Teck Resources Ltd. Teck Resources Ltd. is parting ways with chief operating officer Harry (Red) Conger because of massive cost overruns at the company’s QB2 copper mine, two sources familiar with the situation said.
In a terse statement on Monday, Teck TECK-B-T announced that Mr. Conger, who is chief operating officer and president, is retiring effective Wednesday.
Teck chief executive officer Jonathan Price is taking over as president, while the company searches for a permanent COO replacement for Mr. Conger.
The sources said Teck’s board holds Mr. Conger responsible for the troubles at QB2, in northern Chile, and the Canadian miner wants to ensure there won’t be any more cost overruns. The Globe and Mail is not identifying the sources because they were not authorized to speak publicly.
Teck declined to comment.
Mr. Conger could not be reached for comment.
Just last week, Teck announced that the capital cost estimate at QB2, its flagship copper mine, had spiralled to roughly US$8.7-billion, or 85 per cent higher than a US$4.7-billion estimate in 2019.
The problems at QB2 are happening at an a particularly awkward time for the Vancouver-based company, at it tries to reinvent itself as a copper-focused miner.
Since the spring, it 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. Teck wants to divest its coal business because of the fossil fuel’s poor environmental, social and governance credentials.
At the same time, 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.
The recent travails at QB2 mean the pressure is on Teck’s management to prove it can get its copper business back on track.
“Project execution is especially important,” Jefferies analyst Christopher LaFemina wrote in a note to clients last week. “Value creation from organic growth is a key part of the standalone Teck investment case. Delivering projects on a timeline and budget that drives attractive returns is key.”
QB2 was sanctioned in 2018, started production this year, and is in the early stages of ramping up to full output. The mine is located high up in the mountains of northern Chile.
Teck has revised the construction costs of the mine upward multiple times over the past few years, blaming engineering problems, challenges in building its associated port, and the inflationary impact of the COVID-19 pandemic among many other issues.
When Teck announced the latest US$600-million capital cost escalation on Q2B last week, its shares fell by nearly 9 per cent.
Mr. Conger started as COO of Teck in 2020 and was named president last year. Before joining Teck, Mr. Conger was COO – Americas with U.S. copper miner Freeport McMoRan.
Among the parties interested in Teck’s coal unit are Glencore PLC of Switzerland, Japan’s Nippon Steel Corp., Indian conglomerate JSW Steel and a consortium led by Canadian mining veteran Pierre Lassonde.
Niall McGee