount rates between 4.05%
and 5.85%. We also used an inflation rate of 2.00% (2019 – 2.00%) in our cash flow estimates. The total decommissioning
and restoration provision includes $712 million (2019 – $396 million) in respect of closed operations.
During the fourth quarter of 2020, our decommissioning and restoration provisions increased by $712 million relating
to a decrease in the discount rate compared to the third quarter. The provisions also increased by $412 million compared
to the third quarter as a result of a change in cash flow estimates, the majority of which relates to post-closure water
quality management costs at Teck Coal and increased projects at our dormant properties.
b) Obligation to Neptune Bulk Terminals
Through our cost of services agreement with Neptune Bulk Terminals Inc. (Neptune), we owe amounts to Neptune for
any loans entered into by Neptune that are specifically related to funding the assets of our steelmaking coal loading
and handling operations. The carrying value of this obligation approximates fair value based on prevailing market
interest rates in effect at December 31, 2020. This is considered a Level 2 fair value measurement with significant
other observable inputs on the fair value hierarchy (Note 31). The current portion of this obligation is recorded as part
of trade accounts payable and other liabilities.
25. Equity
a) Authorized Share Capital
Our authorized share capital consists of an unlimited number of Class A common shares without par value, an unlimited
number of Class B subordinate voting shares without par value and an unlimited number of preferred shares without
par value issuable in series.
Class A common shares carry the right to 100 votes per share. Class B subordinate voting shares carry the right to one
vote per share. Each Class A common share is convertible, at the option of the holder, into one Class B subordinate
voting share. In all other respects, the Class A common shares and Class B subordinate voting shares rank equally.
Consolidated Financial Statements
123
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
25. Equity (continued)
The attributes of the Class B subordinate voting shares contain so-called “coattail provisions,” which provide that, in
the event that an offer (an “Exclusionary Offer”) to purchase Class A common shares, which is required to be made to
all or substantially all holders thereof, is not made concurrently with an offer to purchase Class B subordinate voting
shares on identical terms, then each Class B subordinate voting share will be convertible into one Class A common
share at the option of the holder during a certain period, provided that any Class A common shares received upon
such conversion are deposited to the Exclusionary Offer. Any Class B subordinate voting shares converted into Class A
common shares pursuant to such conversion right will automatically convert back to Class B subordinate voting shares
in the event that any such shares are withdrawn from the Exclusionary Offer or are not otherwise ultimately taken up
and paid for under the Exclusionary Offer.
The Class B subordinate voting shares will not be convertible in the event that holders of a majority of the Class A
common shares (excluding those shares held by the offeror making the Exclusionary Offer) certify to Teck that they
will not, among other things, tender their Class A common shares to the Exclusionary Offer.
If an offer to purchase Class A common shares does not, under applicable securities legislation or the requirements of
any stock exchange having jurisdiction, constitute a “take-over bid” or is otherwise exempt from any requirement that
such offer be made to all or substantially all holders of Class A common shares, the coattail provisions will not apply.
b) Class A Common Shares and Class B Subordinate Voting Shares Issued and Outstanding
Shares (in 000’s)
As at January 1, 2019
Class A common shares conversion
Shares issued on options exercised (c)
Acquired and cancelled pursuant to normal course issuer bid (h)
As at December 31, 2019
Shares issued on options exercised (c)
Acquired and cancelled pursuant to normal course issuer bid (h)
As at December 31, 2020
c) Share Options
Class A
Common
Class B
Subordinate
Shares Voting Shares
7,768
562,925
(3)
–
–
3
1,239
(24,639)
7,765
539,528
–
–
145
(16,292)
7,765
523,381
The maximum number of Class B subordinate voting shares issuable to full-time employees pursuant to options
granted under our current stock option plan is 46 million. As at December 31, 2020, 13,806,488 share options remain
available for grant. The exercise price for each option is the closing price for our Class B subordinate voting shares on
the last trading day before the date of grant. Our share options are settled through the issuance of Class B subordinate
voting shares.
During the year ended December 31, 2020, we granted 6,313,710 share options to employees. These share options
have a weighted average exercise price of $14.42, vest in equal amounts over three years, and have a term of 10 years.
124 Teck 2020 Annual Report | Forward Together
The weighted average fair value of share options granted in the year was estimated at $4.76 per option (2019 – $10.73)
at the grant date based on the Black-Scholes option-pricing model using the following assumptions:
Weighted average exercise price
Dividend yield
Risk-free interest rate
Expected option life
Expected volatility
Forfeiture rate
2020
$
14.42
2.13%
1.19%
6.1 years
41%
1.16%
$
2019
28.62
1.05%
1 .81%
5.9 years
41%
0.55%
The expected volatility is based on a statistical analysis of historical daily share prices over a period equal to the
expected option life.
Outstanding share options are as follows:
2020
2019
Share
Options
(in 000’s)
Weighted
Average
Exercise
Price
Outstanding at beginning of year
20, 152
$
Granted
Exercised
Forfeited
Expired
Outstanding at end of year
Vested and exercisable at end of year
6,314
(156)
(293)
(767)
25,250
17,368
$
$
23.02
14.42
8.33
20.97
35.14
20.61
21.76
16 ,6 17
Share
Options
(in 000’s)
19,7 75
$
1,940
(1,239)
(110)
(214)
20, 152
Weighted
Average
Exercise
Price
21 .75
28.62
8 . 1 7
32.52
38.24
23.02
21.32
$
$
The average share price during the year was $16.15 (2019 – $26.58).
Information relating to share options outstanding at December 31, 2020, is as follows:
Outstanding Share Options (in 000’s)
Exercise
Price Range
Weighted Average Remaining Life
of Outstanding Options (months)
10,699
4,135
2,127
5,339
2,950
25,250
$
5.34 — $ 15.35
$ 15.36 — $ 24.97
$ 24.98 — $ 26.79
$ 26.80 — $ 36.85
$ 36.86 — $ 58.80
$ 5.34 — $ 58.80
84
60
36
67
46
68
Total share option compensation expense recognized for the year was $23 million (2019 – $18 million).
d) Deferred Share Units, Restricted Share Units, Performance Share Units and Performance Deferred Share Units
We have issued and outstanding deferred share units (DSUs), restricted share units (RSUs), performance share units
(PSUs) and performance deferred share units (PDSUs) (collectively, Units).
Consolidated Financial Statements
125
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
25. Equity (continued)
As of 2017, DSUs are granted to directors only. RSUs may be granted to both employees and directors. PSUs and
PDSUs are granted to certain officers only. DSUs entitle the holder to a cash payment equal to the closing price of one
Class B subordinate voting share on the Toronto Stock Exchange on the day prior to redemption. RSUs entitle the
holder to a cash payment equal to the weighted average trading price of one Class B subordinate voting share on the
Toronto Stock Exchange over 20 consecutive trading days prior to the payout date. PSUs and PDSUs issued in 2017
and later vest in a percentage from 0% to 200% based on both relative total shareholder return as compared to our
compensation peer group and a calculation based on the change in EBITDA over the vesting period divided by the
change in a weighted commodity price index. Once vested, PSUs and PDSUs entitle the holder to a cash payment
equal to the weighted average trading price of one Class B subordinate voting share on the Toronto Stock Exchange
over 20 consecutive trading days prior to the payout date. Officers granted PSUs in 2017 and later can elect to receive
up to 50% of their Units as PDSUs, which pay out following termination of employment as described below.
RSUs, PSUs, and PDSUs vest on December 20 in the year prior to the third anniversary of the grant date. DSUs granted
to directors vest immediately. Units vest on a pro rata basis if employees retire or are terminated without cause, and
unvested units are forfeited if employees resign or are terminated with cause.
DSUs and PDSUs may be redeemed on or before December 15 of the first calendar year commencing after the date
on which the participant ceases to be a director or employee. RSUs and PSUs pay out on the vesting date.
Additional Units are issued to Unit holders to reflect dividends paid and other adjustments to Class B subordinate
voting shares.
In 2020, we recognized compensation expense of $24 million for Units (2019 – $14 million recovery). The total liability
and intrinsic value for vested Units as at December 31, 2020 was $83 million (2019 – $71 million).
The outstanding Units are summarized in the following table:
(in 000’s)
DSUs
RSUs
PSUs
PDSUs
2020
2019
Outstanding
Vested Outstanding
2,555
1,408
1,449
213
5,625
2,555
484
–
70
3,109
2,463
892
741
177
4,273
e) Accumulated Other Comprehensive Income
(CAD$ in millions)
Accumulated other comprehensive income – beginning of year
Currency translation differences:
Unrealized losses on translation of foreign subsidiaries
Foreign exchange differences on debt designated as a hedge of our
investment in foreign subsidiaries (net of taxes of $(17) and $(26)) (Note 30(b))
Gain on marketable equity and debt securities (net of taxes of $(3) and $(1))
Remeasurements of retirement benefit plans (net of taxes of $29 and $(31))
Total other comprehensive income (loss)
Less remeasurements of retirement benefit plans recorded in retained earnings
2020
$
309
$
(197)
111
(86)
24
(50)
(112)
50
Accumulated other comprehensive income – end of year
$
247
$
Vested
2,463
–
–
65
2,528
2019
584
(449)
167
(282)
7
74
(201)
(74)
309
126 Teck 2020 Annual Report | Forward Together
f) Earnings (Loss) Per Share
The following table reconciles our basic and diluted earnings (loss) per share:
(CAD$ in millions, except per share data)
2020
2019
Net basic and diluted profit (loss) attributable to shareholders of the company
$
(864)
$
(605)
Weighted average shares and diluted shares outstanding (000’s)
Basic earnings (loss) per share
Diluted earnings (loss) per share
534,378
559,765
$
$
(1.62)
(1.62)
$
$
(1.08)
(1.08)
For the years ended December 31, 2020 and December 31, 2019, there was a net loss attributable to shareholders of
the company. Accordingly, all share options would be considered anti-dilutive and have been excluded from the calculation
of diluted earnings (loss) per share. The weighted average shares outstanding and weighted average diluted shares
outstanding are therefore the same.
g) Dividends
We declared and paid dividends on our Class A common and Class B subordinate voting shares of $0.05 per share in
each quarter of 2020 and 2019. During the year ended December 31, 2020, we declared and paid a total of $106 million
(2019 – $111 million).
h) Normal Course Issuer Bid
On occasion, we purchase and cancel Class B subordinate voting shares pursuant to normal course issuer bids that
allow us to purchase up to a specified maximum number of shares over a one-year period.
In 2020, we purchased and cancelled 16,292,441 (2019 – 24,639,468) Class B subordinate voting shares under our
normal course issuer bid for $207 million (2019 – $661 million).
26. Non-Controlling Interests
Set out below is information about our subsidiaries with non-controlling interests and the non-controlling interest
balances included in equity.
(CAD$ in millions)
Carmen de Andacollo
Quebrada Blanca (a)(b)
Region IV, Chile
Region I, Chile
Elkview Mine Limited Partnership
British Columbia, Canada
Compañía Minera Zafranal S.A.C.
Arequipa Region, Peru
Percentage of
Ownership
Interest and
Voting Rights
Held by Non-
Principal Place
of Business
Controlling December 31, December 31,
Interest
2020
2019
$
10%
40%
5%
20%
$
26
526
74
43
$
669
$
29
634
67
40
770
a)
During the year ended December 31, 2019, SMM/SC subscribed for a 30% indirect interest in QBSA. As a result, we
recorded a non-controlling interest for SMM/SC’s interest in QBSA of $793 million on the date of the transaction.
Consolidated Financial Statements
127
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
26. Non-Controlling Interests (continued)
b) Quebrada Blanca
The following is the summarized financial information for Quebrada Blanca before intra-group eliminations. Quebrada
Blanca has non-controlling interests that are considered material to our consolidated financial statements.
(CAD$ in millions)
Summarized balance sheet
Current assets
Current liabilities
Current net assets
Non-current assets
Non-current liabilities
Non-current net assets
Net assets
Accumulated non-controlling interests
Summarized statement of comprehensive income (loss)
Revenue
Loss for the period
Other comprehensive income (loss)
Total comprehensive income (loss)
Loss allocated to non-controlling interests
Summarized cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Effect of exchange rates on cash and cash equivalents
December 31, December 31,
2019
2020
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
221
698
(477)
8,575
4,841
3,734
3,257
526
116
(291)
(47)
(338)
(95)
(442)
(1,657)
1,668
8
653
512
141
6,628
3,448
3,180
3 , 32 1
634
170
(120)
(138)
(258)
(24)
(298)
(1,255)
2,076
(22)
Net increase (decrease) in cash and cash equivalents
$
(423)
$
501
27. Contingencies
We consider provisions for all of our outstanding and pending legal claims to be adequate. The final outcome with
respect to actions outstanding or pending as at December 31, 2020, or with respect to future claims, cannot be
predicted with certainty. Significant contingencies not disclosed elsewhere in the notes to our financial statements
are as follows:
Upper Columbia River Basin
Teck American Inc. (TAI) continues studies under the 2006 settlement agreement with the U.S. Environmental Protection
Agency (EPA) to conduct a remedial investigation on the Upper Columbia River in Washington State.
The Lake Roosevelt litigation involving TML in the Federal District Court for the Eastern District of Washington continues.
In December 2012 on the basis of stipulated facts agreed between TML and the plaintiffs, the Court found in favour
of the plaintiffs in phase one of the case, issuing a declaratory judgment that TML is liable under the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA) for response costs, the amount of which will be
128 Teck 2020 Annual Report | Forward Together
determined in later phases of the case. TML has exhausted its appeal rights in respect of that decision. The case
relates to historic discharges of slag and effluent from TML’s Trail metallurgical facility to the Upper Columbia River.
As a consequence of a ruling of the Ninth Circuit Court of Appeals, alleged damages associated with air emissions
from the Trail facility are no longer part of the case.
A hearing with respect to natural resource damages and assessment costs is expected to follow completion of the
remedial investigation and feasibility study being undertaken by TAI.
Until the studies contemplated by the EPA settlement agreement and additional damage assessments are completed,
it is not possible to estimate the extent and cost, if any, of any additional remediation or restoration that may be required
or to assess the extent of our potential liability for damages. The studies may conclude, on the basis of risk, cost,
technical feasibility or other grounds, that no remediation other than some residential soil removal should be undertaken.
If other remediation is required and damage to resources found, the cost of that remediation may be material.
Elk Valley Water Quality
During the year ended December 31, 2018, Teck Coal Limited (TCL) received notice from Canadian federal prosecutors
of potential charges under the Fisheries Act in connection with discharges of selenium and calcite from steelmaking
coal mines in the Elk Valley. Since 2014, compliance limits and site performance objectives for selenium and other
constituents, as well as requirements to address calcite, in surface water throughout the Elk Valley and in the Koocanusa
Reservoir have been established under a regional permit issued by the provincial government in British Columbia. This
permit references the Elk Valley Water Quality Plan (EVWQP), an area-based management plan developed by Teck in
accordance with a 2013 Order of the British Columbia Minister of Environment. In October 2020, Environment and
Climate Change Canada issued a direction to TCL requiring it to undertake certain additional measures to address
water quality and fish habitat impacts in the upper Fording River and certain tributaries, and stipulating deadlines for
implementation of certain measures contemplated by the EVWQP. Certain of the measures in the Direction, including
a cover trial, will require incremental spending beyond that already associated with the EVWQP. The measures
required by the Direction have been included in the measurement of our decommissioning and restoration provisions,
where appropriate (Note 24(a)). The issuance of the Direction does not resolve the potential charges under the Fisheries Act
previously notified to Teck. Discussions with respect to those charges continue and the outcome of these discussions
is uncertain. If a pre-trial resolution of the potential charges is not feasible, it is not possible to assess the viability of
potential defences to any charges and the impact of a conviction may be material.
28. Commitments
a) Capital Commitments
As at December 31, 2020, we had contracted for $1.76 billion of capital expenditures that have not yet been incurred
for the purchase and construction of property, plant and equipment. This amount includes $1.58 billion for QB2,
$52 million for our steelmaking coal operations and $127 million for our 22.5% share of Antamina. The amount includes
$1.53 billion that is expected to be incurred within one year and $230 million within two to five years.
b) Red Dog Royalty
In accordance with the operating agreement governing the Red Dog mine, TAK pays a royalty to NANA Regional
Corporation, Inc. (NANA) on the net proceeds of production. A 25% royalty became payable in the third quarter of 2007
after we had recovered cumulative advance royalties previously paid to NANA. The net proceeds of production royalty
rate will increase by 5% every fifth year to a maximum of 50%. The increase to 35% of net proceeds of production
occurred in the fourth quarter of 2017. An expense of US$175 million was recorded in 2020 (2019 – US$231 million) in
respect of this royalty.
c) Antamina Royalty
Our interest in the Antamina mine is subject to a net profits royalty equivalent to 7.4% of our share of the mine’s free
cash flow. An expense of $27 million was recorded in 2020 (2019 – $16 million) in respect of this royalty.
Consolidated Financial Statements
129
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
28. Commitments (continued)
d) Purchase Commitments
We have a number of forward purchase commitments for the purchase of concentrates and other process inputs, and
for shipping and distribution of products, which are incurred in the normal course of business. The majority of these
contracts are subject to force majeure provisions.
We have contractual arrangements for the purchase of power for the expansion of our Quebrada Blanca Operations.
These contracts contain monthly fixed prices and variable prices per hour and were effective from dates between
November 2016 and December 2020. In 2018, we entered into a 20-year contractual arrangement to purchase power
for our Trail Operations, with an option to extend for a further 10 years. This arrangement requires payments of
$75 million per year, escalating at 2% per year.
29. Segmented Information
Based on the primary products we produce and our development projects, we have five reportable segments that we
report to our Chief Executive Officer — copper, zinc, steelmaking coal, energy and corporate. The corporate segment
includes all of our initiatives in other commodities, our corporate growth activities, and groups that provide administrative,
technical, financial and other support to all of our business units. Other operating income (expenses) include general
and administration, exploration, research and innovation, and other operating income (expense). Sales between
segments are carried out on terms that arm’s-length parties would use. Total assets does not include intra-group
receivables between segments. Deferred tax assets have been allocated amongst segments.
(CAD$ in millions)
December 31, 2020
Copper
Steelmaking
Coal
Zinc
Energy
Corporate
Total
Segment revenues
$ 2 ,419
$ 3,164
$ 3,375
$
454
$
Less intra-segment revenues
–
(464)
–
Revenues (Note 6(a))
2 ,419
2,700
3,375
(1,560)
(2 , 17 7 )
(3,098)
Cost of sales
Gross profit (loss)
Asset impairments (Note 8(a))
Other operating expenses
Profit (loss) from operations
Net finance income (expense)
Non-operating income (expense)
Share of gain (loss) of associates
and joint ventures
Profit (loss) before taxes
Capital expenditures
Goodwill
Total assets
859
–
(323)
536
(151)
38
1
424
1,990
391
523
–
(98)
425
(44)
(4)
–
377
247
–
–
454
(780)
(326)
(1,244)
(28)
(1,598)
(26)
–
–
277
–
(193)
84
(56)
13
–
41
(1,624)
(354)
(1 ,136)
1,284
702
91
–
16
–
3,628
1,093
14,546
4,006
17,266
2,658
2,802
41,278
–
–
–
–
–
–
$ 9,412
(464)
8,948
(7,615)
1,333
(1,244)
(357)
(357)
9
(4)
(2)
(999)
(910)
(268)
43
(1)
130 Teck 2020 Annual Report | Forward Together
(CAD$ in millions)
December 31, 2019
Copper
Steelmaking
Coal
Zinc
Energy
Corporate
Total
Segment revenues
$
2,469
$ 3,487
$
5,522
$
975
$
Less intra-segment revenues
Revenues (Note 6(a))
Cost of sales
Gross profit
Asset impairments (Note 8(a))
Other operating expenses
Profit (loss) from operations
Net finance income (expense)
Non-operating income (expense)
Share of loss of associates
and joint ventures
Profit (loss) before taxes
Capital expenditures
Goodwill
Total assets
–
2,469
(1,852)
(519)
2,968
(2,367)
617
(31)
(183)
403
(119)
50
(2)
332
1 ,757
399
601
–
(63)
538
(47)
(9)
–
482
307
–
–
5,522
(3,410)
2, 1 1 2
(289)
(136)
1,687
(60)
(15)
–
–
975
(965)
10
(2,370)
(26)
(2,386)
(27)
(2)
–
1,612
(2,415)
–
–
–
–
–
–
(392)
(392)
35
(121)
(1)
(479)
$ 12,453
(519)
11,934
(8,594)
3,340
(2,690)
(800)
(150)
(218)
(97)
(3)
(468)
1 ,197
702
191
–
16
–
3,468
1 , 101
12,740
3,904
16,032
3,916
2,758
39,350
The geographical distribution of our non-current assets, other than financial instruments, deferred tax assets and
post-employment benefit assets, is as follows:
(CAD$ in millions)
Canada
Chile
United States
Peru
Other
December 31, December 31,
2019
2020
$
22,410
10,555
1,710
1,483
157
$
22,033
8,697
1,567
1,499
149
$
36,315
$
33,945
Consolidated Financial Statements
131
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
30. Financial Instruments and Financial Risk Management
a) Financial Risk Management
Our activities expose us to a variety of financial risks, which include liquidity risk, foreign exchange risk, interest rate
risk, commodity price risk, credit risk and other risks associated with capital markets. From time to time, we may use
foreign exchange, commodity price and interest rate contracts to manage exposure to fluctuations in these variables.
Our use of derivatives is based on established practices and parameters to mitigate risk and is subject to the oversight
of our Hedging Committee and our Board of Directors.
Foreign Exchange Risk
We operate on an international basis, and therefore, foreign exchange risk exposures arise from transactions denominated
in a currency other than the functional currency of the entity. Our foreign exchange risk arises primarily with respect to
the U.S. dollar, Chilean peso and Peruvian sol. Our cash flows from Canadian, Chilean and Peruvian operations are exposed
to foreign exchange risk, as commodity sales are denominated in U.S. dollars and a substantial portion of operating
expenses are denominated in local currencies.
We also have various investments in U.S. dollar functional currency subsidiaries, whose net assets are exposed to
foreign currency translation risk. This currency exposure is managed in part through our U.S. dollar denominated debt
as a hedge against these net investments.
U.S. dollar financial instruments subject to foreign exchange risk consist of U.S. dollar denominated items held in
Canada and are summarized below.
(US$ in millions)
Cash and cash equivalents
Trade and settlement receivables
Trade accounts payable and other liabilities
Debt
Reduced by: Debt designated as a hedging instrument in our net investment hedge
Net U.S. dollar exposure
December 31, December 31,
2019
2020
$
$
23
616
(608)
(3,741)
3,575
85
505
(459)
(3,209)
2,969
$
(135)
$
(109)
As at December 31, 2020, with other variables unchanged, a $0.10 strengthening of the Canadian dollar against the
U.S. dollar would result in a $18 million pre-tax gain (2019 – $14 million) from our financial instruments. There would also
be a $415 million pre-tax loss (2019 – $464 million) in other comprehensive income (loss) from the translation of our
foreign operations. The inverse effect would result if the Canadian dollar weakened by $0.10 against the U.S. dollar.
Liquidity Risk
Liquidity risk arises from our general and capital funding requirements. We have planning, budgeting and forecasting
processes to help determine our funding requirements to meet various contractual and other obligations. Note 19(d)
details our available credit facilities as at December 31, 2020.
132 Teck 2020 Annual Report | Forward Together
Contractual undiscounted cash flow requirements for financial liabilities as at December 31, 2020 are as follows:
Less Than
1 Year
2—3 Years
4—5 Years
More Than
5 Years
$
2,736
$
–
$
–
$
–
$
(CAD$ in millions)
Trade accounts payable and
other liabilities
Debt (Note 19(f))
Lease liabilities
QB2 advances from SMM/SC
Other liabilities
Estimated interest payments on debt
Estimated interest payments on
QB2 advances from SMM/SC
Estimated interest payments on lease
and other liabilities
115
146
–
–
270
–
12
500
175
–
193
530
–
11
677
130
–
21
528
–
7
Total
2,736
6,337
1 , 157
941
268
4,416
5,045
706
941
54
3,088
1,202
1,202
38
68
During the year ended December 31, 2020, we entered into a receivable factoring facility, where from time to time we
are able to factor specified invoices related to steelmaking coal sales. The counter party has discretion to determine
the amount of invoices it factors under these arrangements. The derecognition criteria is met for these receivables
upon execution of the transaction.
Interest Rate Risk
Our interest rate risk arises in respect of our holdings of cash, cash equivalents and floating rate debt. Our interest rate
management policy is to borrow at both fixed and floating rates to offset financial risks.
Cash and cash equivalents have short terms to maturity and receive interest based on market interest rates.
A 1% increase in the short-term interest rate at the beginning of the year, with other variables unchanged, would have
resulted in a $4 million pre-tax decrease in our profit (loss) (2019 – $17 million pre-tax increase in our profit (loss)). There
would be no effect on other comprehensive income (loss).
Commodity Price Risk
We are subject to price risk from fluctuations in market prices of the commodities that we produce. From time to time,
we may use commodity price contracts to manage our exposure to fluctuations in commodity prices. At the balance
sheet date, we had zinc and lead derivative contracts outstanding as described in (b) below.
Our commodity price risk associated with financial instruments primarily relates to changes in fair value caused by final
settlement pricing adjustments to receivables and payables, derivative contracts for zinc and lead, embedded derivatives
in our TAK road and port contract, and in the ongoing payments under our silver stream and gold stream arrangements.
Consolidated Financial Statements
133
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
30. Financial Instruments and Financial Risk Management (continued)
The following represents the effect on profit (loss) attributable to shareholders from a 10% change in commodity prices,
based on outstanding receivables and payables subject to final pricing adjustments at December 31, 2020. There is no
effect on other comprehensive income (loss).
Price on December 31,
Change in Profit
Attributable to Shareholders
(CAD$ in millions, except for US$/lb. data)
2020
2019
2020
2019
Copper
Zinc
US$3.52/lb.
US$1.24/lb.
US$2.80/lb.
US$1.04/lb.
$
$
36
(2)
$
$
14
7
A 10% change in the price of zinc, lead, silver and gold, respectively, with other variables unchanged, would change our
net asset relating to derivatives and embedded derivatives, excluding receivables and payables subject to final pricing
adjustments, and change our pre-tax profit (loss) attributable to shareholders by $32 million (2019 – $17 million). There
would be no effect on other comprehensive income (loss).
Credit Risk
Credit risk arises from cash, cash equivalents, derivative contracts, debt securities and trade receivables. While we are
exposed to credit losses due to the non-performance of our counterparties, there are no significant concentrations of
credit risk and we do not consider this to be a material risk.
Our primary counterparties related to our cash, cash equivalents, derivative contracts and debt securities carry
investment grade ratings as assessed by external rating agencies, which are monitored on an ongoing basis. All of our
commercial customers are assessed for credit quality at least once a year or more frequently if business or customer
specific conditions change based on an extensive credit rating scorecard developed internally using key credit metrics
and measurements that were adapted from S&P’s and Moody’s rating methodologies. Sales to customers that do not
meet the credit quality criteria are secured either by a parental guarantee, letter of credit or prepayment.
For our trade receivables, we apply the simplified approach for determining expected credit losses, which requires us
to determine the lifetime expected losses for all our trade receivables. The expected lifetime credit loss provision for
our trade receivables is based on historical counterparty default rates and adjusted for relevant forward-looking
information, as required. Since the majority of our customers are considered to have low default risk and our historical
default rate and frequency of losses are low, the lifetime expected credit loss allowance for trade receivables is
nominal as at December 31, 2020.
Our investments in debt securities carried at fair value through other comprehensive income (loss) are considered to
have low credit risk as our counterparties have investment grade credit ratings. The credit risk of our investments in
debt securities has not increased significantly since initial recognition of these investments and accordingly, the loss
allowance for investments in debt securities is determined based on the 12-month expected credit losses. The
12-month expected credit loss allowance is based on historical and forward-looking default rates for investment grade
entities, which are low and accordingly, the 12-month expected credit loss allowance for our investments in debt
securities is nominal as at December 31, 2020.
b) Derivative Financial Instruments and Hedges
Sale and Purchase Contracts
We record adjustments to our settlement receivables and payables for provisionally priced sales and purchases,
respectively, in periods up to the date of final pricing based on movements in quoted market prices or published price
assessments (for steelmaking coal). These arrangements are based on the market price of the commodity, and the
134 Teck 2020 Annual Report | Forward Together
value of our settlement receivables and payables will vary as prices for the underlying commodities vary in the metal
markets. These final pricing adjustments result in gains (losses from purchases) in a rising price environment and
losses (gains from purchases) in a declining price environment and are recorded in other operating income (expense).
The table below outlines our outstanding settlement receivables and payables, which were provisionally valued at
December 31, 2020 and December 31, 2019.
(Pounds in millions)
Receivable positions
Copper
Zinc
Lead
Payable positions
Zinc payable
Lead payable
Outstanding at
December 31, 2020
Outstanding at
December 31, 2019
Pounds
US$/lb.
Pounds
US$/lb.
132
142
42
112
19
$
$
$
$
$
3.52
1.24
0.90
1.24
0.90
65
239
74
79
10
$
$
$
$
$
2.80
1.04
0.87
1.04
0.87
At December 31, 2020, total outstanding settlement receivables were $949 million (2019 – $465 million), and total
outstanding settlement payables were $61 million (2019 – $16 million) (Note 18). These amounts are included in trade
and settlement receivables and trade accounts payable and other liabilities, respectively, on the consolidated balance
sheet.
Zinc and Lead Swaps
Due to ice conditions, the port serving our Red Dog mine is normally only able to ship concentrates from July to
October each year. As a result, zinc and lead concentrate sales volumes are generally higher in the third and fourth
quarter of each year than in the first and second quarter. During 2020 and 2019, we purchased and sold zinc and lead
swaps to match our economic exposure to the average zinc and lead prices over our shipping year, which is from July
of one year to June of the following year. We do not apply hedge accounting to the zinc or lead swaps.
The fair value of our commodity swaps is calculated using a discounted cash flow method based on forward metal
prices. A summary of these derivative contracts and related fair values as at December 31, 2020 is as follows:
Derivatives not designated
as hedging instruments
Zinc swaps
Lead swaps
Quantity
169 million lbs.
65 million lbs.
Average Price
of Purchase
Commitments
US$1.21/lb.
US$0.88/lb.
Average Price
of Sale
Commitments
US$1.23/lb.
US$0.89/lb.
Fair Value
Asset
(CAD$ in millions)
$
$
10
2
12
All free-standing derivative contracts mature in 2021.
Free-standing derivatives, not designated as hedging instruments, are recorded in prepaids and other current assets in
the amount of $12 million on the consolidated balance sheet.
Consolidated Financial Statements
135
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
30. Financial Instruments and Financial Risk Management (continued)
Derivatives Not Designated as Hedging Instruments and Embedded Derivatives
(CAD$ in millions)
Zinc derivatives
Lead derivatives
Settlement receivables and payables
Contingent zinc escalation payment embedded derivative (c)
Gold stream embedded derivative (c)
Silver stream embedded derivative (c)
Amount of Gain (Loss) Recognized
in Other Operating Income (Expense)
(Note 9)
2020
2019
$
$
12
(5)
47
(1)
28
28
(4)
(2)
(49)
1
15
7
$
109
$
(32)
During the year ended December 31, 2019 we recorded a $105 million gain in non-operating income (expense) (Note 11)
related to an increase in the value of the debt prepayment option in our 8.5% notes due in June 2024, up to the date of
redemption of the notes during 2019 (Note 19(b)).
Accounting Hedges
Net investment hedge
We manage the foreign currency translation risk of our various investments in U.S. dollar functional currency subsidiaries
in part through the designation of our U.S. dollar denominated debt as a hedge against these net investments. We
designate the spot element of the U.S. dollar debt as the hedging instrument. As only the spot rate element of the
debt is designated in the hedging relationship, no ineffectiveness is expected and no ineffectiveness was recognized
in profit (loss) for the years ended December 31, 2020 and 2019. The hedged foreign currency risk component is the
change in the carrying amount of the net assets of the U.S. dollar functional currency subsidiaries arising from
spot U.S. dollar to Canadian dollar exchange rate movements. At December 31, 2020, US$3.6 billion of our debt
(2019 – US$3.0 billion) and U.S. dollar investment in foreign operations was designated in a net investment hedging
relationship. During the year ended December 31, 2020, $128 million (2019 – $193 million) of foreign exchange
translation on our U.S. dollar investment in foreign operations was hedged by an offsetting amount of foreign
exchange translation on our U.S. dollar denominated debt. Refer to Note 25(e) for the effect of our net investment
hedges on other comprehensive income (loss).
c) Embedded Derivatives
The TAK road and port contract contains a contingent zinc escalation payment that is considered to be an embedded
derivative. The fair value of this embedded derivative was $32 million at December 31, 2020 (2019 – $31 million), of
which $6 million (2019 – $nil) is included in trade accounts payables and other liabilities and the remaining $26 million
(2019 – $31 million) is included in provisions and other liabilities on the consolidated balance sheet.
The gold stream and silver stream agreements entered into in 2015 each contain an embedded derivative in the ongoing
future payments due to Teck. The gold stream’s 15% ongoing payment contains an embedded derivative relating to
the gold price. The fair value of this embedded derivative was $51 million at December 31, 2020 (2019 – $25 million),
of which $5 million (2019 – $3 million) is included in prepaids and other current assets and the remaining $46 million
(2019 – $22 million) is included in financial and other assets on the consolidated balance sheet. The silver stream’s
136 Teck 2020 Annual Report | Forward Together
5% ongoing payment contains an embedded derivative relating to the silver price. The fair value of this embedded
derivative was $33 million at December 31, 2020 (2019 – $6 million), of which $2 million (2019 – $nil) is included in
prepaids and other current assets and the remaining $31 million (2019 – $6 million) is included in financial and other
assets on the consolidated balance sheet.
31. Fair Value Measurements
Certain of our financial assets and liabilities are measured at fair value on a recurring basis and classified in their
entirety based on the lowest level of input that is significant to the fair value measurement. Certain non-financial
assets and liabilities may also be measured at fair value on a non-recurring basis. There are three levels of the fair
value hierarchy that prioritize the inputs to valuation techniques used to measure fair value, with Level 1 inputs having
the highest priority. The levels and the valuation techniques used to value our financial assets and liabilities are
described below:
Level 1 – Quoted Prices in Active Markets for Identical Assets
Level 1 inputs are unadjusted quoted prices in active markets that are accessible at the measurement date for
identical, unrestricted assets or liabilities.
Certain cash equivalents, certain marketable equity securities and certain debt securities are valued using quoted
market prices in active markets. Accordingly, these items are included in Level 1 of the fair value hierarchy.
Level 2 – Significant Observable Inputs Other than Quoted Prices
Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active
markets, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Derivative instruments and embedded derivatives are included in Level 2 of the fair value hierarchy as they are valued
using pricing models or discounted cash flow models. These models require a variety of inputs, including, but not
limited to, market prices, forward price curves, yield curves and credit spreads. These inputs are obtained from or
corroborated with the market. Also included in Level 2 are settlement receivables and settlement payables from
provisional pricing on concentrate sales and purchases, certain refined metal sales and steelmaking coal sales
because they are valued using quoted market prices derived based on forward curves for the respective commodities
and published price assessments for steelmaking coal sales.
Level 3 – Significant Unobservable Inputs
Level 3 inputs are unobservable (supported by little or no market activity) prices.
We include investments in certain debt securities and certain equity securities in non-public companies in Level 3
of the fair value hierarchy because they trade infrequently and have little price transparency.
Consolidated Financial Statements
137
Notes to Consolidated Financial Statements Years ended December 31, 2020 and 2019
31. Fair Value Measurements (continued)
The fair values of our financial assets and liabilities measured at fair value on a recurring basis at December 31, 2020
and 2019, are summarized in the following table:
(CAD$ in millions)
2020
2019
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Cash equivalents
$ 313
$
Marketable equity securities
Debt securities
Settlement receivables
Derivative instruments
64
88
–
$
–
–
–
38
– $ 313
102
90
949
–
2
949
and embedded derivatives
–
96
–
96
$ 877
$
–
–
–
465
29
$
–
$ 877
36
2
–
–
89
106
465
29
53
104
–
–
$ 465
$ 1,045
$
40 $ 1,550
$ 1,034
$ 494
$
38
$ 1,566
Financial liabilities
Derivative instruments
and embedded derivatives
$
Settlement payables
$
–
–
–
$
$
32
61
– $
–
$
93
$
– $
32
61
93
$
$
–
–
–
$
$
33
16
$
49
$
–
–
–
$
$
33
16
49
As at December 31, 2020, we measured certain non-financial assets at their recoverable amounts using a FVLCD basis,
which is classified as a Level 3 measurement. Refer to Note 8 for information about these fair value measurements.
Unless disclosed elsewhere in our financial statements (Note 19 and Note 20), the fair value of the remaining financial
assets and financial liabilities approximate their carrying value.
32. Capital Management
The capital we manage is the total of equity and debt on our balance sheet. Our capital management objectives are to
maintain access to the capital we require to operate and grow our business while minimizing the cost of such capital
and providing for returns to our investors. Our financial policies are to maintain, on average over time, a target debt-to-
EBITDA ratio of approximately 2.0x. This ratio is expected to vary from its target level from time to time, reflecting
commodity price cycles and corporate activity, including the development of major projects. We may also review and
amend such policy targets from time to time. We maintain two committed revolving facilities in amounts of US$4.0
billion and US$1.0 billion. As at December 31, 2020, US$262 million was outstanding on our US$4.0 billion revolving
credit facility and the US$1.0 billion facility was undrawn. These facilities include a financial covenant that requires us
to maintain a net debt-to-capitalization ratio that does not exceed 0.60 to 1.0 (Note 19(d)).
As at December 31, 2020, our debt-to-adjusted EBITDA ratio was 2.7 (2019 – 1.1) and our net debt-to-capitalization ratio
was 0.24 to 1.0 (2019 – 0.15 to 1.0). We manage the risk of not meeting our financial targets through the issuance and
repayment of debt, our distribution policy, the issuance of equity capital, asset sales as well as through the ongoing
management of operations, investments and capital expenditures.
138 Teck 2020 Annual Report | Forward Together
33. Key Management Compensation
The compensation for key management recognized in total comprehensive income (loss) in respect of employee
services is summarized in the table below. Key management includes our directors, President and Chief Executive
Officer, and senior vice presidents.
(CAD$ in millions)
Salaries, bonuses, director fees and other short-term benefits
Post-employment benefits
Share option compensation expense
Compensation expense (recovery) related to Units
2020
2019
$
$
19
8
10
6
43
$
$
17
9
7
(1)
32
Consolidated Financial Statements
139
Board of Directors1
Sheila A. Murray (1)
Chair of the Board
Director since 2018
Norman B. Keevil III (1)
Vice Chair of the Board
Director since 1997
Donald R. Lindsay (1)
President and Chief Executive Officer
Director since 2005
Mayank M. Ashar (2)(5)(6)
Director since 2007
Quan Chong (5)
Director since 2016
Edward C. Dowling (1)(3)(4)(6)
Director since 2012
Eiichi Fukuda (5)
Director since 2016
Toru Higo (5)
Director since 2019
Tracey L. McVicar (1)(2)(3)(4)
Director since 2014
Kenneth W. Pickering (4)(5) (6)
Director since 2015
Una M. Power (1)(2)(3)(4)
Director since 2017
Timothy R. Snider (1)(2)(6)
Director since 2015
Notes:
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation & Talent Committee
(4) Member of the Corporate Governance & Nominating Committee
(5) Member of the Safety & Sustainability Committee
(6) Member of the Technical Committee
1 Directors listed as at February 17, 2021. More information on our directors and officers can be found in our most recent Annual Information Form or in
our Management Proxy Circular, which are available on our website at www.teck.com, under our profile on SEDAR at www.sedar.com, and on the
EDGAR section of the United States Securities and Exchange Commission website at www.sec.gov.
140 Teck 2020 Annual Report | Forward Together
Officers1
Sheila A. Murray
Chair of the Board
Norman B. Keevil III
Vice Chair of the Board
Donald R. Lindsay
President and Chief Executive Officer
Harry M. Conger
Executive Vice President and
Chief Operating Officer
Dale E. Andres2
Senior Vice President, Base Metals
Shehzad Bharmal
Senior Vice President, Base Metals,
North America and Peru
Alex N. Christopher
Senior Vice President, Exploration,
Projects and Technical Services
Réal Foley
Senior Vice President,
Marketing and Logistics
Andrew J. Golding2
Senior Vice President
Nicholas N.P.M. Hooper
Senior Vice President,
Corporate Development
Kieron McFadyen
Senior Vice President, Energy
Peter C. Rozee
Senior Vice President,
Commercial and Legal Affairs
M. Colin Joudrie
Vice President,
Business Development
Robin B. Sheremeta
Senior Vice President, Coal
Ralph J. Lutes
Vice President, Asia
Marcia M. Smith
Senior Vice President,
Sustainability and External Affairs
Dean C. Winsor
Senior Vice President and
Chief Human Resources Officer
Ian K. Anderson
Vice President, Logistics
Greg J. Brouwer
Vice President, Transformation
Douglas B. Brown
Vice President, Corporate Affairs
Scott E. Maloney
Vice President, Environment
Stuart R. McCracken
Vice President,
Exploration and Geoscience
Karla L. Mills
Vice President, Project Development
Douglas J. Powrie
Vice President, Tax
Crystal J. Prystai
Vice President and Corporate
Controller
Anne J. Chalmers
Vice President, Risk and Security
Amanda R. Robinson
Corporate Secretary
Amparo Cornejo
Vice President, Chile Sustainability and
Corporate Affairs
Kalev Ruberg
Vice President and Chief Innovation
Officer
Larry M. Davey
Vice President, Maintenance
Sepanta Dorri
Vice President,
Corporate Development
Ronald A. Millos2
Senior Vice President
Justine B. Fisher
Vice President and Treasurer
Andrew K. Milner
Senior Vice President and Chief
Transformation Officer
C. Jeffrey Hanman
Vice President, Sustainable
Development, Coal
H. Fraser Phillips
Senior Vice President, Investor
Relations and Strategic Analysis
Jonathan H. Price
Senior Vice President and
Chief Financial Officer
Amber C. Johnston Billings
Vice President, Communities,
Government Affairs and HSEC
Systems
Donald J. Sander
Vice President, Planning and
Innovation, Coal
André D. Stark
Vice President, Marketing
Keith G. Stein2
Vice President, Major Projects
Nikola Uzelac
Vice President, Legal
Alejandro M. Vasquez
Vice President, South America
Lawrence A. Watkins
Vice President, Health and Safety
Scott R. Wilson2
Vice President
1 Officers listed as at February 17, 2021. More information on our directors and officers can be found in our most recent Annual Information Form or
in our Management Proxy Circular, which are available on our website at www.teck.com, under our profile on SEDAR at www.sedar.com, and on the
EDGAR section of the United States Securities and Exchange Commission website at www.sec.gov.
2 Each of Messrs. Millos, Andres, Golding, Stein and Wilson are currently in a phased retirement process that is expected to complete by the end of
the first quarter 2021.
Officers
141
Corporate Information
2020 Share Prices and Trading Volume
Class B subordinate voting shares–TSX–CAD$/share
Q1
Q2
Q3
Q4
Class B subordinate voting shares–NYSE–US$/share
Q1
Q2
Q3
Q4
Class A common shares–TSX–CAD$/share
Q1
Q2
Q3
Q4
High
23.09
16.45
20.55
24.08
High
17.77
12.27
15.60
18.94
High
23.33
18.73
22.25
30.00
$
$
$
$
$
$
$
$
$
$
$
$
Low
8.15
9.41
13.46
15.81
Low
5.60
6.66
10.03
11.93
Low
9.00
12.75
15.01
18.90
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Close
Volume
10.67
14.22
18.54
23.10
195,571,072
180,300,330
151,484,186
147,040,684
674,396,272
Close
Volume
7.56
10.42
13.92
18.15
87,826,084
66,314,247
54,572,092
62,194,992
270,907,415
Close
14.01
16.08
20.75
27.50
Volume
468,907
238,408
184,699
192,498
1,084,512
Stock Exchanges
Our Class A common shares and Class B subordinate voting
shares are listed on the Toronto Stock Exchange under the
symbols TECK.A and TECK.B, respectively.
Our Class B subordinate voting shares are also listed on the
New York Stock Exchange under the symbol TECK.
Dividends Declared on Class A and B Shares
Amount per share Payment Date
March 31, 2020
$
June 30, 2020
$
September 30, 2020
$
December 31, 2020
$
0.05
0.05
0.05
0.05
These dividends are eligible for both the Canadian federal
and provincial enhanced dividend tax credits.
Shares Outstanding at December 31, 2020
Class A common shares
Class B subordinate voting shares
7,765,503
523,381,420
Annual Meeting
Our annual meeting of shareholders will be held at
12:00 p.m. on April 28, 2021.
Transfer Agents
Inquiries regarding change of address, stock transfers, registered
shareholdings, dividends, estate matters, or lost certificates
should be directed to our Registrar and Transfer Agent:
AST Trust Company (Canada)
1600 – 1066 West Hastings Street,
Vancouver, British Columbia V6E 3X1
AST Trust Company (Canada) provides an AnswerLine Service
for the convenience of shareholders:
Toll-free in Canada and the United States
+1.800.387.0825
Outside Canada and the United States
+1.416.682.3860
Email: inquiries@astfinancial.com
Website: www.astfinancial.com/ca-en
American Stock Transfer & Trust Company, LLC
6201 – 15th Avenue,
Brooklyn, New York 11219
+1.800.937.5449 or +1.718.921.8124
Email: help@astfinancial.com
Website: www.astfinancial.com
TTY: +1.866.703.9077 or +1.718.921.8386
Auditors
PricewaterhouseCoopers LLP
Chartered Professional Accountants
Suite 1400, 250 Howe Street,
Vancouver, British Columbia V6C 3S7
Annual Information Form
We prepare an Annual Information Form that is filed with the
securities commissions or similar bodies in all the provinces of
Canada. Copies of our Annual Information Form and annual and
quarterly reports are available on request or on our website at
www.teck.com, under our profile on SEDAR at www.sedar.com,
and on the EDGAR section of the SEC website at www.sec.gov.
142 Teck 2020 Annual Report | Forward Together
Teck Resources Limited
Suite 3300, 550 Burrard Street
Vancouver, British Columbia, Canada
V6C 0B3
+1.604.699.4000 Tel
www.teck.com