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Managing Sustainability in Our Value Chain

Our Value Chain Profile

Teck procures goods and services that support large-scale mining and refining operations, such as mobile equipment, machinery, fuel and lubricants, explosives, and a range of other products and services. The following stakeholders are included in our value chain:

  • Suppliers: We rely on an international network of suppliers to provide the products, materials and goods needed to support our operations. These include mining equipment and spare parts, tires, fuel and lubricants, explosives, electricity, operating materials and consumables, and chemicals for processing.

  • Service Providers: We outsource selected operational activities to third parties, typically due to their cost-effectiveness or technical capabilities. Typical activities carried out by service providers and contractors include heavy mining equipment maintenance; transport and logistics; mechanical, electrical and construction work; general exploration drilling; and technical/engineering consultancy.

  • Joint Venture Partners: Ownership of some of our assets is shared with joint venture partners. This includes, for example, our Antamina mine in Peru (BHP Billiton, Glencore and Mitsubishi Corporation), the Fort Hills oil sands mining and processing operation in Alberta (Suncor Energy Inc. and Total E&P Canada Ltd.) and the NuevaUnión project in Chile (Goldcorp).

  • Customers: Our customers include refineries, smelters and steel mills. Our products are purchased for immediate use or for further processing. In addition, we provide other customers with various metals and chemical by-products.

  • End Users: Our products are used by a variety of industries, including construction; transportation, automobile and logistics; electronics and telecommunications; power generation and transmission; domestic appliances; consumer goods and nutritional supplements; agriculture; and energy users.

2017 Suppliers and Critical Suppliers

In 2017, we had an overall global spend of approximately $4.2 billion. See Figure 4 for a breakdown.

Figure 4: 2017 Supply Chain Spend by Business Unit

Critical suppliers are suppliers of goods or services that, in the event of an interruption in the supply chain, can have a significant impact on Teck’s production, costs and/or revenues. Suppliers may also be considered critical due to the nature of their products and the potential risk and impact on health, safety, the environment and the communities in which we operate. Critical suppliers include inbound suppliers of mobile equipment, fuels, tires, ammonium nitrate, process equipment, consumables such as grinding media, and suppliers of related parts and services; and outbound suppliers of rail, marine, trucking, bulk terminal and related distribution services. In 2017, critical suppliers represented approximately 52% of our total procurement spend.

Table 4: 2017 Spend on Critical Suppliers

Business Area

Total (millions)

Critical (millions)

% of Total That Are Critical

Steelmaking Coal

$2,447

$1,686

40.2%

Copper

$711

$272

6.5%

Zinc

$876

$203

4.8%

Corporate

$149

-

-

Other

$12

-

-

Total

$4,195

$2,161

51.5%

Within critical suppliers, there are two types: those managed on-site and those managed at a corporate level. Our supplier qualification, management and assessment depend on supplier type, as outlined in further detail below.

Supply Chain Management at Teck

Through responsible supply management, our objective is to ensure that we minimize our potential impacts on people and on the environment, and that we manage business and reputation risks while capitalizing on opportunities. For example, we make efforts to source supplies and services from local sources, including from Indigenous Peoples where possible. Supply chain management is a multidisciplinary function at Teck involving several departments:

  • Our Supply Management group oversees inbound supply chain risks while our Logistics and Transportation group oversees outbound risks.

  • Our Community and Government Relations group administers the Human Rights Policy, which is overseen by our Legal department; these groups work together to embed Human Rights considerations, where relevant and realistic, into our Supply Chain Management practices.

  • Our Operations and Exploration groups, along with other functional areas, manage supply chain matters related to on-site contractors and procurement.

  • Our Materials Stewardship Team provides the strategic direction including a framework for materials stewardship and supply chain risk management at Teck. It establishes the materials stewardship criteria as they pertain to product, business, customer and downstream/upstream issues. The committee meets regularly, and activities include identifying and managing risks associated with customer assessments, supply chain reviews, product approvals, transportation, regulations, technical advice, environmental and health guidance, legal and new product application reviews and approvals.

  • Our Corporate Risk and Legal groups support our Supply Management, Logistics and Transportation, and Operations and Exploration groups. The Corporate Risk group identifies and manages supply chain risks through the corporate risk assessment processes while the Legal group manages commercial contract development and compliance with Teck’s policies related to our supply chain.

Management Guidelines and Expectations

As our operations and the majority of our business activities are in lower-risk jurisdictions that have strong legal frameworks, we expect and have a good level of assurance that our suppliers’ and contractors’ business conduct is aligned with robust environmental and labour legislation and regulation. In addition, we provide clear communications to suppliers about our expectations and requirements. All suppliers are required to follow our Expectations for Suppliers and Contractors, which builds on our Code of EthicsHuman Rights Policy and Anti-Corruption Policy. We articulate our standards for suppliers and contractors through the Expectations, which include our requirement that suppliers and service providers will address issues relating to ethics, health and safety, environmental stewardship and human rights, including numerous labour law requirements. In addition, the Expectations integrate stipulations regarding fair working conditions, non-discrimination and the abolition of child labour.

When working with suppliers, the Expectations also include information from our Health, Safety, Environment and Community (HSEC) Management Standards. Our HSEC Management Standard 7, on Contractors and Suppliers, requires us to identify and manage HSEC and supply chain risks by assessing performance and practices when selecting contractors and suppliers, by maintaining oversight of risks associated with the goods and services provided by suppliers and contractors, and by assessing other opportunities and threats within the supply chain.

Identifying and Managing Sustainability Risks in the Supply Chain

Inbound supply chain risks are initially identified as part of the analysis and identification of critical suppliers by our Supply Management group. Outbound supply chain risks are identified by the Logistics and Transportation group as well as by the Materials Stewardship working group, which advises and develops active risk management processes to reduce the impacts of our products and to ensure products satisfy or exceed regulatory, environmental and societal needs. For example, as we are heavily reliant on third parties to transport our products, we conduct a risk-based screening of our transportation providers based on the volume and commodity transported. This screening enables us to select transportation providers who will handle our products safely and who share our commitment to safe and responsible supply chain management.

Supplier Qualification

As outlined in Figure 5, there are three factors that determine supplier qualification processes. For suppliers who do not meet any of these three factors, there is a process of ongoing monitoring and assessment. This involves the Corporate Risk Group collecting information, conducting assessments and implementing risk processes to identify and assess HSEC risks associated with suppliers.

When higher risk has been identified with selected suppliers, a detailed sustainability assessment is conducted. If an issue is identified during the assessment, work is stopped, an investigation is conducted and a corrective action plan is developed in collaboration with the supplier. If the plan is implemented to our requirements, work with the supplier will resume. If the plan does not meet our requirements, further work with the supplier to correct the finding will be conducted and/or the contract with the supplier may be terminated. In 2017, 21 reviews against the criteria outlined in our Supplier Expectations were initiated and assessments are still ongoing. Of the reviews conducted, there were no material social or economic impacts identified, such as child labour issues.

In addition to responding to the Expectations questionnaire, 100% suppliers (580 in total) updated their information in our supplier database. Where a potential risk is identified, the process calls for gathering additional information on the supplier. This process may involve the use of third-party consultants to gather and review additional information.

Figure 5: Supplier Qualification and Assessment Process

Measuring Supply Chain Risk Management Performance

We measure supply management performance of our critical suppliers by setting and tracking key performance indicators in contracts. For example, all contracts have safety performance indicators and some have environmental indicators related to reducing or minimizing impacts based on the nature of the product or service provided. In addition to measuring supplier-specific performance indicators, we measure and report on:

  1. Company-wide procurement from local suppliers

  2. Company-wide procurement from Indigenous suppliers

  3. Contractor health and safety

Managing Product Impacts through Materials Stewardship

A major component of supply management is materials stewardship, an active risk management process that minimizes the impact of our products throughout their life cycle on employees, communities and the environment, and ensures our products satisfy or exceed regulatory and societal needs. The Materials Stewardship Committee (MSC) employs life cycle thinking to understand the potential risks and impacts of our products, beginning with the extraction of raw material from the earth, through to production/processing, transportation, product sales, customer use and recycling.

All products at Teck are listed on a Master Product List (MPL) that is owned and managed by the MSC. To be added to the MPL, operations where products are produced require project leaders to submit a detailed application to the MSC. The Committee reviews the application and either approves or refuses the product, based on a set of requirements and other considerations. These requirements must be met and considered from the perspective of the whole product life cycle, and include customer assessments, legal jurisdiction reviews, logistics and form of transportation, hazardous materials and emergency response, contracts, and financial rate of return.

The MSC commissions and conducts customer assessments. These assessments help ensure products are handled safely, as some may cause harm if handled unsafely by smelters, refineries or other end users. Customer assessments help us uphold business ethics, regulatory requirements and external expectations. The Committee works to ensure users, including our own and those downstream, have sustainable management practices in place. Five customer site assessments were carried out in 2017.

We draw on ecotoxicity expertise developed by the various commodity associations to bring sound science into our management approaches and decisions. Our materials stewardship program is also actively engaged with collective industry efforts, including those of the ICMM, towards continuously improving materials stewardship practices.

Responding to Regulatory Requirements

Our materials stewardship efforts have expanded in recent years to meet growing regulatory pressures on mineral concentrates. These are manifested, for example, in the International Maritime Organization (IMO) bulk cargo requirements, Chinese import restrictions, and the Minamata Convention for Mercury. These requirements and restrictions now affect mining companies and smelters globally, and Teck specifically, in the same way that Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulations have defined chemical management programs for refined metals, alloys and compounds in the European Union since 2006.

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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.