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Teck Resources Ltd. blew past profit expectations in its latest quarter, but Canada’s biggest base metals miner is warning that construction costs at its massive new copper mine will likely be higher than anticipated.

Vancouver-based Teck is just more than two thirds of the way through building its QB2 mine in Chile. The project’s construction costs were previously pegged at US$5.3-billion, but costs are now expected to rise by as much as 5 per cent, or US$263-million. The estimate has gone up because of engineering issues around QB2′s tailings facility, and its port.

QB2 is a key part of Teck’s strategy to tilt its portfolio increasingly toward copper and away from metallurgical coal, as investors pull back from minerals with particularly dirty environmental footprints. While the mining and processing of copper generates vast amounts of carbon, its applications in energy storage and other clean-energy areas give it a relatively clean environmental profile.

Harry (Red) M. Conger, Teck’s chief operating officer, said in a conference call with analysts that some of the increased costs are attributable to the fact that QB2′s port needs to be reinforced, because the sea floor underneath it is softer than anticipated.

“To meet the structural criteria that the facility has been designed to, we’re actually having to drive those pilings now deeper down into the seafloor to achieve that structural integrity,” Mr. Conger said.

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The port is necessary not only for shipping copper concentrate to market, but also for pumping saltwater from the nearby Pacific Ocean to a desalination plant, so it can be used in QB2′s mining process. Because of the arid climate in the northern part of Chile where the mine is located, fresh water is in short supply.

Also, a section of QB2′s tailings dam needed to be redesigned because of instability detected during construction.

The company has said neither the changes to the tailings facility nor the modifications to the port will affect the planned startup date for QB2, which is in the second half of next year.

For the quarter that ended on Sept. 30, Teck made a net profit of $816-million, compared with only $61-million in the same quarter last year, when commodity prices were suffering owing to the intensifying COVID-19 pandemic. Twelve months on, the picture has brightened considerably with a powerful snapback in global demand for minerals, including copper, coal and zinc. Teck’s adjusted earnings came in at $1.88 a share, far higher than the consensus estimate of $1.46.

Teck is especially benefiting from booming metallurgical coal prices. The commodity reached a record high during the third quarter, thanks in large part to a continuing international trade spat. China at the moment is refusing to buy coal from Australia. The resulting market tightening has benefited producers in other countries, such as Teck.

Teck also said on Wednesday that it is experiencing broad-based inflation that is driving up the prices of consumables such as crude oil, steel and diesel. And the company is facing increases in shipping charges, stemming from the current global supply chain disruption that has impacted many industries.

Réal Foley, senior VP of marketing and logistics with Teck, said in the conference call that freight rates on coal being shipped from the company’s mines in British Columbia to China have increased substantially.

“If you compare to what they were at the beginning of 2021, they would have been in the mid- to high teens, maybe as high as $20 per tonne. They’re currently in the $33 to $35 range.”

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