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Economic Performance and Contributions

Economic performance, indirect economic impacts, local hiring and procurement practices, community investment.

Why was Economic Performance and Contributions a Material Topic in 2016?

The ongoing slowdown in growth in China and emerging markets in 2015 had a major impact on the global economy. As the world’s second-largest economy and the largest consumer of most commodities, slowing growth in China has created significant drag on the global economy and regional economies around the world. Commodities were particularly hard hit as prices fell below levels experienced in 2008–2009. This downturn in commodity prices has resulted in declining investment and declining revenues to government in resource-dependent regions and economies around the world. In response, governments are increasingly looking at measures to stimulate growth and manage budget shortfalls.

The decline in commodity prices due to the slowdown in China and emerging markets coupled with oversupply made 2015 one of the most economically challenging years on record for the global mining industry. Margins of return for the industry were by far the lowest they have been in 30 years. Across the industry, mining companies focus on measures to maintain economic viability, including asset sales, project cancellations and deferrals, closures and workforce reductions. The commodity price downturn also had a significant impact on mining-dependent communities and countries as jobs were lost and tax revenues fell. Communities were also increasingly concerned about the cyclical nature of the industry and looked to governments and companies to take measures to mitigate the impacts of down cycles. As a result, many mining companies have increasingly focused on engagement throughout the mining life cycle in order to determine and demonstrate long-term mutual benefits. 

Learn More
Mine 2015: The gloves are off - PwC

In line with the rest of the industry, the downturn in commodity markets resulted in decreased revenues and lower profits for Teck. In response, we continued to implement a variety of cost reduction measures, which included a global workforce reduction of 1,000 positions by the end of 2016. In addition, Teck announced in 2015 the suspension of our Coal Mountain Phase 2 project, which will result in the existing Coal Mountain Operation closing in 2017. In the face of impacts on local employment, investment and procurement, we have increased engagement with local communities in order to be transparent about the challenges we are facing, the steps we are taking to address them and the potential impacts they may have on the community. Through this engagement, we work to maintain trust, mitigate impacts where possible and create mutual benefits for the long term.

Performance Highlights

$8.3 billion

Revenue and gross profit before
depreciation of $2.6 billion

$1.95 billion

Cash flow from operations 

Over  $6.7 billion

of liquidity at the end of 2015; cash balance of $1.9 billion
and a US$3.0 billion unused line of credit

$16.7 million

in community investments

Our Targets and Commitments

We are committed to providing long-term economic opportunities through local hiring and procurement coupled with strategic community investments to encourage lasting positive benefits for the communities in which we operate.

Our annual community investment budget is 1% of average annual earnings before taxes during the preceding five-year period. With a budget tied to earnings, our success as a company directly impacts our ability to invest in the communities where we operate.


How Does Teck Manage Economic Performance and Contributions?

Teck works to generate value from the extraction, processing and sale of mineral, coal and metal resources. This requires our operations to be economically viable across a range of commodity prices. We achieve this by focusing on maximizing the cost-efficiency of our operations and ensuring we receive full value for our products. This in turn ensures the longer-term sustainability of our operations and their economic contributions to communities including employment, procurement, capital investment, revenues to governments and Indigenous Peoples, and dividends to shareholders. 

We also recognize that our ability to operate depends on the support of local communities and that economic development needs to be managed responsibly so that it does not lead to dependence. As such, we focus on facilitating long-term economic opportunities through local hiring and procurement coupled with strategic community investments to encourage lasting positive benefits for the communities in which we operate

Promoting long-term employability and economic resilience will help support the sustainability of communities throughout the mining life cycle and ensure that we leave a positive legacy. Sourcing local goods and services and hiring people locally helps gain community support for our activities, enhances our local knowledge, builds capacity, and mitigates business and social risks. Reflecting this, one of our 2015 goals under our sustainability strategy was for operations to enhance local employment and procurement opportunities. 

Local hiring is a priority at Teck operations. In order to ensure that the communities most directly affected by our activities benefit through their interactions with us, we have been working to develop a consistent approach to the definition of “local’ at each operation. 

As part of defining local, we determined the need to identify geographic and time-scale criteria. In order to determine what constitutes the local geographic area of each operation, we completed “Area of Influence” exercises at all of our operations to identify those communities and areas that are directly influenced by our activities. This improved the clarity of the geographic criteria of what constitutes the local area. Next, we considered how long a person needs to live in an area before they can reasonably be considered local. This is clearly a highly subjective question and there was no established industry norm. Through our work, we established that if a person asserts that their primary residence is within the direct area of influence at the time they apply to work at our operations, then the applicant will be considered local. Human Resources personnel at our operations have started using this information in their assessment of applications so that those who fall under our direct area of influence are identified as local in the hiring process. To ensure that local hires have the skills necessary for advancement, we focus on access to training opportunities at or near Teck locations. In 2016, our Communities and Human Resources teams will work together to better define the weighting of the local criterion during the hiring process.  

For local procurement, we consider each operation’s definition of local, and we work to weight this positive criterion with other criteria such as the ability to meet our needs, health and safety performance, and competitiveness. Whenever possible, sites look for opportunities to utilize local suppliers, providing that they meet our standards and provide cost-competitive goods and services. At some of our sites, local suppliers also include those who self-identify as Indigenous Peoples.

Community investment is a key pillar of our company’s overall commitment to communities where we live and work. We contribute to community organizations to help support community development priorities and to enhance specific community objectives. Community investments also help build and maintain our social licence to operate, manage social risks, enhance our reputation and improve employee recruitment and retention.  

Our community investment program is guided by best practices from the International Finance Corporation, the London Benchmarking Group and Imagine Canada. Our annual community investment target is 1% of average annual earnings before taxes during the preceding five-year period; with our target tied to earnings, our success as a company directly impacts our ability to invest in the communities where we operate. 

In particular, our community investments are focused on:

  1. Health – programs and initiatives that improve the status of health in a community, including child and maternal health, access to health services and reductions in the prevalence of disease. 
  2. Education – programs and initiatives designed to enhance access to educational resources and training opportunities, including early childhood education, primary and secondary schooling, lifelong learning and institutions of technical training and higher education, with particular emphasis on programs of relevance to the mining, metals and energy industries.
  3. Environment – programs and initiatives designed to support and enhance environments, with particular focus on water, biodiversity (including wetlands protection and enhancement of fish and wildlife habitats, flora and fauna) and climate.
  4. Community – programs and initiatives designed to enhance social and economic sustainability and the capacity to earn a living or improve livelihoods, including support for business development, agriculture, subsistence activities, employment initiatives, food security and vulnerable groups. This category also includes support of relevant community and Indigenous organizations focused on social and community programs, and sponsorship of athletic and recreational activities and events and teams where the main goal of the investment is to promote community spirit and wellness.
  5. Other – from time to time, we support initiatives not covered in our four primary categories.

Our approach to community investment is based on the knowledge we gain through the following activities:

  • Collecting social baseline information and understanding our area of influence
  • Mapping, prioritizing and directly engaging with COIs 
  • Understanding social impacts and the needs of particular communities
  • Identifying potential risks and opportunities
  • Developing a strategic engagement plan linked to social risks in order to effectively engage with COIs
  • Assessing and incorporating engagement and social baseline information into our community investment plan

Our internal community investment policy guides how we align business drivers with community priorities, and guides our approach to providing long-term community benefits. Our community investment program is administered by the Corporate Community Investment Committee, which consists of the Chief Financial Officer, the Chief Operating Officer, the Senior Vice President, Sustainability and External Affairs and the Vice President, Community and Government Relations. Sites and Project Teams develop and submit proposed community investment budgets to the Committee for assessment. The Committee considers several factors, such as the social needs of the community in question, the outcome of social/risk assessments and the availability of other funding partners when evaluating and ultimately approving budgets. 

The geographic distribution of our contributions can be categorized at a local, regional, provincial/state, country or global level. We understand that building and maintaining our community relationships is essential, not only to our success, but also to the sustainable future of communities. That is why much of the focus of our community investment program is designed to support the many communities where we live and work.

Planning for Community Investment Fluctuations at Highland Valley Copper Operations with United Way

For more than 25 years, Highland Valley Copper Operations (HVC) in southeast British Columbia has hosted an annual fundraising campaign with the local branch of the United Way. With high levels of participation from employees, this has been an important community investment effort for the site. HVC works closely with the United Way, with employees serving on United Way community impact councils and the board.

When the community investment budget started to decline in 2013 due to the downturn in the mining industry, HVC hosted a workshop with United Way personnel to understand how a reduction to the campaign would affect them. In 2013, HVC’s total campaign (including employees' personal donations and a corporate equivalent contribution) was funding 27% of the local United Way’s annual operating budget, so a decrease in donations from HVC and Teck would have had a big impact on the organization. From 2013 to 2015, HVC worked closely with United Way to manage this decline in corporate contributions, which included clear and consistent communication, and worked with United Way to ensure their key programs continue to be delivered long-term.

What was Our Performance in Economic Contributions in 2015?

We contribute to the wealth and prosperity of the countries, regions and communities where we operate by generating economic value that includes tax and royalty payments, local hiring and procurement and community investments. We work to improve efficiency of our activities and reduce our operating costs to maximize economic value generated. 

Economic Value Generated and Distributed in 2015

In 2015, we generated approximately $8.3 billion in revenue and distributed approximately $6.9 billion in economic value distributed as defined by the Global Reporting Initiative (outlined in the table below). We paid dividends at an annualized rate of $0.20 per share and paid $255 million in income and resource taxes to various levels of government, creating benefits where we operate. Additionally, we contributed $16.7 million to charitable organizations and projects worldwide through our community investment program in support of community development, environmental protection, human health and education.  

In 2015, we incurred a loss attributable to shareholders of $2.5 billion, or $4.29 per share. This compares with a profit of $362 million or $0.63 per share in 2014, and $961 million or $1.66 per share in 2013. The reductions are due mainly to the $2.7 billion of after-tax impairment charges taken in 2015 and declining commodity prices, partially offset by the effect of the strengthening U.S. dollar and our cost reduction initiatives. See our 2015 Annual Report for more detailed information on our financial performance.

Table 2: Economic Value Generated and Distributed (Dollars in millions)







2015 Total

2014 Total

2013 Total

Economic Value Generated












Economic Value Distributed


Operating Costs1









Wages and Benefits









Payments to Providers of Capital





Income and Resource
Taxes paid2


$ 14

$ 82






Community Investments




















Economic Value Retained









(1) Per income statement (fiscal year). Operating costs include operating expenses at our mining and processing operations and our general and administration, exploration, and research and development expenses. Employee wages and benefits are not included in the total but are specified separately.
(2) This table reflects income and resource taxes paid. Other taxes (property, payroll, royalty, etc.) are not included, but some taxes may be reflected in operating costs. The amount is found in of our Annual Report. Breaking this table down to reflect all components is beyond the scope of this report.

Local Hiring and Procurement in 2015

The table below displays definitions and data that reflect our approach to tracking local employees and local procurement until the end of 2015. The geographic criterion of “local” was broad and place of residence was not solicited during the application process at all operations, but instead may have been solicited after hire. As such, the below figures may be overstated given that some employees likely moved to the broadly defined local area as a result of securing employment with Teck and did not live in the local area at the time of application. Increases and decreases in local procurement are influenced primarily by site-level construction and maintenance activity, as well as by the availability of suppliers in the local area. Please refer to the Indigenous Peoples section on page 63 for discussions of our performance regarding sharing the benefits with Indigenous Peoples. 

Table 3: Local Employment and Procurement in 2015 1,2

Operation # of Local Employment % of Local Employment % of Senior Management Roles Filled by Locals % of Spending on Local Suppliers     Definition of Local
Cardinal River   307   92    42   Regional 
Carmen de Andacollo 386    57 0 19 Regional
Coal Mountain 195    73 71 48 Regional
Elkview 651  67 96 48 Regional
Fording River 729 69 92 48 Regional
Greenhills 415 70 69 48 Regional
Highland Valley Copper 1,013 94 14 29 Regional
Line Creek    319 67 70    48 Regional
Pend Oreille  163 69 13  12 Regional
Quebrada Blanca         316 52 15 24 Regional
Red Dog  226 68 8 55 State-wide
Trail Operations  1,455 99 90 24 Regional
Overall  6,175 80 48 27 As Above

(1) Operational data is not directly comparable as there are differences in how each operation defines “local” and tracks data.
(2) Senior management are defined by their compensation band.

Community Investment in 2015

We continue to meet our target of donating 1% of our average annual pre-tax earnings during the preceding five-year period and are committed to doing so going forward. Our community investment expenditures in 2015 were $16.7 million. 

With our recent decline in earnings, our total community investment spending has declined and will continue to decline in the future. This has the potential to impact organizations that receive our community investment funds, so we have been communicating early with those organizations to allow them to prepare for and adapt to the change. In addition, we are also working to support these organizations in finding other funding sources and assist in fundraising efforts such as introductions, letter writing and drafting proposals. In this way, we ease dependence on the company while also helping to develop the organization’s capacity in a manner that diversifies their funding sources. 

Guided by the London Benchmarking Group, we have a community investment reporting framework to ensure that we report our contributions accurately each year. The framework has four categories: 

  1. Why We Contribute – the motive for contribution, from philanthropic donations to community and infrastructure development to commercially driven engagement.
  2. What We Support – the categories of our contributions, such as health and education.
  3. How We Contribute – the type of contribution, whether made in cash or in-kind.
  4. Where We Contribute – the geographic spread of our contributions.  

Within the ‘Why we contribute’ category, we define philanthropic investments as a response to a request from an organization, community and infrastructure developments as contributions to programs that enhance the well-being and infrastructure development in a community, and commercial initiatives as investments with a direct business benefit through the promotion of our company as well as a benefit to the communities where we live and work.

Figure 4: Where We Contribute


Figure 5: What We Support


Figure 6: Why We Contribute 


Table 4: Community Investment Types





Philanthropic Investments




Community and Infrastructure Developments




Commercial Initiatives




Table 5: Community Investment by Site 1, 2, 3, 4





Carmen de Andacollo




Coal operations(1)




Duck Pond




Highland Valley Copper




Pend Oreille




Quebrada Blanca




Red Dog(2)




Trail Operations




Corporate Offices and Projects(3)








(1) Steelmaking coal operations include: Cardinal River, Coal Mountain, Elkview, Greenhills, Fording River and Line Creek Operations.
(2) The 2012–2014 Red Dog numbers were recalculated to include investments that Vancouver Head Office made in the Northwest Arctic Borough.
(3) Includes Calgary, Santiago, Spokane, Toronto and Vancouver offices as well as resource development projects.
(4) The numbers represent Teck’s portion of ownership only, so some sites do not have their 100% budget represented (Carmen de Andacollo – 90%, Highland Valley Copper 97.5%, Quebrada Blanca 76.5%).

The increase in community investment expenditures at Carmen de Andacollo and Red Dog operations over the last three years is a reflection of recognizing the greater social need in the areas near each of these operations.

Emerging Risk - Product Substitution

Technological innovation, changing regulations and future fluctuations in commodity prices may result in substitutions of certain commodities. For example, new regulation around fuel efficiency standards has prompted some vehicle manufacturers to use lighter weight materials such as aluminum instead of steel. Increased use of technologies such as 3-D printing could lower demand for certain commodities while increasing demand for others. Changes in battery storage could reduce the demand for lead. Environmental regulations – similar to the European Union’s e-waste recycling requirements – could result in an increase in use of recycled metal and mineral products.


Outlook for Economic Performance and Contributions

Persistent low commodity prices are expected to continue to impact Teck’s revenues and associated earnings. This in turn will impact funds available for government, employment, local procurement, community investment expenditures and infrastructure projects. Teck will continue to take measures to ensure the long-term viability of our business and work collaboratively with communities of interest to keep them informed of the challenges we are facing and the actions we are taking. Wherever possible, we will continue to work to mitigate impacts and focus on creating mutual long-term benefits. 

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Teck is a diversified resource company committed to responsible mining and mineral development with business units focused on copper, zinc, steelmaking coal and energy.