Teck Warns of $1.13 BIllion Hit if Trudeau Rejects Oil-Sands Mine
February 23, 2020 EnergyNow Media
By Kevin Orland
(Bloomberg) Teck Resources Ltd. said it would take a C$1.13 billion ($852 million U.S.) impairment charge if Canadian Prime Minister Justin Trudeau’s cabinet rejects its proposed Frontier oil-sands mine, raising the stakes for the government’s decision.The company said in an earnings statement on Friday that it is still studying ways to optimize the project with new technology and other operational improvements. Vancouver-based Teck said it believes the project in northern Alberta will still be technically feasible and commercially viable.The warning from Teck adds to the pressure on Trudeau, whose government’s decision is due this month. His environmentalist base is lobbying against the Frontier mine, saying that an approval would make it difficult for Canada to meet its greenhouse gas reduction commitments.Meanwhile, the country’s energy industry is pushing hard for an approval, warning that turning down Frontier would dissuade future investment in the sector. Rejection would also fuel more anger in western Canada over the lack of progress on resource projects.
Teck’s application for the project relied on long-term oil prices of $95 per barrel during its operating life from 2026 to 2066, levels that global benchmark prices haven’t seen since 2014. Teck said Friday that those economics don’t reflect subsequent efforts to improve the project.
In the earnings statement, Teck disclosed a C$910 million after-tax writedown ($686 million) on its stake in the Fort Hills oil project.
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