Teck Resources Rides Copper Surge in Earnings Call

Teck Resources (($TSE:TECK.B)) has held its Q1 earnings call. Read on for the main highlights of the call.

Teck Resources painted an upbeat picture in its latest earnings call, combining a sharp rebound in profitability with growing copper momentum and a fortified balance sheet. Management acknowledged pockets of risk in tailings execution, zinc costs, and inflation, but kept guidance intact and emphasized the powerful leverage of current copper prices on cash generation.

Adjusted EBITDA Surges on Copper and Trail Strength

Adjusted EBITDA more than doubled year over year, rising 125% to $2.1 billion in the first quarter of 2026. Management credited record copper sales, firmer commodity prices and optimized feed at the Trail smelting complex, which collectively lifted margins and set the tone for a much stronger earnings profile.

Cash Pile Grows as Liquidity Reaches $9.8 Billion

Operating cash flow reached $1.0 billion in the quarter, pushing net cash up by $338 million to $488 million, with a further $276 million generated in April. With total available liquidity of $9.8 billion, Teck highlighted ample financial flexibility to fund projects, absorb volatility and maintain shareholder returns.

Copper Output and Margins Hit New Records

Copper production climbed 32% year over year to 140,000 tonnes, while copper gross profit before depreciation and amortization jumped 158% to $1.8 billion. The copper gross margin before D&A expanded to 52% from 47%, underscoring strong operating leverage as volumes and prices moved higher together.

QB Delivers Record Copper Sales Despite Maintenance

At the QB operation, copper production reached 56,000 tonnes and record quarterly sales of 70,000 tonnes as inventory was drawn down. Mill availability and asset utilization held at 92% and 87% respectively despite planned maintenance, and management reaffirmed guidance for the asset.

Trail Smelter Profitability Rebounds Sharply

Trail’s gross profit before depreciation and amortization rebounded to $258 million from $80 million a year earlier, a gain of roughly 222%. The turnaround stemmed from a refined feed strategy and stronger by‑product pricing, helping transform Trail from a drag into a meaningful earnings contributor.

Zinc Segment Shows Profit and Volume Gains

Zinc gross profit before D&A rose 72% to $387 million, supported by higher refined output and better performance at Trail. Red Dog zinc sales exceeded guidance at 52,000 tonnes, demonstrating that the segment can still generate solid cash despite planned grade declines.

Unit Costs Edge Lower on Scale and Credits

Net cash unit costs improved across key metals, with copper costs falling by $0.27 per pound and zinc by $0.08 per pound year over year. Management pointed to higher by‑product credits and increased production as the main drivers, partially offsetting broader inflationary pressures.

Highland Valley Expansion Advances on Budget

The Highland Valley mine life extension moved further into execution, with detailed engineering over 90% complete and procurement more than 95% done. Teck invested $188 million in the quarter and kept both the 2026 capex range of $900 million to $1.2 billion and total project cost of $2.1 billion to $2.4 billion unchanged.

QB Tailings Facility Work Reaches New Milestones

Teck completed Rock Bench 4 at QB’s tailings facility in the first quarter and expects Rock Bench 5 to be finished by the end of the second quarter. Sand deposition rates improved after a new cyclone was installed, and a secondary cyclone has been approved to further enhance sand quality and operational stability.

High Copper Prices Supercharge Earnings Scenarios

Management highlighted a highly supportive price environment, with average copper prices reaching a record $5.83 per pound in the quarter. Scenario analysis suggested full‑year EBITDA of about $6.6 billion and operating cash of $5.5 billion at $5.50 copper, rising to roughly $7.1 billion EBITDA and $5.9 billion cash if prices hover near $6.00.

Safety Performance Remains at Best‑Ever Levels

Teck reported a high‑potential incident frequency rate of 0.05 for the quarter, below last year’s annual figure of 0.06. This matched the company’s best‑ever safety result and was presented as evidence that operational intensity is not compromising safety standards.

Anglo Merger Progresses Through Regulatory Pipeline

The merger of equals with Anglo American cleared a regulatory hurdle in South Korea, while reviews in China are progressing as expected. Integration planning is underway, and management kept its timeline for closing and combining the two businesses within 12 to 18 months of the announcement.

Maintenance Weighs on QB Availability but Guidance Intact

QB’s mill availability and asset utilization slipped quarter on quarter to 92% and 87% due to scheduled maintenance and a shorter February. Management downplayed the impact, emphasizing that these were planned events and that overall production and cost guidance for the operation remain unchanged.

Tailings and Infrastructure Execution Risks Persist at QB

Despite recent tailings milestones, Teck acknowledged substantial remaining work to reach steady‑state TMF operations at QB. The timing of permanent infrastructure installation is still under review, with a provisional window around the latter part of the decade, leaving a degree of execution risk through the year.

Zinc Cost Guidance Rises as Volumes Shift

Red Dog’s zinc output reflected lower grades in line with plan, prompting a material increase in annual net cash unit cost guidance to $0.65 to $0.75 per pound from last year’s levels. Management cited lower production volumes and structural changes in the zinc business as key reasons for the higher cost outlook.

Working Capital Build Tempers Near‑Term Cash Flow

Working capital swelled by $834 million in the quarter, primarily from seasonal outflows and a royalty payment. Higher receivables tied to stronger sales volumes and prices also absorbed cash, partially muting the headline benefit from the surge in earnings.

Inflation and Oil Prices Pose Cost Headwinds

Teck flagged inflation and supply chain pressures, particularly around diesel imports into Chile amid geopolitical tensions. With guidance assuming a much lower oil price than current levels, the company highlighted that moves in WTI can materially influence unit cost sensitivities and potentially erode some margin gains.

Conservative Assumptions Add Volatility to Costs

Guidance is built on conservative by‑product and commodity assumptions, including a relatively modest silver price compared with spot levels. While this conservatism means current prices are boosting results, it also introduces sensitivity, creating potential volatility in reported unit costs as markets move.

Index Inclusion for Combined Company Still Unclear

Management noted that potential inclusion of the combined Teck‑Anglo entity in major equity indices is under consultation. The outcome and timing depend on regulatory and market milestones, adding another variable for investors tracking future index‑driven flows.

Guidance Reinforced by Strong Start and Copper Leverage

Teck reaffirmed its 2026 guidance, projecting full‑year EBITDA of about $6.6 billion and operating cash of $5.5 billion at $5.50 copper, with upside if prices stay closer to $6.00. Copper output is guided at 455,000 to 530,000 tonnes with net cash unit costs of $1.85 to $2.20 per pound, while Highland Valley and QB tailings projects remain on budget and on track.

Teck’s earnings call underscored a company riding a powerful copper upcycle while steadily de‑risking major growth projects. Investors were left with a mix of robust current performance, disciplined capital plans and some lingering execution and macro cost risks, but overall sentiment skewed clearly positive as management leaned into the strength of its copper franchise.