By Peter Kennedy
When Ron Vance joined Teck Resources Ltd. (TSX: T.TCK.b, Stock Forum) (NYSE: TCK, Stock Forum )as senior vice-president corporate development in early 2006, it must have seemed like a dream situation, even for someone who has spent his career in mining finance.
Part of chief executive officer Don Lindsay’s new management regime, the 58-year-old financier was immediately thrown into an $18 billion shopping spree that netted the assets of Fording Canadian Coal Trust, Aur Resources Ltd., and Global Copper Corp.
While, a high profile bid to acquire Inco Ltd. didn’t pan out, he was also front and centre in the effort to restore the company’s investment grade rating following the near disastrous Fording acquisition in 2008, which led to the rescheduling of debt and the recruitment of a major investor from China.
After plunging to a low of $3.35 in the fourth quarter of 2008 the price of Teck’s Class B common shares has recovered to trade at $45.01 on Friday in a 52-week range of $46.92 and $29.76.
“The fact that I have been involved in so many different aspects of the business has been very rewarding,’’ said Vance, during an interview in Vancouver.
A native of UpState New York, he came into the mining industry by accident.
Acting on a tip from a friend he wound up working in the Bunker Hill Mining Co. which in 1975 had a mine in Idaho and a small sales and marketing office in New York.
After being recruited by Cyprus Amax Minerals in 1978, he later joined Newmont Mining Corp. (NYSE: NEM, Stock Forum), moving west to Denver when the gold mining giant transferred its head offices there in 1988, and working in marketing and project development.
During 14 years at Rothschild Inc., he led the British firm’s resource banking and treasury business before moving to investment banking.
When he arrived at Teck in early 2006, Vance found himself working for a company that he described as “resource constrained.’’ But acquisitions made in the last four years have put Teck on a stronger footing, equipping it with a portfolio that will drive the company’s growth plans over the next several years.
It has been widely reported that following the acquisition of Fording Coal, Teck has the ability to increase its coal production capacity by 50 per cent compared to 2009 levels in the next four years.
But the company is also poised to expand its copper output as a result of the Aur Resources and Global Copper acquisitions. A joint venture with NovaGold Resources Inc. (TSX: T.NG, Stock Forum) may also fuel that expansion if the Galore Creek project in British Columbia lives up to expectations.
“We have the ability to triple copper production by 2017 or 2018 compared to where we were in 2009,’’ said Vance.
The core assets that will drive that growth include the Quebrada Blanca, Andacollo and Relincho operations in Chile. An expansion is also under way at the Antamina copper-zinc mine in Peru that aims raise production by 38% there by the end of 2011.
Having achieved commercial production, Andacollo is expectedto produce 80,000 tonnes of copper and 55,000 oz. gold in concentrate annually during the next 10 years. The open pit mine, located beside the town of Andacollo, is a joint venture held 90% by Teck and 10% by ENAMI, a Chilean state-owned entity.
At Quebrada Blanca, Teck and partners Inversiones Mineras S.A. (IMSA) and Empresa Nacional de Minera (ENAMI) have been producing 85,000 tonnes of copper cathodes annually since the late 1990s.
However, the company hopes to expand production to 200,000 tonnes per year (of copper in concentrate) by mining the underlying supergene ore, which contains a significant molybdenum component that can be sold to reduce costs.
The Quebrada expansion is expected to involve the construction of a concentrator and a pipeline to pump water from the ocean to the mine site, which is located about 4,300 metres above sea level.
Water is needed to run the concentrator. A pipeline will also be built to deliver the concentrates to the sea port. “So it’s a pretty interesting project from a conceptual perspective,’’ said Vance.
The development decision is subject to a feasibility study , which is expected to take about 12 to 15 months to complete.
Meanwhile, Teck has a similar plan for the Relincho project in northern Chile, which came with the acquisition of Global Copper, and is located in more hospitable terrain at an elevation of roughly 1,500 metres.
The company is looking at the feasibility of mining roughly 150,000 tonnes per year in concentrates that would be transferred via a pipeline to the coast. Here again, Teck is looking to the ocean as a source of water for the processing plant.
To put all of this in perspective, there are only 28 mines in the world that are 150,000 tonnes or larger.
“There is no question that the company has grown significantly,’’ said Vance. “But even though we have grown quite a lot, we are still of a size that we believe we can and need to be quite nimble.’’
He was referring to Teck Chairman Norman Keevil ‘s long-standing belief that management should recognize opportunities , analyze those opportunities, and act on those opportunities. “Those are his buzz words,’’ Vance said. “I believe that culture is quite prevalent today.’’
Outside Latin America, Teck’s copper expansion plans continue to include the Galore Creek joint venture with NovaGold.
Subject to a prefeasibility study that is examining costs estimates and timelines, the joint venture is eyeing an indicated resource of almost 9 billion pounds of copper and 7.3 million ounces of gold.
But due to the remote location of the site, it is still several years away from being in production.
“It’s a complex project in terms of both the geography and what we have to deal with there,’’ Vance said.
Meanwhile, on the zinc side of its metals business, Teck is moving ahead with the development of a new deposit that will sustain its flagship Red Dog mine in Alaska for the forseeable future.
Vance said zinc hasn’t performed as well as the other metals like copper in the past couple of years.
“But we believe that the near to medium term future looks quite bright.’’
He said the forecast is based in part on the large number of large zinc mines which are approaching the end of their life. Those include the Brunswick mine in New Brunswick and Century mine in Australia.
“There hasn’t been a lot of money invested in large zinc mines over the past several years,’’ Vance said.
Ronald Vance Bio
Ronald Vance joined Teck Resources Ltd. in January 2006 as Senior vice-president, corporate development. Prior to joining Teck, Vance was managing director of corporate finance and investment banking with Rothschild Inc. His career with Rothschild spanned over 14 years.
He also worked with Newmont Mining Corp., both as vice-president, marketing and vice- president, project development.
Vance holds a Bachelor of Arts in Sociology from Hobart College and an MBA from Columbia University.