As we reflect on 2015 and look to the year ahead, it is clear that the mining industry is facing increasing pressures across all facets of our business. Despite a prolonged and severe downturn in global commodities markets, Teck and its people maintain a dedicated and disciplined approach to managing economic, social and environmental risk. It is this dedication and discipline that defines who we are as a responsible resource company and, importantly, how we act in an ever-changing world.
No aspect of our performance is more important to Teck than the health and safety of our people. In 2015, we continued to build on our actions to improve safety performance, achieving a 25% reduction in our High-Potential Incident frequency compared to 2014 and we had no fatalities. However, our total reportable injury and lost-time injury frequency edged upwards, making it clear that we must remain diligent as we work to reach our ultimate goal of everyone going home safe and healthy every day.
Our operating performance in 2015 was very strong. All operations reduced production costs and all of our business units met or exceeded production guidance. As a result, despite record low commodity prices, all of our major operating mines remained cash flow positive over the year. Given the substantial decline in commodity prices, we continued to take action to maintain balance sheet strength and reduce costs. As part of our focus on cost reduction, we are reducing our workforce by a further 1,000 positions across Teck’s offices and operations by the end of 2016.
Recognizing and respecting the rights of Indigenous Peoples remained a significant focus for Teck. In 2015, we instituted our Indigenous Peoples Policy, formalizing our commitment to working with Indigenous Peoples to ensure their rights, cultural heritage and traditional land use are respected. We also advanced a number of negotiations on agreements with Indigenous Peoples near our operations and projects.
We continued to strengthen our environmental performance and management practices in 2015. As part of this work, last year, we launched a project to pilot the use of liquefied natural gas (LNG) as a haul truck fuel at our Fording River steelmaking coal operation – the first such use of LNG fuel at a Canadian mine. Using LNG fuel has the potential to significantly cut CO2 emissions and reduce our fuel costs. We also achieved a major milestone in the implementation of the Elk Valley Water Quality Plan in southeastern British Columbia with the commissioning of our first full-scale water treatment facility at our Line Creek Operations. The facility is now successfully removing selenium and nitrate from mine-affected waters, helping us achieve the goals of our watershed-based plan to address water quality challenges in the region. As part of our ongoing efforts to improve air quality and reduce dust in the Andacollo region of Chile, Carmen de Andacollo Operations began implementing a detailed Atmospheric Decontamination Plan with Chile’s Ministry of Environment and municipal government officials. Under the plan, we are targeting a 65% reduction in dust emissions over the next two years.
Our sustainability performance was recognized in 2015 by a number of prominent ranking institutes. We were named to the Dow Jones Sustainability World Index (DJSI) for the sixth consecutive year, the Global 100 Most Sustainable Corporations list by Corporate Knights for the fourth consecutive year, and the FTSE4Good Global Index for the first time.
We continually analyze the issues and trends shaping the world around us to help guide our approach to responsible resource development. We gather information and consult with our communities of interest to identify and prioritize the risks and opportunities that have the greatest potential to impact our business.
Like our industry peers, we continue to be affected by the ongoing downturn in commodity markets and low prices for mineral products, which impact all aspects of our business. Throughout 2016, we will continue to take steps to reduce costs and improve efficiency across our operations to ensure we emerge stronger from this challenging period.
The 21st Conference of the Parties (COP21) set out a global path forward to addressing the challenge of climate change and increased the industry’s focus on the role of mining and metals in the transition to a low-carbon economy. We recognize that human activities are contributing to climate change and we are committed to reducing our own carbon footprint and supporting society’s transition to a lower-carbon economy. With a significant portion of our energy use coming from renewable power sources, such as hydroelectricity, Teck is well positioned as the world transitions to a low-carbon future.
Breaches of tailings dams operated by other mining companies have reinforced the importance of health and safety, tailings management and emergency preparedness. We have further strengthened our existing high standards and are working with partner organizations such as the International Council on Mining and Metals (ICMM) to support improved tailings management practices across the industry.
Our approach to responsible resource development is guided by our sustainability strategy, which sets out short- and long-term goals in six specific areas of focus: Community, Our People, Water, Energy and Climate Change, Air, and Biodiversity.
In 2015, we marked five years since the development of our strategy and the completion target date for our first set of short-term goals. Thanks to the hard work of employees across our operations, we achieved all 28 of our short-term goals on time and, in some cases, exceeded them. Achieving these goals has led to improvements in cost performance and efficiency at our sites, including reductions in energy use and greenhouse gas, strengthened water and biodiversity management, and improved safety performance.
Upon reaching this five-year mark of our strategy, we undertook a review to establish our next set of short-term sustainability goals that will take us further on the road to our long-term 2030 goals. Consistent with our desire to remain focused on the most important challenges and opportunities facing our company, we have elevated ‘Air’ to the status of a focus area and strengthened our emphasis on climate change.
We continue to participate in organizations that help guide sustainability practices in our industry, including ICMM, the Mining Association of Canada and the United Nations Global Compact. In September 2015, the United Nations adopted the Sustainable Development Goals (SDGs), a set of 17 ambitious goals and 169 targets that aim to shift the world onto a sustainable path. These goals include taking action on climate change, eliminating poverty, creating employment, reducing inequality, ending hunger and improving cities, among others. Through our interactions with communities, the products we produce and the economic activity we generate, the mining industry is well positioned to make a contribution toward achieving the SDGs. We believe that strong partnerships between the private sector, civil society, government and non-governmental organizations (NGOs) will be critical in advancing progress toward achieving the SDGs. This global effort will help to guide us as we work to sustainably and responsibly develop mineral resources while also contributing to creating a better future for people, communities and the world.
As we look ahead, we know that our continued success as a responsible resource company depends on our ability to anticipate and respond effectively to the risks and opportunities facing us. By staying focused on the essentials of our business — productivity, financial strength, safety and sustainability — Teck and its people will have the capacity to further enhance our performance and meet the challenges of an evolving world.
Donald R. Lindsay
President and Chief Executive Officer
Vancouver, B.C., Canada
April 27, 2016