marketing...marketing world economy in 2017 4 • transition to a more consumer-based economy •...

MarketingMarch 30, 2017Andrew Stonkus, Senior Vice President, Marketing and SalesRéal Foley, Vice President, Coal MarketingGlenn Burchnall, Director, Energy Marketing and Logistics

Marketing

Forward Looking Information

Both these slides and the accompanying oral presentation contain certain forward-looking statements within the meaning of the UnitedStates Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario)and comparable legislation in other provinces. Forward-looking statements can be identified by the use of words such as “plans”, “expects”or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or“believes”, or variation of such words and phrases or state that certain actions, events or results “may”, “could”, “should”, “would”, “might”or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factorswhich may cause the actual results, performance or achievements of Teck to be materially different from any future results, performance orachievements expressed or implied by the forward-looking statements. These forward-looking statements relating to management’sexpectations with respect to Teck’s expectations to demand, price, production and volatility of the commodities that we produce, as well asexpectation that the energy market will balance in 2017, WTI price expectations, anticipated energy supply shortfall, expected ramp-uptime and Teck share of production relating to Fort Hills and our approach to market access for Fort Hills production.

These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially. Thesestatements are based on a number of assumptions, including, but not limited to, assumptions regarding general business and economicconditions, the supply and demand for, inventories of, and the level and volatility of prices of coal, zinc, copper as well as steel, oil, naturalgas and petroleum. The foregoing list of assumptions is not exhaustive. Events or circumstances could cause actual results to differmaterially. Factors that may cause actual results to vary include, but are not limited to: unanticipated developments in business andeconomic conditions in the principal markets for the products discussed or in the supply, demand, and prices for metals and othercommodities to be produced, changes in interest or currency exchange rates.

Events or circumstances could cause actual results to differ materially. Factors that may cause actual results to vary include, but are notlimited to: factors noted in the various slides and oral presentation, unanticipated developments in business and economic conditions in theprincipal markets for Teck’s products or in the supply, demand, and prices for metals and other commodities to be produced, changes inpower prices, changes in interest or currency exchange rates.

Further information concerning assumptions, risks and uncertainties associated with these forward-looking statements and our businesscan be found in our Annual Information Form for the year ended December 31, 2016, filed under our profile on SEDAR (www.sedar.com)and on EDGAR (www.sec.gov) under cover of Form 40-F, and management discussion and analysis reports and other public filings filedon www.sedar.com or www.sec.gov. Teck does not assume the obligation to update forward-looking statements except as required undersecurities laws.

2

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http://www.sec.gov/

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Marketing

Agenda

Overview

Steelmaking Coal

Base Metals

Energy

Summary

3

Global growth expected to increase to 3.4%, from 3.1% in 2016

• India expected to be the fastest-growing large economy at 7.6%

• China plans to keep growth >6.5%, per the 13th Five Year Plan

• Growth expected to pick up in commodity-exporting emerging markets & developing economies (EMDEs)

• Japan’s growth expected to pick up modestly to 1%1

• US at full employment; US$1 trillion infrastructure package could increase GDP growth to 2.3% in 20172

Global GDP is still growing & may exceed expectations if fiscal stimulus in major economies is implemented

Source: IMF1. EIU forecast of 1% in 2017, fro 0.8% in 2016.2. IMF and EIU forecast GDP growth to increase to 2.3% in 2017, compared with 1.6% in 2016.

Marketing

World Economy in 2017

4

• Transition to a more consumer-based economy

• Infrastructure construction remains a key pillar

• Supply-side reforms, e.g. coal and steel capacity reductions

• Copper demand expected to be strong, driven by power grid and new electric vehicle (NEV) sectors

• Zinc demand expected to remain solid, driven by infrastructure (2017E: >US$2 trillion investment) autos & higher zinc intensity

Investment remains the key to achieving growth goals

Marketing

China’s 13th Five-Year Plan

5

Marketing

Agenda

Overview

Steelmaking Coal

Base Metals

Energy

Summary

6

7

Steelmaking Coal Marketing

Good Market Fundamentals

• Price volatility easing

• Demand growth in emerging markets

• China supply constraints

• Limited restarts

Coal Price Assessments

Source: Argus Plotted to March 17, 2017

• Price induced closures globally

• Supply disruptions from weather & temporary mine failures

• Q4 inventory build by mills due to further supply disruption concerns

• Price induced supply response

• Q1 inventory drawdown by mills as no further disruptions

Supply and demand driven volatility


Price Volatility Easing

60

90

120

150

180

210

240

270

300

$ / to

nne

Quarterly Contract Settlement Argus FOB Australia

8

500

600

700

800

900

$0

$20,000

$40,000

$60,000

$80,000

$100,000

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019

f

Nominal GDP, Billion USD(LHS) Crude Steel Production, Mt(RHS)

Ex-China


Improving Steel Demand & Output Globally

Steel Demand

YoY Growth 2017

Global +0.5%

China -2.0%

Developing, ex-China +4%

Developed +1.1%Source: WSA

• Chinese steel demand could be stable given 2017 is a leadership transition year

• Global steel demand expected to grow overall

GDP and Crude Steel Production

500

800

1,100

1,400

1,700

2,000

$0

$40,000

$80,000

$120,000

1986

1991

1996

2001

2006

2011

2016

2021

f

Global

0

300

600

900

$0

$5,000

$10,000

$15,000

$20,000

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019

f

China

Source: WSA, IMF

9

25

30

35

40

45

50

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Milli

on to

nnes

Coking coal output 2015 Coking coal output 2016

Seaborne coal utilization increased by ~2 Mt YoY

Source: Fenwei

China's Coking Coal Imports & Stock ChangesChina’s Coking Coal Production

Approximate Period of 276 Operating Days Policy 35

13

3

8

36

24

2

9

0

5

10

15

20

25

30

35

40

Seaborne Landborne Stock at sixports

Stock at sampleend users

Milli

on to

nnes

2015 2016


China’s Operating Day Policy Influence on Demand

Source: China Customs, Mysteel(Dec. 31)(Dec. 31)

10

Coal Capacity Reduction Target

2017 coal capacity reduction target @ 150Mt

Steel Capacity Reduction Target

140

65

50

25

0

20

40

60

80

100

120

140

160

2016-2020target

2016 actual 2017 target 2018-2020remaining

target

Milli

on to

nnes

800

290

150

360

0

100

200

300

400

500

600

700

800

900

2016-2020target

2016 actual 2017 target 2018-2020remaining

target

Mill

ion

tonn

es

Source: Governmental announcementsSource: Governmental announcements


Capacity Reductions Continue in China

11

Seaborne Coking Coal Imports

Hegang Project• Inland plant relocating to coastal area• Capacity: crude steel 20Mt• Status: Timeline not announced

Guofeng Project• Inland plant relocating to coastal area• Capacity: crude steel 8Mt, hot metal 8Mt• Status: Construction to be started in 2017;

completion in 2021

Shougang Jingtang Plant• Expansion• Capacity: crude steel 9.4Mt (phase 2)• Status: Construction started in 2015; completion in

2018

Shandong Steel Rizhao Project• Greenfield project• Capacity: crude steel 8.5Mt• Status: Construction started in 2015; completion

in 2017

Liusteel Fangcheng Project• Greenfield project• Capacity: Phase 1 crude steel ~10Mt• Status: Timeline for blast furnace not announced

Large users and coastal steel projects to support seaborne demand

1021 21 22 25

25

39

26

13 11

0

10

20

30

40

50

60

70

2012 2013 2014 2015 2016

Small users 14 large users


Large Users Increasing Seaborne Imports

2 projects under construction3 approved projects

Source: China Customs

12

Source: CRU; Wood Mackenzie

Seaborne Steelmaking Coal Imports (Average of CRU and Wood Mackenzie, Change 2021 vs. 2016)

China’s import demand is currently stronger,and coastal plants depend on seaborne imports


Strong Demand Fundamentals ex. China

265

275

285

295

305

2016 Brazil Vietnam Europe& CIS

India Other 2021,ex.

China

China 2021

Mt

13

India’s Hot Metal Capacity; Projects and Operations

Seaborne Steelmaking Coal ImportsRequired to Meet India Hot Metal Production

Seaborne steelmaking coal imports forecasted to increase by >25%


Growing India Steelmaking Coal Imports

0

10

20

30

40

50

60

70

80

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

HMP forecast by CRUHMP forecast by Wood MackenzieSeaborne Steelmaking Coal Imports (average Wood Mackenzie and CRU)

Source: WSA, CRU, Wood Mackenzie

Mt

Actual HMP (WSA)

z

14


Supply Response to Prices

Seaborne Steelmaking Coal Exports (Cumulative change since January 2016 vs. corresponding period in 2015)

Source: Global Trade Atlas, T.Parker, Argus

Steelmaking coal exports still lower than previous period

0

50

100

150

200

250

300

350

-7-6-5-4-3-2-101234

Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17

Australia USA Canada Monthly Avg. of Argus FOB Australia (RHS)

US$

/t

Mt

15

• ~14 Mt restarts announced:− ~1/3 is HCC− Gradual implementation expected

• Majority of restarts announced by:− New owners− Junior companies− Mozambique


Restarts Coming Gradually

0

2

4

6

8

10

12

14

16

2016 2017 2018 2019 2020

USA Australia Canada Mozambique

Mt

Announced Restarts: Seaborne Steelmaking Coal Exports

Few restart announcements since October 2016

Source: Wood Mackenzie; CRU; company reports

As at March 15, 201716

17


Good Market Fundamentals

• Prices doubled in past year

• India leading demand growth

• China cutting production capacity

• Seaborne steelmaking coal exports lower in past year

AppendixSteelmaking Coal Marketing


2nd Largest Seaborne Steelmaking Coal Supplier

High quality, consistent, reliable, long-term supply

Competitively positioned to supply steel producers worldwide

North America~5%

Europe~15%

China ~20%

Asia excl. China~55% Latin America

~5%

19

Marketing

Agenda

Overview

Steelmaking Coal

Base Metals

Energy

Summary

20

21

Base Metals Marketing

Strong Fundamentals

Copper• Global mine production growth slowing• Deficits starting to develop

Zinc• Concentrate market in significant deficit• Smelters cutting production• Reported stocks declining


Slowing Copper Mine Production Growth

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000

Thou

sand

Ton

nes

Mine Production SXEW Scrap Demand

Copper Mine Production Peaks in 2019 Uncommitted Projects Increasingly Delayed

Existing and Fully Committed Mines

Committed and operating mine production peaking & replacement projects delayed

Source: Wood Mackenzie, CRU, ICSG, Teck

0

2,000

4,000

6,000

8,000

10,000

12,000

2018FLast Year

2018FToday

2020FLast Year

2020FToday

2022Last Year

2022Today

Thou

sand

Ton

nes

Base Highly Probable Probable Possible

15%in

Base Case

15% in

Base Case

10% in

Base Case

22

52% 43%

25%

37%23%

20%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

11th - 5yr PlanCompleted

12th - 5yr PlanCompleted

13th - 5year PlanEstimate

RM

B tri

llion

Transmission Distribution-Urban Distribution-Rural


Chinese Copper Demand to Remain Strong

Source: CEC, ICA Source: NEA, ICA

Significant Power Grid Investment

282

202

7148

2119

-7 -75

-100

-50

0

50

100

150

200

250

300

Ktpa

Potential Annual Growth in Most Sectors

23

-300

-200

-100

0

100

200

300

400

500

600

Month of Forecast

-300

-200

-100

0

100

200

300

400

500

600

Month of Forecast

Wood Mackenzie 2017 Refined Balance Wood Mackenzie 2018 Refined Balance


Wood Mackenzie Copper Outlook Moved to DeficitTh

ousa

nd t

onne

s

24

Improved fundamentals supporting stronger prices

2018 market also moved into deficit

Thou

sand

ton

nes

Market now in deficitdespite lower demand


Global Stocks Stable Despite Price Decline

-

50

100

150

200

250

300

350

400

450

500

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2011 2012 2013 2014 2015 2016 2017

US¢/lb

Thou

sand

tonn

es

Chinese Bonded LME COMEX SHFE LME Price

• Price correction late 2016 as more balanced market expected

• Total stocks (including bonded), in days of global consumption:‒ Today: 29 days‒ Early 2013: ~45

days‒ Average this decade

~33 days

Copper Stocks

Source: CRU, SHFE, LME, CME, Teck

plotted to mid-March 2017

Lower prices have not translated into increased stocks

25

• At 2.1% global demand growth, 521 kt new supply needed annually

• Mine production falls ~230 kt per year after 2019

• Market finely balanced through 2018‒ Could materially change with

similar disruption level as 2015

• Structural deficit starts 2019

• Projects delayed today will not be available by 2019

Forecast Copper Refined Balance


Long-Term Copper Mine Production Still Needed

Source: ICSG, Wood Mackenzie, Teck

-6,000

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Thou

sand

tonn

es

26

27

• Global mine production growth slowing

• Demand growth positive

• Deficits starting to develop

• Global stocks are low

• Market needs new projects


Copper Market Moving to Deficit

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2010 2013 2016 2019 2022 2025

Thou

sand

Ton

nes

Mine Production Secondary Demand


Slowing Zinc Mine Production Growth

Zinc Mine Production Has Peaked Uncommitted Projects Increasingly Delayed

Existing and Fully Committed Mines

Committed and operating mine production peaking & replacement projects delayed

Source: Wood Mackenzie, CRU, ILZSG, Teck

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2018LastYear

2018Today

2020LastYear

2020Today

2022FLastYear

2022Today

Thou

sand

Ton

nes

Base Highly Probable Probable Possible

28

Source: SMM, Antaike, Teck

0

50

100

150

200

250

300

350

400

450

500

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Jul-1

4

Jan-

15

Jul-1

5

Jan-

16

Jul-1

6

Jan-

17

Chinese Zinc Concentrate Port Stocks

Source: Teck, LME, SHFE, RBC

Zinc Treatment Charges

Low concentrate stocks reflected in low TCs

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

0

50

100

150

200

250

Jan-

10Ju

l-10

Jan-

11Ju

l-11

Jan-

12Ju

l-12

Jan-

13Ju

l-13

Jan-

14Ju

l-14

Jan-

15Ju

l-15

Jan-

16Ju

l-16

Jan-

17

Imported spot TCs Domestic spot TCs

kdm

t

Impo

rted

TC ($

/dm

t)

Dom

estic TC (R

MB/t)


Concentrate Stocks at Historic Lows

29

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0¢

50¢

100¢

150¢

200¢

250¢

LME Stocks SHFE Price


Zinc Metal Market Moving Towards TightnessU

S¢/lb

Plotted to March 15, 2017

Source: LME/SHFE

Daily Zinc Prices & Stocks

Stocks are drawing down & nearing 2006’s critical level

Stocks inflection point in 2005/2006

Stoc

ks

30


Zinc Stocks Approaching Critical LevelsU

S¢/lb

Data Plotted from 2000 to March 15, 2017Source: LME, SHFE, Wood Mackenzie

Zinc Prices vs. Days of Reported Stocks

• Significant mine closures completed

• Mine production has fallen

• Asian metal production curtailments

• Inventories declining

• Treatment charges have tightened significantly

Days of stocks

0¢

50¢

100¢

150¢

200¢

250¢

0 10 20 30 40 50 60 70

2007

2003

2004

20062005

Jan 2014Jan 2013

Jan 2015

Jan 2016

Mar 15, 2017

Dec 31, 2016

31


Committed Zinc Supply Insufficient for Demand

Forecast Zinc Refined Balance

Source: Wood Mackenzie, Teck

• Insufficient mine supply to constrain refined production− 2014-2020: demand increase of

2.8 Mt vs. supply increase 792 kt

• Market in deficit from 2014

• Inventory that has funded the deficit will be depleted in 2017

• Market moving into significant deficit‒ Demand growth projections

outpacing supply response(6,000)

(5,000)

(4,000)

(3,000)

(2,000)

(1,000)

0

1,000

Thou

sand

tonn

es

32

33


Structural Deficits in Zinc

• Concentrate market in significant deficit

• Smelters cutting production

• Short term production restarts needed

• Stocks declining & insufficient to meet demand

Marketing

Agenda

Overview

Steelmaking Coal

Base Metals

Energy

Summary

34

• Price upside limited by US production growth in short term

• Production cuts & demand growth expected to balance market in 2017

• Consensus expectations for WTI of US$75 per barrel by 2025

Energy Marketing

Market Moving Towards Balance

World Liquid Fuels Production & Consumption

-3

-1

1

3

5

84

88

92

96

100

mbp

d

Implied stock change and balance (right axis)World production (left axis)World consumption (left axis)

Source: EIA Short Term Energy Outlook March 2017

North American Rig Count & US Production

5000

6000

7000

8000

9000

10000

200

700

1,200

1,700

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

Jan-

16

Jan-

17

kbpd

Rig

cou

nt u

nits

US Rig Count CAD Rig Count US 4-week Production Avg.

Source: Baker Hughes, EIA

WTI Benchmark Price (US$/bbl)

Source: IHS, Sproule, Deloitte

$0$20$40$60$80

$100$120

US$

/bbl

2014-2016 Historical 2017-2025 Forecast (Real $)

35

Strategic Objectives• Successful commissioning & start-up• 12-month ramp up to 90% capacity • Maximize sales volumes & bitumen netbacks• Market diversification

Energy Marketing

Guiding Principles for Fort Hills Marketing

Key Commercial Activities• Bitumen production*: 37 kbpd• Diluent acquisition: 11 kbpd• Blend sales: 48 kbpd

* Under “steady state” operating conditions.Source: Fort Hills Energy Limited Partnership36

WTI-WCS* differentials forecast to improve with export pipeline capacitySource: CAPP 2016 Supply Forecast, Lee & Doma, Teck* Western Canadian Select heavy blend.

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

kbpd

Western Canada Supply Western Canada Supply GrowthTotal Pipeline & Local Refining Total Pipeline, Local Refining & Rail

TransMountain & Enbridge

Keystone XL

Excess Pipeline Capacity

Western Canada Supply/Demand Balance

Energy Marketing

Recent Pipeline Announcements Constructive

Constrained Pipeline Capacity ; Rail

Available

37

• US/Canadian heavy refining capacity exceeds Canadian heavy crude oil production

• US Gulf Coast provides largest market for growth

• TransMountain & Keystone XL pipelines will provide increased access to deep water ports

Disposition & Refining Capacity For Canadian Heavy (kbpd)

0600

12001800

2015 2019

Western Canada

0600

12001800

2015 2019

US Rockies0

60012001800

2015 2019

Eastern US/Canada0600

12001800

2015 2019

US West Coast

0600

12001800

2015 2019

US Midwest

0600

12001800

2015 2019

US Gulf Coast

0

1000

2000

3000

4000

2015 2019

kbpd

US/Canada Heavy Crude Refining Capacity

AdditionalCapacityAvailable forCanadian Heavy

Canadian HeavyUsage

Source: CAPP, EIA, Lee & Doma Energy Group

Additional Capacity Available for Canadian Heavy

Canadian Heavy Usage

Energy Marketing

US Midwest/Gulf Coast Key Markets

38

Blended Bitumen Pipelines

TransCanada Energy East

Enbridge/Enbridge Flanagan South

TransMountain

TransCanada Keystone, Keystone XL

Market Hub

Deep Water Port

In Service Pipeline

Proposed Pipeline

Hardisty or Common Carriage to Midwest / USGC

Cushing

Flanagan

HardistyEdmonton

Saint John

US Gulf Coast

Europe

Asia

Vancouver

Steele City

Asia SuperiorMontreal

Asia Europe

• Fort Hills partners have secured long-term pipeline access to Hardisty‒ Significant Canadian market hub‒ Access to common carriage and

contract capacity pipelines

• Will secure contracted pipeline access‒ North American refining centres &

deep water ports‒ Targeting contracts for 20-25 kbpd

of capacity on export pipelines

• Balance to be sold at Hardisty, or nominated on Enbridge

Energy Marketing

Portfolio Approach to Market Access

Access to deep water ports will add market capacity & diversification 39

Energy Marketing

Hardisty is Canada’s “Cushing”• Crude oil storage: 29 mbbls, 425 kbbls contracted by Teck• Export pipeline takeaway capacity: 3.7 mbpd

– Enbridge common carrier– Keystone & Express pipelines– Origination point for 2 proposed pipelines

• Rail car loading capability: 120 kbpd

Source: Gibson Energy40

Energy Marketing

Target Customers

• High quality bitumen that is attractive to refiners

• Targeting key customers throughout North America

• Term contracts under negotiation

Source: Suncor41

Energy Marketing

Summary

42

• Marketing an established, well accepted type of crude

• Well positioned with significant storage at Hardisty market hub

• Developing a portfolio of market access opportunities to diversified markets

Source: Enbridge

Marketing

Agenda

Overview

Steelmaking Coal

Base Metals

Energy

Summary

43

44

Marketing

Summary

Copper• Global mine production growth slowing• Deficits starting to developZinc• Concentrate market in significant deficit• Smelters cutting production• Reported stocks declining

Steelmaking Coal• Price volatility easing• Good demand growth forecast

Energy• Established type of crude • Portfolio of market access opportunities

MarketingMarch 30, 2017Andrew Stonkus, Senior Vice President, Marketing and SalesRéal Foley, Vice President, Coal MarketingGlenn Burchnall, Director, Energy Marketing and Logistics

marketing...marketing world economy in 2017 4 • transition to a more consumer-based economy •...

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