In a world that increasingly prioritizes decarbonization and sustainability,
you would think it would be tough times for a mining company. But,
noting “strong coal prices” combined with “solid strategy” revealed
in a virtual investor day, BMO Capital Markets has upgraded Teck Resources Ltd. (TECK:TSX; TECK:NYSE) to Outperform and raised their one-year target to CA$44.00/share (from CA$40.00/share).
In other words, by meeting the world’s conflicting needs for both steel and sustainability, Teck Resources is poised for success.
Teck’s investments in technology and use of cost-effective, low-carbon blast furnace and BOF steelmaking are showing significant benefits.
According to a BMO report, “Yesterday's virtual investor day update provided helpful color company's operations, its corporate strategy, and sustainability initiatives. The important QB2 project is progressing on schedule, investments in technology are showing significant benefits, and cash flows are strong (especially in the case of sustained spot copper and coal commodity prices).”
After a year of COVID-19-related drops in demand, steel supply has become more limited than need. China, which accounts for more than half of the global steel output, has cut production an effort to reduce carbon emissions. However, Teck’s investments in technology and use of cost-effective, low-carbon blast furnace and BOF steelmaking are showing significant benefits. Despite the world’s increasing focus on decarbonization and sustainability,
Teck expects that blast furnace-based processes will still be important steelmaking processes in the foreseeable future.
As factors contributing to the decision to upgrade Teck to Outperform, BMO cited strong cash flows as prices remain elevated in Teck’s key commodities and a clear and well-articulated strategy for integrating sustainability into production to meet global demand.
1) Wendy Hubbert compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor/employee. He/she or members of his/her household own securities of the following companies mentioned in the article: None. He/she or members of his/her household are paid by the following companies mentioned in this article: None. His/her company has a financial relationship with the following companies referred to in this article: None.
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Disclosures from BMO Capital Markets, Teck Resources, Sept. 21, 2021
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