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Teck Resources Ltd. is exiting the oil sands business with a $1-billion sale of its stake in the Fort Hills oil sands project to Suncor Energy Inc. to concentrate on its base metals operations.

In the largest oil-sands transaction in years, Suncor will acquire Vancouver-based Teck’s 21.3-per-cent interest, boosting its share to 75.4 per cent and further consolidating oil sands holdings in the region at a time of high oil prices. France’s TotalEnergies owns the remaining interest in Fort Hills, and has said it also plans to part with its oil sands holdings.

Teck had long signaled that it intended to sell its oil sands holding to focus on mining metals including copper and zinc – crucial for electrifying the economy - and to lower its carbon footprint. When he retired last summer, longtime chief executive officer Don Lindsay said environmentally conscious investors had avoided the Teck’s shares because of the oil sands interest. The company also mines metallurgical coal.

Suncor, Canada’s largest oil sands producer and the operator of Fort Hills, was widely viewed as the most logical buyer of the Teck interest.

“This transaction advances our strategy of pursuing industry leading copper growth and rebalancing our portfolio of high-quality assets to low-carbon metals,” Mr. Lindsay’s successor, Jonathan Price, said in a statement. Mr. Price said the company will review where to deploy the proceeds from the sale.

The deal comes with oil sands-industry profits surging due to high crude prices. The sector is also seeking to improve its reputation with investors, governments and the public through an alliance among the largest companies that has pledged to invest billions of dollars in technology to get to net-zero carbon emissions by 2050.

In September, TotalEnergies said it plans to spin off its oil sands interests, which also include a 50-per-cent stake in a project called Surmont, into a new publicly traded company. CEO Patrick Pouyanne said the oil sands stakes do not fit with TotalEnergies’s climate strategy.

The acquisition meets Suncor’s objectives for financial returns and fits with its strategy to “optimize” its holdings around core producing projects, interim CEO Kris Smith said in a statement. It will fund the transaction with cash from asset sales it has in the works, the company said.

With the transaction, Teck will record an after-tax, non-cash impairment charge $950-million in the third quarter of this year, it said. For its part, Suncor said it will record a non-cash charge of $2.6-billion on its existing interest.

Fort Hills, located 90 kilometres north of Fort McMurray, Alta., is the country’s newest oil sands mining project, starting operations in 2018 at a construction cost of $17-billion. It was plagued in its early years with operational problems as well as a government-mandated limit on production when the industry faced a squeeze on export pipeline capacity.

Suncor said on Wednesday that its gross output is expected to be lower than previously projected, and operating costs higher, because of “mine constraints as well as accelerated development of further mine pits for increased sustained long-term production.”

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