An analyst says Teck Resources’ multibillion-dollar Quebrada Blanca 2 (QB2) copper mine in northern Chile continues to face obstacles as it ramps up to full production.
“This mine is now almost close to two years into its ramp up and it continues to have challenges ramping up – it’s still only at about 75 per cent or so of design capacity,” Dalton Baretto, managing director at Canaccord Genuity Corp., told BNN Bloomberg in a Thursday interview.
“Quarter after quarter, management continues to update us in terms of what’s happening, but it seems to have hit a little bit of a plateau there.”
Baretto’s comments came after the Vancouver-based miner reported third quarter earnings Thursday morning.
The company said it booked a $748-million loss from continuing operations attributable to shareholders in the third quarter as it took an asset impairment charge related to its Trail operations in British Columbia.
Despite the loss, the firm brought in $2.86 billion in revenue, up from $1.99 billion during the same quarter last year, while beating earnings per share (EPS) expectations on an adjusted basis.
The EPS beat, however, was largely driven by non-operational factors, Baretto explained, adding that “what the market’s really been focused on is the underlying operating performance.”
Teck shares were down nearly five per cent in mid afternoon trading on Thursday.
The miner also cut its copper guidance for both 2024 and 2025 on Thursday, which Baretto said was “a little bit of an unusual move this early on,” considering the company’s reliance on the metal going forward following the sale of its coal business to Glencore PLC earlier this year.
“This is very much a copper as well as a zinc company on a going-forward basis,” he said, noting that he is maintaining a buy rating on the stock due to his long-term positive outlook on those two base metals.
“Copper gets a lot of airtime in terms of market sentiment just given its role in the energy transition and so on, but zinc pricing has actually increased dramatically this year as well on the back of a number of supply disruptions, so Teck is now very much leveraged in copper and zinc.”
With files from The Canadian Press