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Teck Resources Ltd. TECK-B-T is ratcheting up the capital cost estimate for its QB2 copper mine yet again, as uncertainty persists over an impending restructuring that will likely see Canada’s biggest diversified mining company sell its coal operations.

Since the spring, Vancouver-based Teck has been in talks with companies interested in buying its core metallurgical coal business, after it failed in an earlier attempt to spin it off to shareholders. Among the parties interested in the unit are Glencore PLC of Switzerland, Japan’s Nippon Steel, Indian conglomerate JSW Steel and a consortium led by Canadian mining veteran Pierre Lassonde.

In a conference call with analysts on Tuesday morning, after the release of the company’s third-quarter earnings, Teck chief executive Jonathan Price provided few new details about the sales process, and reiterated that a decision is likely before the end of the year.

“We’re well positioned right now. We’re happy with the level of competition we have, and I’m confident we can get a good outcome for shareholders,” he said.

Teck is increasing its exposure to copper as the metal trades at a significantly higher valuation to coal, owing to its usage in lower carbon energy sources, and its designation in Canada as a critical mineral. At the same time, the company wants to divest its coal business because of the fossil fuel’s poor environmental, social and governance (ESG) credentials.

Teck earlier indicated it is considering either a sale of the entire coal business, or a partial sale, plus spinoff of the remainder to shareholders.

Glencore is the only party known to have put in an offer for 100 per cent of Teck’s coal business. Earlier in the year, Glencore tabled a bid worth US$8.2-billion.

But Teck has been clear that price isn’t the only consideration, with regulatory risk also a major factor in deciding which deal to accept.

“Headline value is important,” Mr. Price said in Tuesday’s call. “But as is the certainty of delivery of that value.”

The federal government, which has the power to block a foreign takeover of Teck on either national security or net benefit grounds, has already expressed reservations about Glencore buying Teck.

Industry Minister François-Philippe Champagne, Natural Resources Minister Jonathan Wilkinson and Deputy Prime Minister Chrystia Freeland, in a letter to the Greater Vancouver Board of Trade earlier this year, wrote: “We need companies like Teck here in Canada – companies with a strong commitment to Canada.”

Teck’s origins date to 1913, when Hughes Gold Mines Ltd. started up a gold mine in Teck Township on the shores of Kirkland Lake, Ont.

Glencore’s history in Canada is considerably shorter. In 2013, it bought fellow Swiss miner Xstrata PLC, which had earlier acquired Canadian nickel miner Falconbridge Ltd. Glencore has a Canadian work force of about 9,000.

As investors wait for the specifics on the fate of the coal business, they’re left to digest a particularly weak third quarter that saw Teck miss the street’s profit estimate by a wide margin, reduce its copper forecast for the year and increase its capital cost estimate for QB2.

The copper mine – a joint venture with Japan’s Sumitomo Metal Mining – was sanctioned in 2018, started production earlier this year and is in the early stages of ramping up to full output. Located high up in the mountains of northern Chile, QB2 has been a particularly challenging project.

Over the years, Teck has revised the construction costs upward multiple times, blaming myriad issues, including engineering problems, challenges in building its associated port and the inflationary impact of the COVID-19 pandemic.

Teck is now disclosing more setbacks at QB2, including construction delays at its molybdenum plant and at the port’s offshore facilities that will drive up costs by US$600-million.

The total capital cost estimate for QB2 is now projected to be between US$8.6-billion and US$8.8-billion, or two-thirds higher than the project’s original US$5.2-billion estimate when the mine was sanctioned.

In Tuesday’s call, Mr. Price said the company is “not pleased” with the latest cost increase, and added that Teck has “a lot to learn” from its experience in building QB2: “We will make sure we understand those lessons well before we sanction our next project.”

Teck’s class B shares fell by 8.9 per cent in trading on the Toronto Stock Exchange on Tuesday to close at $48.49 apiece.

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