Teck Cominco Restructures and Renames

Engineering and Mining Journal, Nov 2008

Teck Cominco announced on October 1 a corporate restructuring into five commodity-based strategic business units (divisions), specializing in copper, zinc, gold, metallurgical coal and energy. At the same time, the company said it is simplifying its name and corporate brand to "Teck." The company's legal name will remain "Teck Cominco Limited" until its next annual general meeting in April 2009, when, subject to the approval of shareholders, the company proposes to change its legal name to "Teck Resources Limited."

"The new structure is designed to improve the company's competitiveness by increasing Teck's ability to analyze and act on available opportunities in each commodity segment," the Teck announcement said. "Each business unit is led by a senior executive with full responsibility for the unit's performance, including establishing a growth strategy, project identification and development, the safe and sustainable operation of the unit's assets, delivering quality products to customers and overall profit and loss accountability."

Following is an outline of Teck's five divisions and their assets. Numbers in parentheses represent Teck's ownership interest.

* Teck's copper division's assets include Teck's interests in the Highland Valley Copper mine in south-central British Columbia (97.5%), the Antamina copper-zinc mine in the north-central Peruvian Andes (22.5%), the Quebrada Blanca copper mine in northern Chile (76.5%), the Andacollo mine southeast of the city of La Serena in north-central Chile (90%), and the Duck Pond copper-zinc mine in central Newfoundland (100%). Molybdenum and zinc are produced as significant by-products at some of the mines.

* Zinc assets, all 100% owned by Teck, include the Trail refining and smelting complex in south-central British Columbia, the Red Dog mine in north west Alaska, and the Pend Oreille mine in Washington state just south of Trail. The mines produce zinc and lead concentrates. The Trail complex produces refined zinc and lead and various precious and specialty metals, fertilizers, and chemicals. The Trail operations also own the Waneta dam, which produces electricity for the metallurgical facilities and for sale to third parties.

* The gold division includes the Pogo mine southeast of Fairbanks, Alaska (40%), the Hemlo mining operations in northwestern Ontario (50%), the Morelos project in Mexico (78.8%), the Lobo-Marte property in Chile (60%) and interests in several other advanced gold exploration properties.

* Teck's metallurgical coal division comprises Teck's 40% interest in the Elk Valley Coal Partnership and its 19.95% investment in the Fording Canadian Coal Trust, which owns 60% of Elk Valley Coal, giving Teck a 52% direct and indirect interest in the partnership. Teck is the managing partner of Elk Valley Coal, which has six metallurgical coal mines in British Columbia and Alberta, and is the world's second largest exporter of seaborne hard coking coal. In late July 2008, Teck announced an agreement to acquire all of the assets of the Fording Canadian Coal Trust. That transaction remained open as of mid-October 2008.

* Teck's energy division's assets are centered on the Fort Hills oil sands project in northern Alberta (20%) and Teck's 50% interest in various oil sands leases held jointly with UTS Energy Corp. In mid-September 2008, Teck and its Fort Hills partners reported that preliminary results from front-end engineering and design work suggest that estimated capital costs for the first phase of the Fort Hills project have risen by about 50% from the $14.1-billion estimate announced in June 2007. The major increases are costs associated with construction materials, labor, project management and engineering. The partners are assessing the new estimates and a range of options to reduce or defer capital costs. The Fort Hills project, as currently conceived, consists of an intgrated oil sands mine and bitumen extraction plant 90 km north of Fort McMurray, Alberta, and an upgrader in Sturgeon county northeast of Edmonton, Alberta. The first phase of the project has been planned to produce 140,000 bbl/d of synthetic crude oil.