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Oct 6, 2017

Teck chairman 'happy' with mega oil sands project

Building Teck Resources from the ground up

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The chairman of Canada's largest diversified mining company says he is committed to the company’s investment in Alberta’s oil sands, despite low oil prices and the flight of investment from Canada’s resource sector.

Production is expected to begin shortly at the Fort Hills mega-project operated by Suncor (SU.TO) and Teck (TECKb.TO), Norman Keevil, chairman of Teck Resources told BNN in an interview.

“It’s a good project, it’s nearly finished,” he said. “We are very happy with it, frankly.”

Teck has a 20-per-cent stake in the project, which is expected to pump out 194,000 barrels of oil per day at full capacity. The project has an expected mine life of at least 50 years at its current planned production rate.

In the past year there has been an exodus of international resource players from Canada’s costly oil sands as the region struggles to compete with cheaper U.S. shale oil plays.

Capital investment in Canada’s energy sector dropped by more than 60 per cent over the past two years, according to the Canadian Association of Petroleum Producers. Companies such as Royal Dutch Shell Plc (RDSa.N) and Marathon Oil Corp (MRO.N) have sold off their oil sands stakes.

It makes sense for Teck to be involved in the oil sands since mining accounts for about 40 per cent of the costs of production, with petroleum production making up the remaining 60 per cent, Keevil said. “It’s natural for a mining company and an oil company to get together,” he said

Teck’s investment in the project is part of the company’s strategy to seek out opportunities across the commodities spectrum, Keevil said. In addition to its oil sands project, the company also mines coal, copper, zinc, as well as gold.

“The reason we are diversified is that we are willing to look at opportunities across the spectrum,” he said. 

Keevil is the author of a new book, Never Rest on Your Ores, which chronicles the history of the company. While Teck is dwarfed by other mining giants, such as BHP (BHP.N) and Rio Tinto (RIO.N), Keevil says the company is the perfect size to produce results.

“We are a goldilocks size where we can build value and building value is more important than size,” he said.