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Agnico Eagle Mines Ltd. AEM-T is teaming up with Teck Resources Ltd. TECK-B-T on a Mexican copper and zinc project, in what is a pivot away from precious metals for the big Canadian gold miner.

Toronto-based Agnico said on Friday it will pay US$580-million for a 50 per cent share in Teck’s San Nicolás copper-zinc mine in Zacatecas, Mexico.

The capital cost estimate to develop the site is estimated at roughly US$1.05-billion. Teck and Agnico are targeting 2026 for first production, and they predict the mine will run for at least 15 years. Over the first five years, San Nicolás is expected to produce 63,000 tonnes of copper and 147,000 tonnes of zinc annually.

Teaming up with Agnico will reduce Teck’s financial exposure to San Nicolás, and see it gain a partner to share the risk of project development. Teck also stands to benefit from Agnico’s expertise in Mexico, where it already operates the Pinos Altos mine in the northern part of the country.

Agnico, Canada’s second-biggest gold producer, is currently heavily weighted toward precious metals production, with about 99 per cent exposure to gold and silver. When San Nicolás starts up, precious metals would fall to about 87 per cent of the company’s output, according to RBC Dominion Securities Inc. analyst Josh Wolfson.

“The transaction represents a shift from Agnico’s historical gold focus,” he said in a note to clients. “It is unclear whether this marks a one-off event for Agnico, or a strategic shift and openness to base metals opportunities.”

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Agnico’s acquisition of the copper-zinc project is also one of the first major moves made by its relatively new chief executive officer. In January, Ammar Al-Joundi, Agnico’s long-time president, took over from Tony Makuch, who lasted just 16 days in the CEO job. Mr. Makuch exited Agnico after a power struggle with the company’s executive chairman, Sean Boyd, The Globe and Mail reported earlier this year.

Agnico would not be alone among the big Canadian gold producers in having significant exposure to copper. About 20 per cent of Toronto-based Barrick Gold Corp.’s production comes from the industrial metal. Barrick, the world’s second-biggest gold producer, has also flirted with the idea of becoming much bigger in copper. A few years ago, CEO Mark Bristow publicly mused about the merits of merging Barrick with United States copper giant Freeport-McMoRan Inc.

Many of the world’s biggest mining companies, including BHP Group Ltd. and Rio Tinto Group, are reducing their exposure to dirty metals, and putting more money into copper, lithium and cobalt. Those minerals are increasingly being used in alternative energy, and are sought out by investors who want exposure to ESG-friendly industries. For example, Rio earlier this month said it is willing to pay $4.2-billion to buy to buy the 49 per cent of Canadian producer Turquoise Hill Resources Ltd. it doesn’t already own.

Teck, too, is inexorably moving its business toward copper. The company is currently building a major new copper mine in Chile called QB2. Over time, investors also expect Teck to pare back its exposure to heavy oil and metallurgical coal. The miner has said it is open to selling its stake in the Fort Hills heavy oil project in Alberta.

The Globe also reported last year that Teck was actively looking at either selling or spinning off its coal unit. While metallurgical coal prices have been robust over the past few years, concerns over the damaging environmental footprint of the commodity mean investors don’t ascribe nearly as much value to coal producers as they do to copper or nickel producers.

Shares in Agnico rose by 1.9 per cent on Friday on the Toronto Stock Exchange to close at $55.33 apiece. The company, like many of its peers in the gold mining industry, has seen its stock come under pressure in the past few months because of the steep decline in the value of bullion. Since March, bullion has fallen by about one-fifth, to US$1,670 an ounce.

The hawkish interest rate environment, which has seen many central banks around the world jack-up rates, tends to exert downward price pressure on gold, which yields nothing.

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