Teck's Quarter of Inflection: Record Copper Profits, Indexation Catalyst, and the Long Walk Toward Anglo American
Copper production surges, QB2 stable for a third quarter, while S&P's indexation proposal adds new spark to the merger story.
TECK · Earnings Call · 2026-07-23
Record Profits on Stable Foundations
Teck Resources turned in another blockbuster quarter, with adjusted EBITDA tripling year-over-year to $2.2 billion and the adjusted EBITDA margin hitting a record 61%. The copper business was the engine, as production rose 25% across all operations and a third consecutive quarter of stable operations at QB2 – the oft-troubled tailings management facility finally looks like it's been put to bed. As CEO Jonathan Price put it bluntly: “we achieved our 3rd consecutive quarter of stable operations.” — Jonathan H. Price, President and Chief Executive Officer · 2026-07-23 That stability is the platform for everything else, unlocking higher throughput, better recoveries, and a 19% improvement in copper net cash unit costs. The stable operations story is now a real profitability driver, not just a management promise. It's a stark contrast to the second quarter of 2025, when the TMF forced downtime and the company was still scrambling to fix the shiploader. "Our expectation here is that we can work through the TMF development issue and put that behind us so that it won't deconstrain operations on an ongoing basis," Price said then. “Our expectation here is that we can work through the TMF development issue and put that behind us so that it won't deconstrain operations on an ongoing basis.” — Jonathan H. Price, President and CEO · 2025-07-24 Now the constraining factors are gone, and the focus has shifted to optimization. The strength was broad-based. Copper margins expanded to 65% from 46% a year ago, and the zinc business – particularly Trail Operations – nearly doubled gross profit before D&A, helped by a ramp in byproduct pricing. With $1.7 billion of operating cash flow, Teck added $756 million to its net cash position in the quarter, pushing it to $1.2 billion.Indexation: The Quiet Catalyst Nobody's Priced In
While the market fixates on copper prices and the Anglo American merger (still awaiting SAMR approval in China), a more subtle but potentially significant catalyst is brewing on the indexation front. S&P Global has thrown a lifeline to foreign issuers domiciled in Canada, proposing a framework that could allow Anglo-Teck to remain in the S&P/TSX Composite Index. The proposal, out for comment until August 21, is a concrete step toward resolving a problem that had the market worried the stock would be dropped from the benchmark upon de-listing from the TSX. "I think the signals are being quite positive here," Price said on the call. “There was some movement on that yesterday when we heard from S&P having released a proposal to the market for comment on the potential for foreign issuers to have indexation.” — Jonathan H. Price, President and Chief Executive Officer · 2026-07-23 That's a marked shift from the prior quarter, when IR chief Emma Chapman could only point to "positive momentum" and an ongoing consultation process. “The good news is we have seen some really positive momentum coming from S&P and the TSX to find a practical solution,” — Emma Chapman, Investor Relations or Corporate Communications · 2026-04-23 she said in April. Now it's a concrete, public document. If the proposal is adopted, it removes a major overhang on the merger's valuation – passive money would keep flowing into the combined entity. It's a real, company-specific catalyst that has been underappreciated.New Money for Critical Minerals: Germanium and Gallium at Trail
Beyond the merger, Teck is doubling down on strategic metals. The government of Canada has signed a strategic investment agreement to support expansion of germanium and antimony production and add new gallium capacity at Trail Operations. The deal, announced July 7, aligns with the broader push for supply-chain security in critical minerals. CFO Crystal Prystai flagged it during the call: “On July 7th, we also announced a strategic investment agreement with the government of Canada to support strategic metals production at Trail.” — Crystal J. Prystai, Chief Financial Officer · 2026-07-23 The initiative is yet to be fully evaluated under Teck's capital allocation framework, but it adds another growth lever to the portfolio. The germanium angle is particularly interesting given its use in infrared optics and fiber optics – a niche where Teck already has a strong position through its Red Dog mine.The $100 Million Question: Rock Bench 6
On the operational side, Teck is weighing a $100 million accelerated TMF investment – constructing a sixth rock bench at QB2 this year – to permanently de-risk the tailings pipeline. In response to an analyst question about the impact on throughput, Price was clear it's about derisking, not boosting output:The capital would allow installation of permanent tailings infrastructure earlier than planned, improving sand deposition efficiency and reducing execution risk. It's a classic reliability investment – one that should further solidify the Rock Bench 6 narrative that's been building since last year's TMF troubles. With full-year guidance unchanged and management pointing to a softer second half (lower grades at Highland Valley, planned maintenance), the market has a clear picture: Teck is executing, but the real swing factors remain the merger close, the indexation decision, and the pace at which QB2 can move from stable to optimized. The stock, however, has already tripled off its lows, and the question now is whether the market is pricing in the indexation outcome or the full value of the Anglo American combination.We do not expect any impact to throughput rates directly the result of the planned actions. We see this as an acceleration and essentially a derisking that allows us to further underwrite that ongoing operational continuity.