Bank of America Merrill Lynch Global Metals, Mining & Steel Conference
- 1. Global Metals, Mining & Steel Conference May 16, 2017
- 2. Forward Looking Information Both these slides and the accompanying oral presentations contain certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario) (collectively referred to herein as forward-looking statements). Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Teck to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements include statements relating to our long-term strategies and priorities, the long-life of our assets and estimated resource life, the possibility that we will have a longer resource life in zinc very soon, our production guidance, estimated profit and estimated EBITDA and the sensitivity of estimated profit and estimated EBITDA to foreign exchange and commodity prices, the statement that the improving zinc market could translate into hundreds of millions of additional EBITDA this year and a number of years going forward, estimated future cash flow and cash flow potential, our expectations regarding market supply, demand and price in the commodities we produce, including our expectations regarding factors which may impact supply or demand in key markets, the expected timing and amount of production at the Fort Hills oil sands project and expectation that the oil price environment will be above our costs of production, potential EBITDA, potential of expanded zinc uses, our statement that Quebrada Blanca 2 is a potential tier 1 asset, the statements made regarding the potential mine life, capital costs, mine life extension and expansion optionality and production for our Quebrada Blanca Phase 2 project, our statements regarding our Satellite Project, including, statements regarding the value, mine-life and potential of these projects, the statement that debt reduction remains a priority, routes to value realization, our statements regarding the sustainability of our cost-management program, statements regarding Red Dog resource potential, 2017 production guidance and cost guidance, 2017 capital expenditures guidance, our growth/value pipeline, our statements regarding expected strip ratios, statements relating to the “Five Year Plan: Sustain 27 Million Tonnes” slide, our statements regarding potential increases in port capacity, expectation of future copper deficits, all projections for our Quebrada Blanca 2 project, including those on the slides titled “Quebrada Blanca 2 Overview” and “QB2: Robust Economics & Tier 1 Attributes”, all projections for NuevaUnión, including statements made on the “NuevaUnión: Project Overview” slide, projections and expectations regarding our Satellite Project including those on the “Satellite Project: 5 Quality Base Metal Assets” slide, our predictions regarding zinc supply and demand, Fort Hills project indicative NPV and life, financial projections and other statements regarding the Fort Hills project, including those made on the “The Real Value of Long- Life Assets” slide, transportation capacity and our ability to secure transport for our Fort Hills production, statements regarding our sustainability goals, and management’s expectations with respect to production, demand and outlook regarding coal, copper, zinc and energy. These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially, which are described in Teck’s public filings available on SEDAR (www.sedar.com) and EDGAR (www.sec.gov). In addition, the forward-looking statements in these slides and accompanying oral presentation are based on assumptions regarding, including, but not limited to, general business and economic conditions, the supply and demand for, deliveries of, and the level and volatility of prices of, zinc, copper and coal and other primary metals and minerals as well as oil, and related products, the timing of the receipt of regulatory and governmental approvals for our development projects and other operations, our costs of production and production and productivity levels, as well as those of our competitors, power prices, continuing availability of water and power resources for our operations, market competition, the accuracy of our reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, conditions in financial markets, the future financial performance of the company, our ability to attract and retain skilled staff, our ability to procure equipment and operating supplies, positive results from the studies on our expansion projects, our coal and other product inventories, our ability to secure adequate transportation for our products, our ability to obtain permits for our operations and expansions, our ongoing relations with our employees and business partners and joint venturers. Reserve and resource life estimates assume the mine life of longest lived resource in the relevant commodity is achieved, assumes production at planned rates and in some cases development of as yet undeveloped projects. Management’s expectations of mine life are based on the current planned production rates and assume that all resources described in this presentation are developed. Certain forward-looking statements are based on assumptions disclosed in footnotes to the relevant slides. Our estimated profit and EBITDA and EBITDA sensitivity estimates are based on the commodity price and currency exchange assumptions stated on the relevant slide. Cost statements are based on assumptions noted in the relevant slide. Assumptions regarding Fort Hills also include the assumption that project development and funding proceed as planned, as well as assumptions noted on the relevant slides discussing Fort Hills. Assumptions regarding our potential reserve and resource life assume that all resources are upgraded to reserves and that all reserves and resources could be mined. The foregoing list of assumptions is not exhaustive. 2
- 3. Forward Looking Information 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 foreign 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, industrial disturbances or other job action, 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 to perform their contractual obligations, changes in our credit ratings or the financial market in general, unanticipated increases in costs to construct our development projects, difficulty in obtaining permits or securing transportation for our products, inability to address concerns regarding permits of environmental impact assessments, changes in tax benefits or tax rates, resolution of environmental and other proceedings or disputes, and changes or deterioration in general economic conditions. We will not achieve the maximum mine lives of our projects, or be able to mine all reserves at our projects, if we do not obtain relevant permits for our operations. Our Fort Hills project is not controlled by us and construction and production schedules may be adjusted by our partners. NuevaUnión is jointly owned. The effect of the price of oil on operating costs will be affected by the exchange rate between Canadian and U.S. dollars. 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. We assume no obligation to update forward-looking statements except as required under securities laws. Further information concerning assumptions, risks and uncertainties associated with these forward-looking statements and our business can be found in our most recent Annual Information Form, as well as subsequent filings of our management’s discussion and analysis of quarterly results, all filed under our profile on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov). 3
- 4. Agenda Teck Overview & Strategy Commodity Market Observations Teck Update 4
- 5. Attractive Portfolio of Long-Life Assets In Low Risk Jurisdictions Zinc Energy Steelmaking Coal Copper 5
- 6. Diversified business model Attractive portfolio of long life assets Low half of the cost curve Appropriate scale Low risk jurisdictions Quality organic growth Consistent Long-Term Strategy 6
- 7. Mid-Point of Production Guidance Unit of Change Effect on Annual Estimated Profit3 Effect on Annual Estimated EBITDA1 $C/$US C$0.01 C$42M /$0.01∆ C$68M /$0.01∆ Coal 27.5 Mt US$1/tonne2 C$21M /$1∆ C$32M /$1∆ Copper 282 kt US$0.01/lb C$5M /$0.01∆ C$7M /$0.01∆ Zinc 904 kt US$0.01/lb C$9M /$0.01∆ C$13M /$0.01∆ The Value of our Diversified Business Model Leverage to Strong Steelmaking Coal & Zinc Markets in 2017 1. Non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” section of our quarterly news releases for further information. Annual effect based on commodity prices and our balance sheet as of February 14, 2017 and a C$/US$ exchange rate of 1.30. Assumes the midpoint of 2017 guidance ranges. Zinc effect on annual estimated EBITDA was updated as of April 24, 2017 and includes 602 kt of zinc in concentrate and 302 kt of refined zinc. 2. Based on a US$1/tonne change in benchmark premium steelmaking coal price.7
- 8. Agenda Teck Overview & Strategy Commodity Market Observations Teck Update 8
- 9. 60 90 120 150 180 210 240 270 300 $/tonne Quarterly Contract Settlement Argus FOB Australia Coal Price Assessments Source: Argus Plotted to May 3, 2017 Price Spike Q4 2016 • Price induced closures globally • Supply disruptions from weather & temporary mine failures • Inventory build by mills due concern about supply disruptions • Chinese policy Price Correction Q1 2017 • Price induced supply response • Inventory drawdown by mills as no signs of supply disruptions • Chinese policy Price Spike April 2017 • Cyclone Debbie disrupts Australian supply Steelmaking Coal Price Normalizing? Prices driven >US$300 for the fourth time since 2008 9
- 10. Slowing Copper Mine Production Growth Copper Production Expected to Decrease Uncommitted Projects Increasingly Delayed Existing and Fully Committed Mines Committed and operating mine production peaking & replacement projects delayed Source: Wood Mackenzie, CRU, ICSG, Teck 0 2,000 4,000 6,000 8,000 10,000 12,000 2018F Last Year 2018F Today 2020F Last Year 2020F Today 2022 Last Year 2022 Today ThousandTonnes Base Highly Probable Probable Possible 15% in Base Case 15% in Base Case 10% in Base Case 0 5,000 10,000 15,000 20,000 25,000 30,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 ThousandTonnes Mine Production SXEW Scrap Projects Demand 10
- 11. Multiple Signs of Tightness in Zinc Market TCs Fall to Historic Lows Chinese Smelter Utilization Falls $0 $100 $200 $300 $400 $500 2006 2008 2010 2012 2014 2016 Spot TC Annual TC Source: Teck, CRU, Wood Mackenzie LME/SHFE Stocks Declining 0 20 40 60 80 100 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 % Smelter utilization rate Large smelters (>200kt) Medium-sized smelters (100-200kt) Small smelters (20-100kt) US Premiums Spike Higher 0 500 1,000 1,500 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ThousandsofTonnes LME Stocks SHFE 0 2 4 6 8 10 12 Zinc Special High Grade- High Source: LME/SHFE Source: LME/SHFE 11
- 12. Source: Consensus Economics, April 2017 Fort Hills first production may coincide with forecasted supply deficit Oil Market to Rebalance Global Crude Oil Supply and Demand Balances Millionofbarrelsperday Millionofbarrelsperday 12
- 13. Agenda Teck Overview & Strategy Commodity Market Observations Teck Update 13
- 14. First Quarter 2017 Highlights • Record coal sales in March • Adjusted EBITDA of $1.5B1,2 • Gross profit up >$1B1,3 • Repurchased ~US$1B notes outstanding • Fort Hills construction >83% complete • Reported annual zinc concentrate treatment charges decrease significantly in favour of miners 1. Non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” section of our quarterly news releases for further information. 2. Adjusted EBITDA is based on the same adjustments made to adjusted profit, applied on a pre-tax basis. 3. Before depreciation and amortization. 14
- 15. Significant Cash Flow Generation Potential EBITDA1 Less: Corporate Steelmaking Coal Copper Zinc 1. Non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” section of our quarterly news releases for further information. Estimates are based on the mid-point of our 2017 production guidance ranges and assume a C$/US$ exchange rate of 1.30 and our typical steelmaking coal sales mix of 40% contract and 60% spot. The steelmaking coal price assumption is based on a combination of our Q1 2017 realized price of US$213 per tonne, and an assumed quarterly contract benchmark price of US$155 per tonne and an average realized price of 92% of the contract price for the balance of the year. Base metal price assumptions are based on the 2017 year to date average copper price of US$2.60 per pound and average zinc price of US$1.25 per pound. Actual prices will vary, and operating performance and sales may vary materially for a variety of reasons, causing these production and sales estimates to be materially incorrect. These estimates are based on numerous assumptions, and are subject to various risks and uncertainties that may cause results to vary materially. Please see the Cautionary Note on Forward-Looking Information at the beginning of this presentation for more specific information. • Strong operating margins • Significant leverage to coal, copper and zinc prices 2017 Based on Current Prices Energy starts contributing EBITDA1 in 2018 >C$5 Billion 15
- 16. Largest Global Net Zinc Mining Companies 0 50 100 150 200 250 300 350 400 Thousandtonnes Source: Wood Mackenzie, 2016. Teck is the Largest Net Miner Provides Increased Exposure to Zinc Price Public Company Private Company Teck 16
- 17. Defending / Expanding Zinc Market Giga Steel Ultrahigh-strength & galvanizable competes well with aluminum. Source: IZA, New York State Thruway Authority, Zinc.org Continuous Galvanized Rebar High productivity process which enables coated rebar to be shaped in the field. Zinc Thermal Spray Portable technology to spray molten zinc onto a steel surface . Zinc Micro-Nutrient Fertilizer Zinc micronutrient in fertilizer well accepted and growing market. 17
- 18. • Construction >83% complete • 4 of 6 areas turned over to Operations • >60% operations personnel hired • First oil end of 2017 Source: Fort Hills Energy Limited Partnership, Fall 2016. Fort Hills Project Status & Progress 18
- 19. Quebrada Blanca 2: Potential Tier 1 Asset Potential top 15 copper producer globally ‒ 300 ktpa copper equivalent production in first 5 years Total costs (AISC) well in low half of cost curve ‒ Exceptionally low strip ratio Initial mine life 25 years with ~25% of reserves & resources ‒ Optionality for expansion or much longer life Attractive capital intensity ‒ Development capital costs reduced significantly Familiar, mining-friendly jurisdiction 19
- 20. Satellite Project: Overview • Situation: Strong base metal growth options largely invisible to the market • Objective: To surface the value in 3-5 years • Possible routes to value realization include: ‒ Prudent funding to increase certainty of development ‒ Work with development partner(s) to advance in a timely manner ‒ IPO, sell down and/or divest at the appropriate time ‒ Build as a Teck project Staged Growth/Value Pipeline Future Options Zinc World-class resource combined with integrated assets Copper Strong platform with substantial growth options San Nicolás (Cu-Zn) Mesaba Zafranal Schaft Creek Galore Creek 20
- 21. Achieved Significant Debt Reduction 1. As at April 24, 2017. 2. Our revolving credit facility requires a debt to debt-plus-equity ratio of <50%. Non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” section of our quarterly news releases for further information. Notes Outstanding Current Debt Portfolio1 Public notes outstanding US$5.1B Average coupon 5.7% Annual interest savings ~US$55M Weighted average term to maturity ~15 years Debt to debt-plus-equity ratio2 27% Undrawn credit facility US$3.0B Tender offer to purchase US$1B of outstanding public notes completed on March 8, 2016 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 30/09/2015 31/12/2015 30/09/2016 31/12/2016 31/03/2017 US$Billion 21
- 22. Returning Cash to Shareholders • Increased the dividend ‒ Annualized dividend of $0.20/share ‒ Payment quarterly • Shift in dividend policy to align with cyclical nature of our business ‒ Variable component, at the Board’s discretion 22
- 23. • Continuing to execute for higher production per share − No equity dilution − No operating assets sold − Investing in production growth from Fort Hills − Maintaining strong liquidity − Reducing debt & managing maturities • Benefiting from the right commodity mix at the right time • Reducing debt • High quality organic growth options Summary 23
- 25. North America ~22% Europe ~14% Latin America ~3% China ~19% Asia excl. China ~42% Diversified Global Customer Base Exposure to Recovery in Developed Markets As well as Growing Emerging Markets * Based on 2016 revenue. Revenue Contribution from Diverse Markets* 25
- 26. >$1B of Annualized Savings Largest savings from mining productivity Annualized Savings from Major Cost Reduction Program Initiatives - $100 $200 $300 $400 Other ($22M) Components (life/cost) ($12M) Plan optimization ($51M) Pricing Improvements ($26M) Equipment Rental Savings ($28M) Admin savings ($79M) Idling & Energy Savings ($66M) Consumables ($77M) Employee Cost Reduction ($191M) Contractors/Consultants Reduction ($216M) Mining Productivity ($354M) 2013 Initiatives 2014 Initiatives 2015 Initiatives 2016 Initiatives CAD$ millions 26
- 27. Solid Record of Delivery Against Guidance 27
- 28. Solid Delivery Against 2016 Guidance 1. Approximate, based on capitalized stripping guidance and mid-point of production guidance range. 2. Steelmaking coal unit cost of sales include site costs, inventory adjustments, collective agreement charges and transport costs. Total cash unit costs are unit cost of sales plus capitalized stripping. US dollar unit costs assume a Canadian dollar to US dollar exchange rate of 1.33 in 2016 and 1.30 in 2017. 3. Non-GAAP financial measures. See ‘Use of Non-GAAP Financial Measures’ in our quarterly results news releases for additional information. 4. Includes one-time collective agreement settlement charges of $2 per tonne. 5. Net of by-product credits. 6. Copper total cash unit costs include cash C1 unit costs (after by-product margins) and capitalized stripping. 7. Including co-product zinc production from our copper business unit. 8. Including capitalized stripping. Guidance Results Steelmaking Coal Production 25-26 Mt 27.6 Mt Record production Site costs $45-49/t $43/t Capitalized stripping $11/t1 $10/t Transportation costs $35-37/t $34/t Total cash unit costs2,3 $91-97/t US$69-73/t $89/t4 US$67/t4 Lower unit costs Copper Production 305-320 kt 324 kt C1 unit costs5 US$1.50-1.60/lb US$1.35/lb Capitalized stripping US$0.21/lb1 US$0.17/lb Total cash unit costs3,6 US$1.71-1.81/lb US$1.52/lb Lower unit costs Zinc Metal in concentrate production7 630-665 kt 662 kt Refined production 290-300 kt 312 kt Record production Capital Expenditures8 $2.0B $1.9B Lower capex 28
- 29. Higher Margin Despite Lower Prices 29 1 Before depreciation and amortization. * The Teck Commodities Index reflects an equal weighting of steelmaking coal, copper and zinc prices, with each price rebased to 100 in 2014. • Average commodity prices dropped 11% in 2014-2016 • 8-point margin improvement, driven by cost management program ‒ Implemented in 2013 ‒ Focused on productivity ‒ Reduced unit costs ‒ Lowered corporate costs Gross Profit Margin1 vs. Indexed Prices Grossprofitmargin(%) TeckCommodityPriceIndex 0.60 0.70 0.80 0.90 1.00 10% 20% 30% 40% 50% 2014 2015 2016 Gross Profit Margin (lhs) Teck Commodities Index* (rhs) 29
- 30. 2016 Results 2017 Guidance* Steelmaking Coal Production 27.6 Mt 27-28 Mt Site costs $43/t $46-50/t Capitalized stripping $10/t $16/t1 Transportation costs $34/t $35-37/t Total cash costs2, 3 $89/t US$67/t $97-103/t US$74-79/t Copper Production 324 kt 275-290 kt C1 unit costs4 US$1.35/lb US$1.40-1.50/lb Capitalized stripping US$0.17/lb US$0.18/lb1 Total cash costs4 US$1.52/lb US$1.58-1.68/lb Zinc Metal in concentrate production5 662 kt 590-615 kt Refined production 312 kt 300-305 kt 2017 Production & Site Cost Guidance * As at April 24, 2017. 1. Approximate, based on capitalized stripping guidance and mid-point of production guidance range. 2. Average C$/US$ exchange rate of 1.33 in 2016. Assumes C$/US$ exchange rate of 1.30 in 2017. 3. Steelmaking coal unit cost of sales include site costs, inventory adjustments, collective agreement charges and transport costs. Total cash costs are unit cost of sales plus capitalized stripping. 4. Net of by-product credits. Copper total cash costs Include cash C1 unit costs (after by-product margins) and capitalized stripping. 5. Including co-product zinc production from our Copper business unit. 30
- 31. ($M) Sustaining Major Enhancement New Mine Development Sub-total Capitalized Stripping Total Steelmaking Coal 140 120 - 260 430 690 Copper 130 20 200 350 140 490 Zinc 210 15 20 245 50 295 Energy 50 - 675 725 - 725 TOTAL 530 155 895 1,580 620 2,200 Total capex of ~$1.6B, plus capitalized stripping 2017 Capital Expenditures Guidance 31
- 32. $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2012 2013 2014 2015 2016 2017 Guidance New Mine Development Major Enhancements Sustaining Capital Capitalized Stripping $M Capital Expenditures Total Capital Expenditures 2012-2017 32
- 33. Strong platform combined with diverse portfolio of options allows us to be selective for risk/reward opportunity and timing Staged Growth/Value Pipeline In Construction Pre-Sanction Energy Building a new business through partnership Fort Hills Frontier Lease 421 Future OptionsMedium-Term Growth Options Zinc World-class resource combined with integrated assets Red Dog Satellite Deposits Cirque Trail #2 Acid Plant Red Dog Mill Optimization Teena Coal Well established with capital efficient value options Elk Valley Replacement Brownfield Quintette/Mt. Duke Elk Valley Brownfield Neptune Terminals to >18Mtpa Coal Mountain 2 Copper Strong platform with substantial growth options San Nicolás (Cu-Zn) QB Phase 2 NuevaUnión Mesaba ZafranalHVC Brownfield Schaft Creek Antamina Brownfield Galore Creek 33
- 34. Operation Expiry Dates Highland Valley Copper In Negotiation - September 30, 2016 Trail May 31, 2017 Cardinal River June 30, 2017 Quebrada Blanca November 30, 2017 January 31, 2019 March 31, 2019 Quintette April 30, 2018 Antamina July 31, 2018 Coal Mountain December 31, 2018 Line Creek May 31, 2019 Carmen de Andacollo September 30, 2019 December 31, 2019 Elkview October 31, 2020 Fording River April 30, 2021 Collective Agreements 34
- 35. No Substantial Maturities for 5 Years 1. As at April 24, 2017. Maturity Profile1 Few maturities through potential QB2 construction period US$M 0 200 400 600 800 1,000 1,200 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Senior Unsecured Notes Senior Unsecured Guaranteed Notes Repurchased in 2017 35
- 36. Credit Ratings S&P Moody’s Fitch BBB Baa2 BBB BBB- Baa3 BBB- BB+ Ba1 BB+ BB stable Ba2 BB positive BB- Ba3 positive BB- Investment Grade Non-Investment Grade Supported by: • Diversified business model • Low risk jurisdictions • Low cost assets • Conservative financial policies • Significant cost reductions • Capital discipline • Excellent operating execution • Increasing coal production • Responsible dividend • Reducing debt Constrained by: • Debt-to-EBITDA*, due to improving metrics Debt reduction is a priority As at April 24, 2017. * EBITDA is a Non-GAAP financial measure. See ‘Use of Non-GAAP Financial Measures’ in our quarterly results news releases for additional information. Issuer Credit Ratings 36
- 37. Teck Credit Ratings vs. Bloomberg Commodity Price Index Credit Ratings Reflect Commodity Prices Plotted to May 4, 2017 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Moody's S&P Fitch LME Index (Right Axis) BBB/Baa2 BBB-/Baa3 BB+/Ba1 BB/Ba2 BB-/Ba3 BBB+/Baa1 B+/B1 B/B2 B-/B3 A+/A1 A/A2 A-/A3 InvestmentGradeNon-InvestmentGrade 37
- 38. Tax Efficient Earnings in Canada ~$6 billion in available tax pools1, including: • $4.6B in loss carryforwards • $1.3B in Canadian Development Expenses Applies to: • Cash income taxes in Canada Does not apply to: • Resource taxes in Canada • Cash taxes in foreign jurisdictions Multiples should reflect tax efficiency of earnings 1. As of December 31, 2016.38
- 39. Our Sustainability Strategy 2011: Launch strategy with short and long- term goals 2015: Complete first set of short- term goals 2020: Target date for short- team goals 2030: Target date for long- term goals Community Water Our People Biodiversity Energy and Climate Change Air 39
- 40. Our External Recognition Best 50 Corporate Citizens in Canada 2016 On the Dow Jones Sustainability World Index seven years in a row Top 50 Socially Responsible Corporations in Canada Listed on FTSE4Good Index in 2015 40
- 41. Note: Based on public filings and Teck’s press release dated April 21, 2017. Assumes Temagami Mining Company Limited has sold 35,000 Class B shares to fund cash taxes. Teck Resources Limited April 21, 2017 Shares Held Percent Voting Rights Class A Shareholdings Temagami Mining Company Limited 4,300,000 55.39% 31.91% SMM Resources Inc (Sumitomo) 1,469,000 18.89% 10.90% Public 2,008,304 25.82% 14.90% 7,777,304 100.00% 57.71% Class B Shares Temagami Mining Company Limited 725,000 0.13% 0.05% SMM Resources Inc (Sumitomo) 295,800 0.05% 0.02% China Investment Corporation (Fullbloom) 101,304,474 17.78% 7.52% Public 467,554,085 82.04% 34.70% 569,879,359 100.00% 42.29% Total Shares Temagami Mining Company Limited 5,025,000 0.87% 31.96% SMM Resources Inc (Sumitomo) 1,764,800 0.31% 10.92% China Investment Corporation (Fullbloom) 101,304,474 17.54% 7.52% Public 469,562,389 81.29% 49.60% 577,656,663 100.00% 100.00% Share Structure & Principal Shareholders 41
- 42. Outstanding Valuation Thesis • Share price increase of ~500% in 2016 • Valuation hasn’t kept pace with expected EBITDA increase ‒ EV/EBITDA multiple trailing Global Diversified comparables Source: Capital IQ. Plotted to May 3, 2017. Teck vs. Global Diversifieds Dividend Adjusted Share Pricing Teck vs. Global Diversifieds EV/EBITDA (NTM) 2x 4x 6x 8x 10x 12x Anglo American Vale Rio Tinto BHP Billiton Teck Freeport-McMoRan Glencore South 32 -100% 0% 100% 200% 300% 400% 500% 600% Anglo American Rio Tinto BHP Billiton Vale Freeport-McMoRan Teck South 32 Glencore 42
- 43. Steelmaking Coal Business Unit & Markets
- 44. Our Market - Seaborne Hard Coking Coal2: ~200 Million Tonnes 1. Source: International Energy Agency 2014 data 2. Source: CRU Global Coal Production1: 7.9 billion tonnes Steelmaking Coal Production2: ~1,185 million tonnes Export Steelmaking Coal2: ~325 million tonnes Seaborne Steelmaking Coal2: ~290 million tonnes High Grade Hard Coking Coal Is A Niche Market 44
- 45. 500 600 700 800 900 $0 $20,000 $40,000 $60,000 $80,000 $100,000 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019f Nominal GDP, Billion USD(LHS) Crude Steel Production, Mt(RHS) Ex-China Improving Steel Demand & Output Globally Steel Demand YoY Growth 2017 Global +1.3% China 0% Developing, ex-China +4% Developed +0.7% Source: WSA Global steel demand expected to grow overall GDP and Crude Steel Production 500 800 1,100 1,400 1,700 2,000 $0 $40,000 $80,000 $120,000 1986 1991 1996 2001 2006 2011 2016 2021f Global 0 300 600 900 $0 $5,000 $10,000 $15,000 $20,000 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019f China Source: WSA, IMF 45
- 46. Traditional Steel Markets • China rebounded • JKT stable • EU recovering Rest of the World • India strong growth • Brazil rebounding • US recovering Monthly Hot Metal Production Source: WSA, based on data reported by countries monthly; NBS Mt Plotted to March 2017 Global Hot Metal Production JKT India Europe USA Brazil 45 55 65 China 0 3 6 9 12 15 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 E.U USA India JKT Brazil 46
- 47. 0 200 400 600 800 1000 2010 2015 2020 2025 2030 2035 Milliontonnes Crude Steel and Hot Metal Production Source: WSA, China Association of Metalscrap Utilization, Wood Mackenzie Crude Steel China Scrap Use to Increase Slowly China’s Scrap Ratio Low vs. Other Countries 73% 54% 33% 88% 28% 50% 11% 36% 0% 20% 40% 60% 80% 100% United States Europe Japan Turkey Russia Korea China World Average China Steel Use By Sector (2000-16) Electric Arc Furnace Hot Metal Hot metal / crude steel ratio to remain >90% and EAF share of crude steel production <10% until ~2028 Source: Wood Mackenzie Source: China Metallurgy Industry Planning and Research Institute Construction 55-60% Others 15-20% Machinery 15-20% Auto 5-10% 47
- 48. Source: CRU; Wood Mackenzie Seaborne Steelmaking Coal Imports (Average of CRU and Wood Mackenzie, Change 2021 vs. 2016) China’s import demand is currently stronger, and coastal plants depend on seaborne imports Strong Demand Fundamentals ex. China 265 270 275 280 285 290 295 300 2016 Brazil Europe India Others 2021, ex- China China 2021 Mt 48
- 49. Seaborne Coking Coal Imports Hegang Project • Inland plant relocating to coastal area • Capacity: crude steel 20Mt • Status: Timeline not announced Guofeng Project • Inland plant relocating to coastal area • Capacity: crude steel 8Mt, hot metal 8Mt • Status: Construction to be started in 2017; completion in 2021 Shougang Jingtang Plant • Expansion • Capacity: crude steel 9.4Mt (phase 2) • Status: Construction started in 2015; completion in 2018 Shandong Steel Rizhao Project • Greenfield project • Capacity: crude steel 8.5Mt • Status: Construction started in 2015; completion in 2017 Liusteel Fangcheng Project • Greenfield project • Capacity: Phase 1 crude steel ~10Mt • Status: Timeline for blast furnace not announced Large users and coastal steel projects to support seaborne demand 10 21 21 22 25 25 39 26 13 11 0 10 20 30 40 50 60 70 2012 2013 2014 2015 2016 Small users 14 large users Large Users Increasing Seaborne Imports 2 projects under construction 3 approved projects Source: China Customs 49
- 50. Coal Capacity Reduction Target 2017 coal capacity reduction target @ 150Mt Steel Capacity Reduction Target 140 65 50 25 0 20 40 60 80 100 120 140 160 2016-2020 target 2016 actual 2017 target 2018-2020 remaining target Milliontonnes 800 290 150 360 0 100 200 300 400 500 600 700 800 900 2016-2020 target 2016 actual 2017 target 2018-2020 remaining target Milliontonnes Source: Governmental announcementsSource: Governmental announcements Capacity Reductions Continue in China 50
- 51. 0 10 20 30 40 50 60 70 80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 HMP forecast by CRU HMP forecast by Wood Mackenzie Seaborne Steelmaking Coal Imports (average Wood Mackenzie and CRU) Mt India’s Hot Metal Capacity; Projects and Operations Seaborne Steelmaking Coal Imports Required to Meet India Hot Metal Production Seaborne steelmaking coal imports forecasted to increase by >25% Growing India Steelmaking Coal Imports Actual HMP (WSA) z 51
- 52. 2nd Largest Seaborne Steelmaking Coal Supplier High quality, consistent, reliable, long-term supply Competitively positioned to supply steel producers worldwide North America ~5% Europe ~15% China ~20% Asia excl. China ~55% Latin America ~5% 52
- 53. An Integrated Long Life Coal Business 53 Prince Rupert Ridley Terminal Vancouver Prince George Edmonton Calgary Westshore Terminal Quintette Cardinal River Elk Valley Kamloops British Columbia Alberta Seattle Elkford Sparwood Hosmer Fernie Fording River Greenhills Line Creek Elkview Coal Mountain ElcoElk Valley 1,150 km • >1 billion tonnes of reserves support ~27 Mt of production for many years • Geographically concentrated in the Elk Valley • Established infrastructure and capacity with mines, railways and terminals • Only steelmaking coal mines still operating in Canada; competitive globally Neptune Terminal 53 Coal Mountain Phase 2 53
- 54. 0 50 100 150 200 250 300 350 Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 Q42013 Q12014 Q22014 Q32014 Q42014 Q12015 Q22015 Q32015 Q42015 Q12016 Q22016 Q32016 Q42016 Q12017 US$/tonne Teck Realized Price (US$) Benchmark Price Average realized price relative to the benchmark price is a function of: 1. Product mix: >90% hard coking coal 2. Direction of quarterly benchmark prices (QBM) and spot prices - Q4 2016 average realized price was higher than benchmark price - Q1 2017 average realized price was 75% of US$285/t benchmark, which was higher than Q4 2016 Historical Average Realized Prices Average Realized Price in Steelmaking Coal Realized prices averaged 94% of QBM over the past three years (2014-2016) 96% 88% 93% 94% 92% 91% 99% 54
- 55. 46 35 32 3 1 2 35 28 26 15 12 8 2014 2015 2016 Total cash unit costs down 32% from 2014 to 20162,3 Total Cash Unit Costs2 US$/t 2014 2015 2016 Change Site $46 $35 $32 -30% Inventory Adjustments $3 $1 $0 -100% Transportation $35 $28 $26 -26% Unit Cost of Sales (IFRS) $84 $64 $603 -29% Capitalized Stripping $15 $12 $8 -50% Total Cash Unit Costs2 $99 $76 $683 -32% Sustaining Capital $6 $2 $1 -83% All In Sustaining Costs2 $105 $78 $693 -35% 1. In US dollars per tonne. Assumes a Canadian dollar to US dollar exchange rate of 1.10 in 2014, 1.28 in 2015 and 1.33 in 2016. 2. Steelmaking coal unit cost of sales include site costs, inventory adjustments and transport costs. Total cash costs are unit cost of sales plus capitalized stripping. All in sustaining costs are total cash costs plus sustaining capital. Non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” section of our quarterly press releases for further information. 3. Includes one-time collective agreement settlement charges of ~US$2 per tonne in 2016. IFRS Steelmaking Coal Unit Costs1 $99 $76 IFRS IFRS $683 Site Inventory Transport Capitalized Stripping Collective Agreement 55
- 56. Competitive on Steelmaking Coal Margin Curve $(20) $- $20 $40 $60 $80 $100 US$perTonne Operating Margin1 Source: Wood Mackenzie • High quality hard coking coal assets provide strong margins • Competitive mining costs • Operations well positioned in a volatile market Teck 1. Quality-adjusted operating margin, based on Wood Mackenzie’s data set for 2016 and utilizing an FOB port equivalent benchmark price of US$131 per tonne for the highest quality products. Assumes a Canadian dollar to US dollar exchange rate of 1.30 and an Australian dollar to US dollar exchange rate of 1.37. 56
- 57. $70 $75 $80 $85 $90 $95 $100 2012 2013 2014 2015 2016 2017 $/tonne Total Costs1 Coal Strip Ratio Supports Future Production • Low strip ratio in 2016 due timing of permitting • Strip ratio increase expected in 2017 ‒ Coal Mountain near end of life ‒ New developments have higher strip ratios & better quality coal • Going forward, strip ratio expected to trend lower 4 5 6 7 8 9 10 11 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 CleanStripRatio Clean Strip Ratio 1. Total costs are site costs plus transportation costs. 2017 is based on the mid-point of guidance. ~~ 0 57
- 58. Five Year Plan: Sustain 27 Million Tonnes1 Objectives • Manage transition from Coal Mountain • Pursue incremental production capacity in remaining Valley mines • Evaluate Cardinal River mine life extension • Maintain optionality with Quintette & Coal Mountain Phase 2 1. Subject to market conditions. - 4 8 12 16 20 24 28 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Production(milliontonnes) Conceptual Production Profile Fording River Greenhills (80%) Elkview Line Creek Cardinal River Coal Mountain Additional Elk Valley 58
- 59. >75 Mt of West Coast Port Capacity Planned Our Portion is 40 Mt • Exclusive to Teck • Recently expanded to 12.5 Mt • Planned growth to 18.5 Mt Westshore Terminals Neptune Coal Terminal Ridley Terminals West Coast Port Capacity • Current capacity: 18 Mt • Expandable to 25 Mt • Teck contracted at 3 Mt • Teck is largest customer at 19 Mt • Large stockpile area • Recently expanded to 33 Mt • Planned growth to 36 Mt • Contract expires March 2021 MillionTonnes(Nominal) Our share of capacity exceeds current production plans, including Quintette 12.5 18 33 6 7 3 0 5 10 15 20 25 30 35 40 Neptune Coal Terminal Ridley Terminals Westshore Terminals Current Capacity Planned Growth 59
- 60. • Around the world, and especially in China, blast furnaces are getting larger and increasing PCI rates • Coke requirements for stable blast furnace operation are becoming increasingly higher • Teck coals with high hot and cold strength are ideally suited to ensure stable blast furnace operation • Produce some of the highest hot strengths in the world 50 60 70 80 90 100 South Africa Japan (Sorachl) Japan (Yubarl) U.S.A. Canada Other Teck HCC Australia Japan South Africa Australia (hard coking) and Canada U.S.A. Australia (soft coking) 10 20 30 40 50 60 70 80 Drum Strength Dl 30 (%) CSR Teck HCC Coking Coal Strength High Quality Hard Coking Coal Source: Yasuschi, Masashi et al, 1983 60
- 61. Copper Business Unit & Markets
- 62. -300 -200 -100 0 100 200 300 400 500 600 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 Month of Forecast -300 -200 -100 0 100 200 300 400 500 600 Month of Forecast Wood Mackenzie 2017 Refined Balance Wood Mackenzie 2018 Refined Balance Wood Mackenzie Copper Outlook Moved to DeficitThousandtonnes 62 Improved fundamentals supporting stronger prices 2018 market also moved into deficit Thousandtonnes Market now in deficit despite lower demand
- 63. Copper Mine Production Disappoints -1,200 -1,000 -800 -600 -400 -200 0 2005 2007 2009 2011 2013 2015 2017 (Mar) Thousandtonnes 2.8% Disruptions Exceeding 5% 4.1% Significant Disruptions in Q1 2017, With Effects Through Q2-Q3 2017 Source: Wood Mackenzie, CRU, Teck 0 20 40 60 80 100 120 140 160 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ThousandsTonnes Constancia Mt. Milligan Sentinel Grasberg Guidance Grasberg FM Grasberg Export Ban/Strike Los Pelambres Escondida Strike Escondida Slow Ramp Up Cerro Verde Strike Disruptions could total >625kmt 63
- 64. Copper Stocks Rise on Seasonal Slowdown - 50 100 150 200 250 300 350 400 450 500 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2011 2012 2013 2014 2015 2016 2017 US¢/lb Thousandtonnes Chinese Bonded LME COMEX SHFE LME Price • Price correction late 2016 as more balanced market expected • Total stocks (including bonded), in days of global consumption: ‒ Today: 29 days ‒ Early 2013: ~45 days ‒ Average this decade ~33 days Copper Stocks Source: CRU, SHFE, LME, CME, Teck plotted to April 2017 Seasonal stock build in China is being drawn down 64
- 65. LME Copper Stock Drops Not Demand Driven 0 50 100 150 200 250 300 350 400 ThousandsofTonnes LME Copper Stocks Source: CRU, SHFE, LME, CME, Teck plotted to May 4, 2017 SHFE stock falls likely reflect seasonal destocking 0 50 100 150 200 250 300 350 400 ThousandsofTonnes SHFE Copper Stocks plotted to May 4, 2017 65
- 66. Copper Scrap Spreads Incentivize Availability -150 -125 -100 -75 -50 -25 0 25 50 75 100 150 170 190 210 230 250 270 290 310 330 350 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Spread Copper #1 Heavy Copper Cathode Scrap to Comex Copper Arbitrage in US¢/lb Discount No.2 Scrap Imported into China USD/t Scrap arbitrage narrowing; scrap consumers now looking to buy cathodes 66
- 67. Copper Scrap Discounts Narrow & Premiums Improve 0 100 200 300 400 500 600 700 800 900 USA Europe China (domestic) Scrap Discounts Narrowing 0 20 40 60 80 100 120 140 160 180 Jan 2015 Apr 2015 Jul 2015 Oct 2015 Jan 2016 Apr 2016 Jul 2016 Oct 2016 Jan 2017 Apr 2017 Shanghai Refined Metal Imported CIF High USD/t Rotterdam Refined Metal CIF High USD/t US East Coast Refined Metal High USD/t Cathode Premiums Recovering US$/t US$/t 67
- 68. 0 200 400 600 800 1,000 1,200 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Cathode Concs Scrap Blister/Semis 000’stonnes(content) Net Copper Imports Source: NBS Plotted to March 2017 Total copper unit imports climb in 2015 & 2016, but lower YTD by 8% over same period last year China Switching to Copper Concentrates 68
- 69. 52% 43% 25% 37% 23% 20% 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 11th - 5yr Plan Completed 12th - 5yr Plan Completed 13th - 5year Plan Estimate RMBtrillion Transmission Distribution-Urban Distribution-Rural Chinese Copper Demand to Remain Strong Source: CEC, ICA Source: NEA, ICA Significant Power Grid Investment 282 202 71 48 21 19 -7 -75 -100 -50 0 50 100 150 200 250 300 Ktpa Potential Annual Growth in Most Sectors 69
- 70. China Demand Supported by Energy & Pollution • Copper intensity is 4–12 x higher in renewable over non-renewable energy. • Wind & solar require more copper per installed MW. • Current targets by India & China for solar PV alone could add 6.5 Mt of new copper. • Current targets by India & China alone could see an increase of 1200 GW of wind generation which would be 3.6 Mt of copper. De-Carbonization/ Renewables Positive for Copper Demand De-carbonization through the use of renewable energy could add >10 Mt of copper demand by 2030 Copper Distribution within Electricity Generation Sector Source: ICA, Warren Centre, Centre for Industrial Ecology – Yale.70
- 71. China NEV Demand Outpaces ROW • China sold 351,800 Electric Cars in 2016 • Tesla sold 76,200. • China Will Replace All 67,000 Fossil-Fueled Taxis In Beijing With Electric Cars. • IEA estimates that as battery technology improves Average EV could contain 90kg – 150kg of Copper vs 15kg for ICE. • Aaaa • Aaa • Aaaa • aa China Electric Car Sales 47% of World Copper intensity of EV and hybrid vehicles 4-6x that of ICE; penetration could reach 50% China will Leap Frog US & Europe With Electric Vehicles Source: ICA, Warren Centre, IEA, CleanTechnica, Dow Jones, Automotive News. China Electric Car Registrations (December 2016) 71
- 72. • At 2.1% global demand growth, 521 kt new supply needed annually • Mine production falls ~230 kt per year after 2019 • Market finely balanced through 2018 ‒ Could materially change with similar disruption level as 2015 • Structural deficit starts 2019 • Projects delayed today will not be available by 2019 Forecast Copper Refined Balance Long-Term Copper Mine Production Still Needed Source: ICSG, Wood Mackenzie, Teck -6,000 -5,000 -4,000 -3,000 -2,000 -1,000 0 1,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Thousandtonnes 72
- 73. Ore Grade Trends Ongoing Decline will put Upward Pressure on Unit Costs 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024 CopperGradeCu% All Operations Primary Mines Co-By Product Mines - (RH axis) Industry Head Grade Trends (Weighted by Paid Copper) Source: Wood Mackenzie 73
- 74. Quebrada Blanca 2 Overview Project Capital1 US$4.7 billion Capital Intensity2 ~US$16,000 $/tonnes annual CuEq C1 Cash Costs2 US$1.28 per pound Note: Based on Feasibility Study. 1. 100% basis, in constant first quarter of 2016 dollars, excluding working capital and interest during construction. Teck owns a 76.5% share. 2. Average production rates, copper equivalent production rates, C1 cash costs and initial development capital are based on the first full five years of operations. C1 cash costs are net of by-product credits. • Competitive capital intensity • Tier 1 metal producer • AISC well in the low half of the cost curve • Very low strip (included as cash cost) and low sustaining capital Throughput 140,000 tonnes per day Copper Equivalent Production2 300,000 tonnes per year Molybdenum Production2 7,700 tonnes per year 74
- 75. QB2: Robust Economics & Tier 1 Attributes Copper Price (US$ per pound) $2.75 $3.00 $3.25 $3.50 Net present value at 8% (US$ millions) 565 1,253 1,932 2,604 Internal rate of return (%) 9.7% 11.7% 13.5% 15.2% Payback from first production (years) 6.8 5.8 5.0 4.4 Annual EBITDA First Full Five Years (US$M pa) 856 1,002 1,148 1,294 First Full Ten Years (US$M pa) 781 918 1,055 1,192 Life of Mine (US$ million pa) 685 811 937 1,063 NI 43-101 Case Long life (25 years plus optionality) Attractive production metrics (top 15 copper producer globally) Low cost (low half of AISC cost curve) Competitive capital intensity (~$16k per tonne) Attractive jurisdiction for long term ownership 75
- 76. NuevaUnión: A New Approach to Project Development Teck and Goldcorp have combined Relincho & El Morro projects and formed a 50/50 joint venture company • Committed to building strong, mutually beneficial relationships with stakeholders & communities Capital smart partnership • Shared capital, common infrastructure • Shared risk, shared rewards Benefits of combining projects include: • Longer mine life • Lower cost, improved capital efficiency • Reduced environmental footprint • Enhanced community benefits • Greater returns over either standalone project 76
- 77. NuevaUnión Project Overview Initial Project Capital US$3.5 billion Copper Production1 190,000 tonnes per year Gold Production1 315,000 ounces per year Mine Life 32+ years Copper in Reserves2 16.6 billion pounds Gold in Reserves2 8.9 million ounces Note: Conceptual based on preliminary design from the PEA. 1. Average production rates and copper equivalent production are based on the first full ten years of operations. 2. Total copper and gold contained in mineral reserves as reported separately by Teck and Goldcorp. 3. Capital estimate for Phase 1a based on preliminary design shown in 2015 dollars on an unescalated basis. • Copper equivalent production of 250 kt per year • Prefeasibility study completion expected at end Q3 2017 • Proactive & participatory community engagement approach 77
- 78. Satellite Project: 5 Quality Base Metal Assets Galore Creek (50%) • Rare significant copper-gold-silver deposit in developing district • High average grade; potential for first quartile C1 costs • Substantial design and engineering work completed in 2012 Schaft Creek (75%) • Large copper-molybdenum-gold- silver deposit • Long mine life; potential expansion • Continue to advance value added field work, along with desk-top engineering and optimization studies San Nicolás (79%) • High grade, open pit operation with 3-4 year timeline to production • Low first quartile costs, offering quick payback • 2016 drill program and scoping study improved understanding and augmented value Mesaba (100%) • Very large copper‐nickel sulphide resource • In a district with long mining history • Proximity to existing infrastructure, and opportunities for significant development synergies • Teck developed proprietary value- added mineral processing technology Zafranal (80%) • Highly competitive mid-sized copper-gold deposit • Pre-feasibility study published June 2016; indicates robust economics • Advancing Feasibility and Environmental Impact Studies in 2017-2018 Substantial resources in mining friendly jurisdictions 78
- 79. Zinc Business Unit & Markets
- 80. 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 0¢ 50¢ 100¢ 150¢ 200¢ 250¢ LME Stocks SHFE Price Zinc Metal Market Moving Towards Tightness US¢/lb Plotted to May 4, 2017 Source: LME/SHFE Daily Zinc Prices & Stocks Stocks are at the critical level from 2006 Stocks inflection point in 2005/2006 Stocks 80
- 81. Zinc Stocks Approaching Critical Levels US¢/lb Data Plotted from 2000 to May 4, 2017Source: LME, SHFE, Wood Mackenzie Zinc Prices vs. Days of Reported Stocks • Significant mine closures completed • Mine production has fallen • Asian metal production curtailments • Inventories declining • Treatment charges have tightened significantly Days of stocks 0¢ 50¢ 100¢ 150¢ 200¢ 250¢ 0 10 20 30 40 50 60 70 2007 2003 2004 2006 2005 Jan 2014 Jan 2013 Jan 2015 Jan 2016 May 4, 2017 Dec 31, 2016 81
- 82. Source: SMM, Antaike, Teck 0 50 100 150 200 250 300 350 400 450 500 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Chinese Zinc Concentrate Port Stocks Source: Teck, LME, SHFE, RBC Zinc Treatment Charges Low concentrate stocks reflected in low TCs 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 0 50 100 150 200 250 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Imported spot TCs Domestic spot TCs kdmt ImportedTC($/dmt) DomesticTC(RMB/t) Concentrate Stocks at Historic Lows 82
- 83. 2014-2020 2014-2020 Significant Zinc Mine Reductions Large Short-Term Losses, More Long Term -500 -400 -300 -200 -100 0 Century Lisheen RedDog RampuraAgucha HuizeQilinchang Jaguar MaeSod Wolverine SanCristobal Zyryanovsk Cayeli 0 100 200 300 400 500 Antamina Gamsberg DugaldRiver McArthurRiver… Guojiagou Bisha SindesarKhurd Kyzyl-Tashtygskoe ZawarMines Castellanos Sanguikou Angouran ElBrocal Chaihe-Erdaohe AguasTenidas Mungana Caribou… Biliutai Source: ICSG, Wood Mackenzie Teck, Company Reports Source: ICSG, Wood Mackenzie Teck, Company Reports 83
- 84. 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 2010 2013 2016 2019 2022 ThousandTonnes Mine Production Secondary Demand Slowing Zinc Mine Production Growth Zinc Mine Production Has Peaked Uncommitted Projects Increasingly Delayed Existing and Fully Committed Mines Committed and operating mine production peaking & replacement projects delayed Source: Wood Mackenzie, CRU, Teck 0 500 1,000 1,500 2,000 2,500 3,000 2018 Last Year 2018 Today 2020 Last Year 2020 Today 2022F Last Year 2022 Today ThousandTonnes Base Highly Probable Probable 84
- 85. Monthly Chinese Mined Zinc Production Chinese Mined Zinc Production Seasonality is a Potential Catalyst for Market Inflection Source: CNIA Production typically declines in winter (January-April) 0 100 200 300 400 500 600 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 May-14 Oct-14 Mar-15 Aug-15 Jan-16 Jun-16 Nov-16 ThousandsDMT Plotted to Marchl 2017 85
- 86. Zinc Concentrate Stocks at Chinese Ports Declining Plotted to April 2017 Monthly Stocks of Zinc Concentrate 0 50 100 150 200 250 300 350 400 450 500 ThousandTonnes Huangpu port: Zhanjiang port: Beihai port: Yunyuejiang port Fangcheng port: Nanjing port: Qinzhou port: Dalian port: BaYuQuan port: QHD port: Jinzhou port: Yantai Port: LYG port: Source: Teck86
- 87. Concentrate Supply Shrinking Chinese Zinc Metal Imports 0 100 200 300 400 500 600 700 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 kt Mine production Concs imports Annualized Monthly Avg. Supply Spot and Benchmark TCs Tighten • Domestic concentrate production plus imports ~550 kt/mth in 2013 - Currently ~410 kt/mth • Concentrate imports averaged ~95 kt/mth 2013 to 2015 − 2016 averaging 70 kt/mth • Reduction in supply forcing metal production cuts • Continued tightness is evidenced by the falling TCs Source: NBS/CNIA, Customs $0 $50 $100 $150 $200 $250 $300 2011 2012 2013 2014 2015 2016 2017 Spot Annual Down ~80% 0 20 40 60 80 100 120 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 kt 555 kt Down ~10% 502 kt Chinese Zinc Concentrate Supply Declining Source: NBS/CNIA, Customs Source: NBS/CNIA, Customs Plotted to March 2017 Plotted to March 2017 Plotted to April 2017 87
- 88. China 5% USA 20% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Galvanized Steel as % Crude ProductionChina Zinc Demand Construction 15% Transportation 20% Other 5% Consumer Goods 30% Infrastructure 30% Chinese Zinc Demand to Outpace Supply Source: Teck If China were to galvanize crude steel at half the rate of the US using the same rate of zinc/tonne, a further 2.1 Mt would be added to global zinc consumption Source: Teck 88
- 89. Committed Zinc Supply Insufficient for Demand Forecast Zinc Refined Balance Source: Wood Mackenzie • Insufficient mine supply to constrain refined production − 2015-2020: demand increase of 1.8 Mt vs. supply increase 1.3 kt • Market in deficit from 2012 • Inventory that has funded the deficit will be depleted in 2017 • Demand growth projections outpacing supply response (4,000) (3,500) (3,000) (2,500) (2,000) (1,500) (1,000) (500) 0 Thousandtonnes 89
- 90. Energy Business Unit & Markets
- 91. • Price upside limited by US production growth in short term • Production cuts & demand growth expected to balance market in 2017 • Expectations for US$75/bbl WTI by 2025 Energy Market Moving Towards Balance World Liquid Fuels Production & Consumption Source: EIA Short Term Energy Outlook April 2017 North American Rig Count & US Production Source: Baker Hughes, EIA $0 $20 $40 $60 $80 $100 $120 US$/bbl 2014-2017 Historical 2017-2025 Forecast (Real $)* WTI Benchmark Price (US$/bbl) Sources: National Bank of Canada, Sproule, GLJ, IHS 5000 7000 9000 11000 200 600 1,000 1,400 1,800 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Thousandbpd RigcountUnits US Rig Count CAD Rig Count -3 -1 1 3 5 84 88 92 96 100 mbpd mbpd Implied stock change and balance (right axis) World production (left axis) World consumption (left axis) 91
- 92. * Export capacity includes pipeline and rail. Actuals plotted to May 2017. Heavy Oil Benchmark Differentials WTI - Western Canadian Select Differential Edmonton CRW C5 + Diluent Minus WTI Differential $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 US$/bbl Constrained Export Capacity* Sufficient Export Capacity* -$10 -$5 $0 $5 $10 $15 $20 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 US$/bbl Western Canadian Select (WCS) Is The Benchmark Price For Canadian Heavy Oil At Hardisty, Alberta • Contract settled monthly as differential to Nymex WTI • Based on heavy/light differential, supply/demand, alternate feedstock accessibility, refinery outages and export capability • Year to date differential: $13.50 US/bbl • Narrower short-term heavy differentials supported by: • OPEC production curtailments • Strong regional demand for heavy supply • Planned/Unplanned production outages • Differentials forecasted to widen in 2018-2019 − Increased oilsands production − Constrained export pipeline capacity and increased rail shipments • Industry evaluating impacts of new bunker fuel oil sulphur specs that take effect in 2020 Diluent (C5+) at Edmonton, Alberta Is the benchmark contract for diluent supply for oil sands • Contract settled monthly as differential to Nymex WTI • Long-term diluent (C5+) differential of Nymex WTI +/- $5 US/bbl • Based on supply/demand, seasonal demand (high in winter, low in summer), import outages • Supply forecasted to exceed demand − Growing local production, − Contract carriage import pipelines 92
- 93. Oil Liquids – Discovered Resources & Production (Billion bbl) Oil Exploration Success Fell To a Post-1952 Low in 2015 Enough oil has been discovered to meet production in only four of the past 30 years Source: Rystad Energy, Morgan Stanley 93
- 94. Source: BMO Capital Markets, May 2016 Oil Sands Mining Costs Lower Than Understood 0 10 20 30 40 50 60 Cash Cost Royalty Cash Tax Sustaining Capex $/bbl Phase 2: Stabilized Market Where we are now 94
- 95. WTI-WCS* differentials forecast to improve with export pipeline capacity Source: CAPP 2016 Supply Forecast, Lee & Doma, Teck * Western Canadian Select heavy blend. 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 kbpd Western Canada Supply Western Canada Supply Growth Total Pipeline & Local Refining Total Pipeline, Local Refining & Rail TransMountain & Enbridge Keystone XL Excess Pipeline Capacity Western Canada Supply/Demand Balance Recent Pipeline Announcements Constructive Constrained Pipeline Capacity ; Rail Available 95
- 96. Building An Energy Business Strategic diversification Large truck & shovel mining projects World-class resources Long-life assets Mining-friendly jurisdiction Competitive margins Minimizing execution risk Tax effective Mined bitumen is in Teck’s ‘sweet spot’ 96
- 97. • Significant value created over long term • 60% of PV of cash flows beyond year 5 • IRR of 50-year project is only ~1% higher than a 20- year project • Options for debottlenecking and expansion The Real Value of Long-Life Assets Fort Hills Project Indicative Rolling NPV1 1. Indicative NPV assumes US$95 WTI, $1.05 Canadian/US dollar exchange rate, and costs as disclosed with the Fort Hills sanction decision (October 30, 2013). 50-year assets provide for superior returns operating through many price cycles 97
- 98. Strategic Objectives • Successful commissioning & start-up • 12-month ramp up to 90% capacity • Maximize sales volumes & bitumen netbacks • Market diversification Guiding Principles for Fort Hills Marketing Key Commercial Activities • Bitumen production*: 37 kbpd • Diluent acquisition: 11 kbpd • Blend sales: 48 kbpd * Under “steady state” operating conditions. Source: Fort Hills Energy Limited Partnership98
- 99. Blended Bitumen Pipelines TransCanada Energy East Enbridge/Enbridge Flanagan South TransMountain TransCanada Keystone, Keystone XL Market Hub Deep Water Port In Service Pipeline Proposed Pipeline Hardisty or Common Carriage to Midwest / USGC Cushing Flanagan Hardisty Edmonton Saint John US Gulf Coast Europe Asia Vancouver Steele City Asia Superior Montreal Asia Europe • Fort Hills partners have secured long-term pipeline access to Hardisty ‒ Significant Canadian market hub ‒ Access to common carriage and contract capacity pipelines • Will secure contracted pipeline access ‒ North American refining centres & deep water ports ‒ Targeting contracts for 20-25 kbpd of capacity on export pipelines • Balance to be sold at Hardisty, or nominated on Enbridge Portfolio Approach to Market Access Access to deep water ports will add market capacity & diversification 99
- 100. Intra Alberta Logistics On Schedule For Fort Hills Commissioning Rail Local Market Pipeline Legend Bitumen Blend Diluent Existing New East Tank Farm Blending w/Condensate Wood Buffalo Extension Norlite Diluent Pipeline Cheecham Terminal Hardisty Terminal Wood Buffalo Pipeline Athabasca Pipeline Edmonton Terminal Fort Hills Mine Terminal Northern Courier Hot Bitumen Pipeline Teck Options Export Pipeline Kirby Athabasca Twin Pipeline Pipeline/Terminal Operator Pipeline Capacity (kbpd) Teck Capacity (kbpd) Project Construction Status* (% completion) Northern Courier Hot Bitumen TransCanada 202 40.4 Pipeline and Facilities: Tank terminal: East Tank Farm - Blending Suncor 292 58.4 Diluent terminaling and blending Wood Buffalo Blend Pipeline Enbridge 550 65.3 In service Wood Buffalo Extension Enbridge 550 65.3 Pipeline: Pump stations and facilities: Norlite Diluent Pipeline Enbridge 130 18.0 Pipeline: Pumpstations and facilities: Hardisty Blend Tankage Gibsons 425 kbbls 425 kbbls Tank completed 100% 99% 100% 100% 94% 99% 100% 99% 96% *As of December 2016.100