Teck Corporation History

Company Perspectives:

Teck's mission is to be the leader in new mine development and operations, by providing the best in engineering talent and systems, having a strong financing capacity and by dealing with our partners on a fair and open basis. Teck projects come in on time and on budget. We welcome new opportunities for successful mine development and the opportunity to establish relationships with new partners.

Company History:

Teck Corporation is one of the world's fastest growing diversified mine development and operating companies, producing gold, silver, copper, zinc, niobium and metallurgical coal. Teck is the largest shareholder in Cominco Ltd., a world leader in zinc and lead as well as a producer of copper. The company has working interests in 11 mines located across Canada and a copper mine in Chile. Teck projects usually involve partnerships or joint ventures with other companies, with Teck operating as the builder and project manager. Teck partners include Adrian Resources, AMAX Inc., Soquem Ltee, Cambior Inc., Inmet Mining Corporation, Kuwait Investment Office, TVX, Rio Algom, Nissho Iwai, Homestake Mining Co., Aur Resources Inc., Cominco Ltd., ENAMI and Sociedad Minera Pudahuel Ltda. (SMP). Their projects include explorations in Australia, Argentina, Bolivia, Brazil, Canada, Central Asia, Chile, Indonesia, Mexico, Panama, Peru, the United States, Venezuela, and West Africa.

The Early Years: Yukon Gold Discovered in 1896

In 1896, gold was discovered in the Yukon Territory at Bonanza Creek by prospector George Washington Carmack. The following July, two steamers carried Yukon prospectors and gold valued at over $1.2 million into the ports of Seattle and San Francisco--a ground-breaking event that opened the famous Klondike Gold Rush of the 1890s. Within two years thousands of men and women trekked north, inspired by dreams of mining their fortunes. Some were more fortunate than the majority, forming businesses that grew and prospered. Such was the case with the Yukon Consolidated Gold Corporation (YCGC), which would eventually grow to become the largest operator in the area. Between 1932 and 1966, YCGC produced 1.7 million ounces of gold, all from the rich river gravels. In later years, YCGC became part of Teck Corporation through a 1978 amalgamation actuated by Norman Keevil.

Norman Keevil--father of the 1990s Teck Corporation President and CEO Norman B. Keevil--began operating as a copper miner when he started the Temagami Mining Company, Ltd., following the discovery of high-grade copper deposits in Ontario's Lake Temagami region. After purchasing several other mining operations and merging with others, Keevil would eventually form Teck Corporation. Teck was derived from the Teck-Hughes Gold Mining Company at Kirkland Lake, Ontario--an operation that had been created in 1913. At that time, Teck-Hughes was a relatively small company with a few small gold mines.

The 1960s-1980s: Growth as a Mining Development Company

Norman Keevil's son, Norman B. Keevil, began working for Toronto-based Teck-Hughes Gold Mines Ltd. in 1962. The younger Keevil shared his father's interest in geology, according to David Berman of Canadian Business, but planned "to pursue a career in academia and actually accepted a job in the geology and geophysics department of a U.S. university." After half a dozen or so refusals to his father's request that he join Teck, the younger Keevil finally relented. Under his youthful and ambitious direction, the company moved it's base to Vancouver, British Columbia, where it grew into a substantial mining development company and began a new phase of rapid expansion. Norman B. Keevil was appointed President and CEO in 1981.

Jewelry fabrication was the largest commercial use for gold--one of Teck's principal products--and usually accounted for about 25 percent of the company's revenues. In 1980, Teck developed a placer gold operation around the area of the Klondike Gold Rush near Dawson City, Yukon Territory. Digging and scraping was conducted adjacent to an area which was mined by dredging between the years of 1914 to 1921. Due to its location in the permafrost-zone, the harsh climate dictated that the operation was seasonal. During the mining season, the surface operation used large CAT tractors and scrapers to mine 800,000 cubic yards per year, resulting in 210,000 cubic yards of paygravel that was washed through a sluicebox. On average, 23 people were employed to produce approximately 7,000 ounces of gold per season, making the Klondike Placer Gold Mine one of the largest and most successful alluvial mining operations in the Yukon.

During this time, the David Bell Mine was discovered by David Bell in 1981. Teck managed the development and construction of the mine in the Hemlo Gold camp of Northern Ontario. According to company reports, the mine was developed through a 1,160 meter production shaft, and mining was done by process of longhold stoping (working a steplike part of a mine where ore, etc. is being extracted) with delayed cemented hydraulic backfill. The mill utilized a two-stage grinding circuit, employing semi-autogenous grinding and ball milling. Gold was recovered from solution using carbon in pulp. The gold was recovered from carbon by pressure stripping and was then electrowon from strip solution. Cathodes were smelted to produce dore bullion. Homestake Mining Company shared a 50 percent joint venture interest in the Bell Mine project.

By the end of the decade, the Williams Gold Mine was the largest gold mine in Canada, producing 450,000 ounces of gold per year. In 1989, the Supreme Court of Canada upheld a 1986 Supreme Court of Ontario judgment awarding the Williams Gold Mine to Teck and its 50 percent joint venture partner Corona Corporation, which would later become the Homestake Mining Company. Teck's experienced management resulted in reductions in operating costs of 20 percent per ton, while increasing throughput by 1,000 tons per day. The facility operated the largest gold milling plant in Canada, using semi-autogenous grinding and a gold recovery circuit which was later expanded to produce 6,000 tons per day.

Expansion and Joint Ventures in the Early 1990s

As a means of balancing the volatile gold market and supply fluctuations, Teck began expanding into the major production of base metal products in the 1990s. In 1991, the Metall Mining Corporation--a Toronto-based subsidiary of Metallgesellschaft AG of Frankfurt, Germany--traded most of its holdings in Cominco Ltd. to MIM Holdings Ltd. (an Australian metals and coal producer) and Teck Corporation, in a stock transfer worth about $170 million. At the same time, Metall strengthened its holdings in MIM and Teck with the intention of pursuing joint-venture base metal projects that were being considered by those companies. Metall acquired 3.7 million shares of Teck's Class A and Class B stock, increasing its Teck holdings to 14.1 percent.

Metall's strategy was to streamline its investments by having one strategic investment in North America and one in the Pacific Rim area, because those areas were considered to be the main mining areas in the world. It also valued Teck and MIM as successful and reliable joint-venture partners. Cominco was the world's largest zinc concentrate producer with its Red Dog, Sullivan, and Polaris mines and would later become the third largest refined zinc producer with its Trail zinc and lead operation and its Cajamarquilla zinc refinery in Peru. After the 1995 acquisition of the Cajamarquilla refinery, Cominco worked to steadily increase its production of zinc.

Cominco was also a significant producer of copper, a substance which was used primarily in electrical wires. Cominco's copper holdings mainly included its 50 percent interest in Highland Valley Copper and its 47.25 percent interest in the Quebrada Blanca copper mine in Chile. Norman B. Keevil explained to Edward Worden of American Metal Market that the Quebrada Blanca Mine's extraction and electrowinning operation would be "bypassing the smelting and refining charges which have been escalating considerably in recent years." Worden reported that the state-owned Empresa Nacional de Mineria retained a ten percent interest in the project, while Sociedad Minera Pudahuel Ltda y Cia held a five percent carried interest in exchange for the use of its patented leaching technology.

Teck reported that 1991 profits declined 59 percent compared with 1990 figures, which was an occurrence attributed to lower metal prices and lower gold production. In the following year, Teck bought over 15 percent of Arauco Resources Corp., a two-year-old junior exploration company that had recently gone public. The company also had numerous gold mining prospects in Chile, plus five copper prospects in Argentina. Teck also increased its share in Pacific Sentinel Gold Corp., a Vancouver exploration company.

Teck and Cominco jointly ran an extensive exploration project in Chile. The joint venture built up a very large property inventory in the high Andes and the coastal copper belts of northern Chile. During this period, Cominco was reporting substantial losses--partly attributed to the company's nickel smelting operations, which were shut down for several months. Thus, Teck also reported losses related to its 22 percent equity interest in Cominco.

In addition to diversification, a continual search for resource development locations remained critical to Teck's future profitability. The company managed an exploration team and a business development team in order to discover, identify, and acquire the reserves which would potentially become operating mines. Teck's early explorations traditionally concentrated on Canadian sites, but became increasingly active internationally as the company began exhausting Canadian options. New exploration opportunities were discovered outside of North America, and offices were established in Singapore, Mexico, Peru, Panama and Chile. The company began planning for further expansion into nearly every country in South America.

Voisey Bay Discovery: 1993

One of the most important mineral discoveries of the century in Canada was the Voisey Bay nickel deposit in Labrador. Vancouver-based Diamond Fields Resources Inc. had discovered the huge deposit almost by accident, and later maintained the majority interest in the mining project. The deposit was found by two prospectors who stumbled across it in 1993. They were looking for diamonds on behalf of their company, and had almost given up at the end of their three-month search. After surveying a 15,000-square-mile area, they were heading home by helicopter when they spotted a gossan, and took samples that were found to be filled with copper sulfide. In addition to nickel, the site also contained substantial amounts of copper and cobalt, with high-grade ore reserve estimates of approximately 25 million metric tons. Annual production of 100 million pounds of nickel and 60 million pounds of copper were estimated. The site was especially attractive due to its high grades of ore and its proximity to the surface, which was expected to cut normal production costs in half.

More than 20 major mining companies expressed interest in participating in the Voisey Bay enterprise. Teck paid $108 million for a 10.4 percent stake in Diamond Fields. Then, due to Teck's experience with open-pit mines, Diamond Fields Resources awarded Teck the approximately $1.5 million contract to conduct a feasibility study "to address mining and concentrate production, power and water supplies, repair facilities and roads, among other things," according to Craig Schiffer in an August 31, 1995 American Metal Market article. It was estimated that total annual revenues of $288 million and a cash flow of $216 million could be expected from the site. Production was scheduled to begin in approximately late 1999, pending successful negotiations with both governmental entities and the Innuit and Innu Tribes, whose traditional hunting grounds and fisheries were located in the coastal waters off Voisey Bay.

The End of the Century and Beyond: Focusing on the Environment

One of the great challenges facing the mining industry has always been to minimize environmental risks. Teck reported that it had adopted a philosophy of prevention, rather than reaction: environmental concerns were addressed throughout the entire process, so as to avoid problems that would need solving later. The company claimed that it tries to emphasize "local concerns and values, environmental conditions, the mining and milling methods used, and techniques for pollution prevention and reclamation technologies." Teck reported that its overall environmental performance at its operations sites continued to be excellent in 1997, with greater than 98.5 percent compliance for effluent water quality. At their Williams/David Bell tailings basin, a water transfer system was established to pump water from the basin into a polishing pond so as to eliminate the need for cyanide treatment. This also allowed the mines to control ammonia levels, and reduced the concentrations of contaminates. Environmental management teams were established to investigate opportunities for recycling at all operations--including the recycling of oil, batteries, scrap metal, paper, and hazardous waste.

Even with all of the company's prevention efforts, two spills occurred in 1997. One took place at the company's Quyintette operation, due to the failure of a decant pipe on a newly-constructed sediment pond. The result was the spill of approximately 800,000 cubic meters of non-toxic sediment-laden pond water into the Murray River. The other occurred at the Tarmoola operation in Australia, when a feed line to the tailings pond burst, releasing 150 tons of tailings. Cleanup was implemented and corrective steps undertaken to prevent future occurrences.

Near the end of the 1990s, approximately 44 percent of Teck's total revenues came from the production of coal, which accounted for $50 million of the company's total mine operating profit in 1997. Its coal operations included the Elkview Mine (located in southeastern British Columbia), the Bullmoose Mine (located in northeastern British Columbia), and the Quintette Mine (also located in northeastern British Columbia). A Coal Task Force was established in 1997 to seek coal development opportunities in Canada as well as in other locations around the globe. The Task Force began by targeting government representatives, mine operators, investment bankers and coal property owners for discussion about operating within their various countries. The Task Force also began investigating methods of working with other coal producers in Canada for the purpose of improving the structure of transportation, port and sales operations.

Also in 1997, the discovery of a massive sulphide deposit in Zacatecas State, Mexico, indicated reserves of copper, zinc, gold, and silver that could be of potential value to Teck following further drilling and metallurgical testing. The company's net interest in the discovery was 52.5 percent. Teck was also involved in a Colorado-based chemical pilot plant for the purpose of converting titanium concentrate to commercial grade pigment. A 1998 feasibility study was conducted to determine its viability. The site contains the largest titanium resource known to be located in North America.

Teck implemented other promising base metal explorations in 1998 in Argentina, Chile, and Mexico, as well as in the Bathurst district of New Brunswick. The company's other investments included a 25 percent share interest in Golden Knight Resources, which holds an interest in the Tarkwa gold mine which is under construction in Ghana, West Africa; a 42 percent interest in Camelot Resources NL, an Australian company which shares a joint-venture with Teck in the Tarmoola gold mine in Western Australia and the Northern Territories; along with other recent investments valued at approximately $89 million.

Prices for most metals were volatile near the end of the 1990s, with gold suffering the largest decline when its price dropped from $369 to $288 per ounce in 1997 alone. Teck reports indicated that the gold decline was influenced less by consumption than by the policies of central banks. Gold prices were expected to recover although it was thought that the practice of forward selling (promising a product to customers and accepting payment before the product was actually available) could moderate the amount of recovery.

Following the weak metal prices, Teck reviewed its expenditure levels, including the cost of exploration and capital spending at the mines. It was decided that the development of the Lobo-Marte, Nuteck, and Petaquilla projects would be deferred. Furthermore, the Klondike placer operation was permanently shut down after the 1997 season, as was the Afton copper mine. Regardless of these decisions--and actually, due to them--the company remained in strong financial condition as it neared the 21st century, and was optimistic about its potential to increase production at its other facilities.

Principal Subsidiaries: Camelot Resources NL (Australia); Central Asian Gold Corp.; Minera Teck Chile, S.A.; Mineral Teck dos Brasil Ltda. (Brazil); Minera Teck Panama, S.A.; Minera Teck Peru, S.A.; Minera Teck S.A. de C.V., Mexico; Nunachiaq Corporation; Teck Australia Pty Ltd.; Teck-Bullmoose Coal Inc.; Teck Exploration Ltd.; Teck Financial Corporation Ltd. (Bermuda); Teck Gold Ltd. (Bermuda); Teck-Hemlo Inc.; Teck Mining Group Ltd.; Teck Resources Inc.; Teck Resources International Ltd. (Bermuda).

Further Reading:

• Berman, David, "Mission: Excellence," Canadian Business, December 1996, p. 71.
• "Canadians Stalled in Kazakhstan," American Metal Market, January 14, 1997, p. 1.
• Caney, Derek, J., "Cominco Resources Incurs C$5.1 M 3rd-qtr. Loss," American Metal Market, November 5, 1993, p. 7.
• Dunn, Brian, "Voisey Bay Discovery Looms Larger by the Minute; Among Biggest Nickel, Copper, and Cobalt Finds," American Metal Market, May 2, 1995, p. 2.
• "Inmet to Sell Stake in Teck," American Metal Market, April 15, 1996, p. 2.
• "Lobo-Marte Gold Project Planned," American Metal Market, December 9, 1996, p. 5.
• "Metall Acquires Teck Corp. Shares," American Metal Market, July 5, 1993, p. 8.
• Mumford, Christopher, "Metall Boosting MIM, Teck Stake Via Stock Swap," American Metal Market, October 18, 1991, p. 1.
• Schiffer, Craig, "Teck Chosen for Voisey Bay Study," American Metal Market, August 31, 1995, p. 2.
• "Teck Boosts Stake in Arauco," American Metal Market, April 30, 1993, p. 5.
• "Teck, Camelot Team for Mt. Edon Buyout," American Metal Market, February 5, 1997, p. 4.
• "Teck Corp. Earnings Register a Dip," American Metal Market, November 17, 1993, p. 6.
• "Teck's Profits Plummet 59 Percent," American Metal Market, February 24, 1992, p. 5.
• Worden, Edward, "Teck Links Up With Cominco to Develop Quebrada Blanca," American Metal Market, December 9, 1991, p. 2.

Source: International Directory of Company Histories, Vol. 27. St. James Press, 1999.

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