Teck Resources says it faces $1.1-billion hit on Frontier oil sands project without federal approval – The Globe and Mail

Teck Resources Ltd. says it would be forced to take a write down of $1.1-billion on the Frontier oil sands project if the federal government doesn’t approve it.

The Liberals are expected to make a decision by the end of the month on whether Vancouver-based Teck is allowed to proceed with Frontier.

Over the past few months, Frontier has become a political flashpoint in Canada. Its proponents, such as Alberta Premier Jason Kenney, argue that approving the project would boost the ailing provincial economy, but its detractors point out that Frontier would significantly set back Canada’s attempts to reduce its carbon footprint and meet international emissions benchmarks.

An early stage study predicted that the project could produce 260,000 barrels of oil a day, which would make it one of the biggest operations in the oil sands.

But Teck hasn’t proven whether the project which it previously said would cost more than $20-billion to construct, would be commercially viable.

Last month, the miner’s chief executive, Don Lindsay, told investors at a conference that for the project to go ahead, it would need higher oil prices, sufficient pipeline capacity and a partner, to help shoulder the burden.

If the project does get the go-ahead from the federal government, Teck says it will work on trying to prove the project can be viable.

On Friday, the company said in a statement alongside its fourth quarter earnings, that thanks to ongoing technological and operational improvements it believes Frontier will be “technically feasible and commercially viable.”

The uncertainty over the Frontier project comes as Teck struggles with its other oil sands property, which is already in production. Teck took a $910-million write down on Fort Hills, which it co-owns alongside Suncor Energy Inc., in the quarter, due to lower expectations for crude oil prices.

Teck’s fourth quarter results were weaker than expected.

It reported adjusted earnings per share of $0.22 compared to the $0.40 that the street was looking for.

The company also sounded a bleak tone for the year, as it navigates weakness across its core metallurgical coal business.

“Ongoing global economic uncertainty negatively impacted commodity prices in the fourth quarter and that has continued into 2020, exacerbated by the effect on markets from the coronavirus and the impact of severe weather conditions in British Columbia, followed by blockades on rail lines,” Mr. Lindsay said in a statement.

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