Teck Resources Ltd. said they could withdraw from the Albertan oil sands completely as the federal government may not approve their $20.6 billion Frontier oil sands mine.
In a call with analysts on Friday, Teck CEO Don Lindsay said that without improvements in the Canadian energy sector, Teck may have to sell their stake in Frontier and the existing Fort Hills mine.
“We would look at doing something to realize that value, whether it’s a spinoff or some sort of transaction,” Lindsay said about Fort Hills.
“If we did that, then probably Frontier would go with it,” he added.
The Trudeau cabinet has until the end of the month to approve the Teck Frontier oil sands mine.
On Friday, Teck Resources Ltd. took a $900-million writedown on its Fort Hills oil mine due to the low price of Canadian oil. Teck also said they will be forced to take a $1.1-billion writedown on the proposed Frontier mine is not approved by the end of the month.
Teck’s shares fell by 15.5% on the Toronto Stock Exchange Friday.
If approved, the Teck Frontier mine would employ 7,000 people during its construction and 2,500 during its expected 40-year lifespan. Teck expects that the government would earn $70 billion in tax revenue from the mine during its lifetime.
The Frontier mine has been under regulatory review since 2011, with a joint review panel giving the project their approval in July 2019.
Liberal MPs have been trying to pressure cabinet to withhold approval for the project, saying that if Frontier is approved Canada will not be able to meet its 2050 carbon emissions target.
In February, Alberta Premier Jason Kenney wrote to Trudeau to warn him that cancelling the Frontier mine may be the “boiling point” for Western alienation.
“There is quite simply, no reason specific to this project that would justify denying federal cabinet approval for the Frontier project,” wrote Kenney.
“[A rejection] of our most important industry could raise roiling Western alienation to a boiling point.”
The Trudeau government has not indicated if it will approve the Frontier mine. Environment Minister Jonathan Wilkinson has said Alberta’s current efforts to fight climate change will be considered in their decision.
