Benzinga - by Stjepan Kalinic, Benzinga Staff Writer.
Wildsight, a non-profit environmental organization, estimates that the selenium cleanup costs associated with Teck Resources (NYSE:TECK) coal mining activities in the Elk Valley region are much higher than anticipated.
Despite excellent earnings results, this news could slow the $8.9 billion coal asset sale to Glencore (OTCPK: GLNCY), which is pending regulatory approval.
According to the Wildsight report and study, conducted by consulting firm Burgess Environmental, the cleanup cost could soar to at least $4.7 billion. That’s significantly higher than the $1.9 billion provisioned by the province for emergency shutdowns and mine reclamation.
“Their provisions with respect to capital spend do not align with B.C. government policy and their use of simplified assumptions overstate ongoing water treatment operating costs alone by 50-60%,” Dale Steeves, director of stakeholder relations at Teck Resources, told Reuters.
The report calculated the cleanup cost by assessing the expenses associated with implementing Teck’s current plan, which involves constructing water treatment plants until 2027 and operating them for 60 years.
Selenium, a naturally occurring element toxic to fish in high concentrations, has been seeping into the surrounding environment for decades from waste rock piles around Teck’s coal mines. Although an important element in tiny amounts, in high doses, it becomes toxic, posing serious risks to aquatic life and causing deformities and reproductive issues in fish.
Teck has invested over $1 billion since 2014 to mitigate selenium concentrations, with plans to allocate an additional $150 million to $250 million by the end of 2024. Teck's investments include water treatment facilities, with the current treatment capacity reaching 77.5 million liters daily.
However, selenium concentrations downstream of the mines still exceed regulatory guidelines, highlighting the persistent challenges in remediation efforts. Thus, the company plans to build six more facilities by 2027, increasing the capacity to 150 million liters per day.
In an interview for The Narwhal, Simon Wiebe, a mining policy and impacts researcher at Wildsight, expressed concerns about the sale’s potential implications.
“We hope that both Glencore and the Canadian government will give careful consideration to this report as they assess the sale, ensuring accountability for the selenium crisis is upheld throughout the ownership transfer,” he stated.
While the asset acquisition by a much larger company such as Glencore provides more capital to deal with the problem, the company has a history of bribery and market manipulation allegations. Thus, Canadian environmentalists have a genuine reason to stay alert.
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