Global Electrification And Infrastructure Expansion Will Spur Copper Demand

Key Takeaways

• Accelerated copper growth and operational improvements, combined with policy support for critical minerals, could drive sustained outperformance and greater revenue visibility.
  
• Early adoption of low-carbon mining and digital traceability positions Teck for premium pricing and strong demand from ESG-focused supply chains.
  
• Strategic shift toward copper exposes Teck to regulatory, execution, and geographic risks that could threaten future earnings, margins, and revenue stability amid global decarbonization.

Catalysts

Engages in research, exploration, development, processing, smelting, refining, and reclamation of mineral properties in Asia, the Americas, and Europe.

• Analyst consensus expects a medium-term boost from QB ramp-up and copper growth, but the recent successful independent validation of QB's operational capacity and ongoing debottlenecking initiatives could enable production to surpass current guidance and achieve sustained industry-leading EBITDA margins, making near-term earnings growth and cash generation likely to exceed existing forecasts.
  
• Analysts broadly see robust demand from electrification and infrastructure, but this may understate tailwinds: a global wave of publicly funded grid upgrades and "reshoring" of industrial supply chains could drive an unprecedented surge in copper intensity per capita, positioning Teck for structurally higher realized prices and revenue outperformance throughout the decade.
  
• With governments in North America and Europe intensifying policy support and investment incentives for "critical minerals, Teck stands to directly benefit from regulatory streamlining, fast-track mine development, and long-term supply contracts at premium pricing, all of which could materially lower capital risk and enhance long-term revenue visibility.
  
• Teck's early leadership in low-carbon mining and digital traceability is positioning the company to capture price premiums and preferred access to emerging "green" metals supply chains, likely resulting in above-peer net margin expansion and sustained demand from ESG-focused end users.
  
• Having executed a major exit from steelmaking coal, Teck now has a fortress balance sheet and liquidity of $10 billion, providing strategic flexibility to rapidly sanction and build out multiple copper projects at once-potentially compressing the timeline for doubling production and driving an accelerated increase in earnings and cash flow per share.

Teck Resources Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Teck Resources compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Teck Resources's revenue will grow by 8.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -1.1% today to 16.3% in 3 years time.
• The bullish analysts expect earnings to reach CA$2.0 billion (and earnings per share of CA$4.32) by about July 2028, up from CA$-109.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 20.5x on those 2028 earnings, up from -240.9x today. This future PE is greater than the current PE for the US Metals and Mining industry at 17.5x.
• Analysts expect the number of shares outstanding to decline by 4.16% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.3%, as per the Simply Wall St company report.

Teck Resources Future Earnings Per Share Growth

Risks

• While Teck highlights its strategic pivot toward copper and away from coal, the company remains exposed to potential long-term structural decline in demand for metallurgical coal due to accelerating global decarbonization and energy transition trends, which could impair future revenue and asset valuations.
  
• Teck faces intensifying ESG scrutiny, and tightening global environmental and permitting regulations have resulted in permitting delays and dispute resolution processes at projects like Highland Valley; ongoing and increasing regulatory demands could elevate compliance costs and delay or even strand essential growth projects, reducing future earnings and net margins.
  
• Teck's capital-intensive growth trajectory-particularly the ramp-up at QB and multiple new copper projects-makes the company vulnerable to cost inflation, execution risk, and potential cost overruns, which could squeeze net margins and dampen free cash flow during periods of commodity price volatility or unexpected operational setbacks.
  
• The company continues to operate with significant geographic and operational concentration in a few major assets (particularly in Chile, Peru, Canada, and Mexico); as demonstrated by weather disruptions, power outages, and tailings facility challenges at QB, this leaves earnings susceptible to regional labor disputes, environmental incidents, or changes to host country regulation and policy.
  
• Heightened global resource nationalism and trade protectionism, including tariffs affecting Red Dog zinc sales to China and ongoing macroeconomic/geopolitical uncertainty, could constrain Teck's ability to access key export markets, potentially reducing revenue predictability and impacting overall profitability.

Valuation

• The assumed bullish price target for Teck Resources is CA$77.69, which represents two standard deviations above the consensus price target of CA$62.99. This valuation is based on what can be assumed as the expectations of Teck Resources's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$82.0, and the most bearish reporting a price target of just CA$48.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be CA$12.6 billion, earnings will come to CA$2.0 billion, and it would be trading on a PE ratio of 20.5x, assuming you use a discount rate of 7.3%.
• Given the current share price of CA$52.72, the bullish analyst price target of CA$77.69 is 32.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.