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Teck Resources Limited (TECK) Q2 2019 Earnings Call Transcript

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Teck Resources Limited (NYSE: TECK)
Q2 2019 Earnings Call
July 25, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Teck Resources Q2 2019 Earnings Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. This conference call is being recorded on Thursday, July 25, 2019.

I would now like to turn the conference over to Fraser Phillips, Senior Vice President, Investor Relations and Strategic Analysis. Please go ahead.

H Fraser Phillips -- Senior Vice President, Investor Relations & Strategic Analysis

Thanks very much, Jen. Good morning, everyone. And thank you for joining us for Teck's Second quarter 2019 Results Conference Call. Before we begin, I would like to draw your attention to the caution regarding forward-looking statements on Slide 2. This presentation contains forward-looking statements regarding our business. This slide describes the assumptions underlying those statements. Various risks and uncertainties may cause actual results to vary. Teck does not assume the obligation to update any forward-looking statement.

I would also like to point out that we use various non-GAAP measures in this presentation. You can find explanations and reconciliations regarding these measures in the appendix. With that, I will turn the call over to Don Lindsay, our President and CEO.

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Donald R. Lindsay -- President & Chief Executive Officer

Thank you, Fraser, and good morning, everyone. We're pretty excited here today. We've got a lot of good news to share, so let's get going. I'll begin on Slide 3 with highlights from our second quarter, followed by Ron Millos, our CFO, who will provide some additional color on the financial results. We will conclude with a Q&A session where Ron, and I, and additional members of our senior management team would be happy to answer any questions.

We achieved a number of important milestones in the second quarter that have put Teck in a strong position moving forward. First, we updated our capital allocation policy and increased our share buyback to $1 billion. We updated our capital allocation framework to reflect our intention to make additional cash returns to shareholders. I'll speak to this in greater detail later, but we intend to supplement our base dividend with an additional amount of at least 30% of available cash flow through supplemental dividends and/or share repurchases. And I note that a couple of analysts have already missed the fact that that 30% is on top of the base dividend.

Second, the BC government has endorsed the use of saturated rock fills to treat water at our steelmaking coal operations. We have begun construction of an expansion of the saturated rock fill at Elkview. We estimate that over the long term, saturated rock fills will significantly reduce capital and operating costs compared to tank based active water treatment facilities of similar capacity.

Third, we are accelerating our innovation driven efficiency program known as RACE21 to generate an initial $150 million in annualized EBITDA improvements by the end of 2019. There'll be much more going on into the future. In addition to RACE21, in light of economic uncertainty and trade tensions, we are actively evaluating further cost reduction initiatives which can be implemented quickly in the event that commodity markets turn against us.

These measures are part of our straightforward strategy of running our operations safely, efficiently, and sustainably to generate cash, successfully executing our QB2 project, and returning excess cash to shareholders.

We also had several additional highlights in the second quarter. We signed a US$2.5 billion limited recourse project financing facility to fund the development of the QB2 project. We redeemed US$600 million of outstanding 8.5% notes due in 2024 on June 29th, reducing our outstanding notes to just US$3.2 billion with no significant maturities for the next 16 years until 2035.

And consistent with our capital allocation framework, we announced that we will not proceed with the MacKenzie Redcap extension at our Cardinal River operations, and day operation will close in the second half of 2020. Critical path construction activities for QB2 are on track and we are building considerable value for shareholders through the development of this world class copper project.

And finally, we were pleased to be recognized as one of the top companies in Canada for corporate citizenship, placing fourth on the Best 50 Corporate Citizens in Canada ranking.

Looking at our capital allocation framework in greater detail, Slide 4 shows how we think about it an prioritize our approach to capital allocation, which is designed to both position Teck for long-term value creation and growth, while returning cash directly to shareholders at the same time. The starting point for the assessment is the operating cash flow, which is first used to fund sustaining capital required to maintain our production levels in accordance with our long-term mine plans, including capitalized stripping costs.

The second priority is to fund capital spending on committed enhancement and growth projects that are already approved by the board, such as QB2, or Red Dog's VIP2 project, or Neptune terminal upgrades. Contributions from partners and drawdown of project finance facilities are netted off in the calculation of capital allocated to this purpose. Capital is then used to fund the base dividend of $0.20 per share. It may also be allocated to strengthen the capital structure through the repayment of debt or to build cash balances consistent with our long stated objective of maintaining solid investment grade metrics and strong liquidity. I should say that at this point we don't see a need for any further substantial decrease in notes outstanding, leaving more available cash for supplemental shareholder distribution.

Our intention is to then distribute an additional amount of at least 30% of remaining cash flow to shareholders by way of supplemental dividends or share buybacks before taking on new major enhancement or growth projects. The allocation between dividends and buybacks will depend on market conditions at the relevant time, and we will consider additional distributions out of the proceeds of any asset sales on a case-by-case basis. Of note, for example, we have already exceeded the 30% figure for 2019 by a considerable margin.

The balance of remaining cash flow is available to enhance further enhancement or growth opportunities. And if there is no immediate need for this capital for investment purposes, it may be used for further returns to shareholders or retained as cash on the balance sheet.

On Slide 5, as I mentioned earlier, we are accelerating our innovation-driven efficiency program RACE21, which was first introduced at our Investor and Analyst Day in April of this year. It is an integrated program that looks across the full value chain, from mine to port. RACE21 leverages existing, proven technology to improve productivity and lower costs with a focus on delivering significant value by 2021. But by the end of 2019, we intend to implement initiatives that we expect will generate an additional $150 million in annualized EBITDA improvements primarily through the expansion of programs such as predictive maintenance, the use of mining analytics to improve cycle times, and processing improvements.

We expect the one-time implementation cost of these initiatives will be approximately $45 million in 2019, and that the benefits will be recurring thereafter. And I should say, the $150 million is after the investment of $45 million. A good example of this world is our haul cycle analytics program. We currently track hundreds of data points related to the performance of our load and haulage fleet. For any human, this volume of data is simply too big to analyze. By streaming this data to the cloud and applying advanced analytics techniques, we are increasing our ability to identify truck underperformance, or poor road quality, and other factors in near-real time.

Reducing variability is the key to reducing costs in surface mining. Advanced analytics enables this reduction by targeting low performing trucks to increase average speed without increasing maximum speed. In our steelmaking coal business alone, we expect to realize $14 million in annualized EBTIDA gains by the end of this year, based on a total investment of just $3 million. As we look ahead and advance our mine autonomy program, we'll be able to further reduce variability in cycle time and capture even greater value.

Another example is our predictive maintenance program. We also track millions of data points there, in real time, that monitor the health of our haul trucks. As you can imagine, there is significant variation in this data due to differences in truck technology, equipment age, operating conditions, and dozens of other factors. This complexity, coupled with the sheer volume of data, makes it impossible for humans to analyze in anywhere near real time, which is what is needed to take predictive action. By using machine learning algorithms, we are now able to effectively model and predict component failure with adequate lead time to allow it to be replaced as part of regularly scheduled maintenance. Reducing unplanned downtown is expected to create $20 million in annualized EBITDA improvements in 2019 in our steelmaking coal business alone, and that's at a cost of approximately $3 million.

We are rapidly advancing RACE21. We expect to identify and implement further opportunities to improve the cost structure of our business or increase our productive capacity. And we will provide guidance on further potential EBITDA improvements for 2020 this February when we do our normal annual guidance. And we think that, at that time, it will be multiples of the current $150 million that we are announcing today.

Turning to our financial results on Slide 6, we generated adjusted EBITDA of $1.2 billion in the second quarter, which is in line with consensus expectations. Revenues were $3.1 billion for the quarter and gross profit, before depreciation and amortization, was $1.4 billion. Bottom line adjusted profit attributed to shareholders was $459 million, or $0.81 per share, on both a basic and a fully diluted basis.

Details of the quarter's earnings adjustments are on Slide 7. The most significant items on the table are the after tax charge on the debt repurchase of $166 million, and the after tax impairment of $109 million related to our decision not to proceed with the MacKenzie Redcap extension at our Cardinal River operations. There are also a number of additional charges that we do not adjust for, which total $77 million on an after tax basis, or $0.13 per share on a diluted basis. And these include negative pricing adjustments of $42 million, or $0.07 per share; stock based compensation of $7 million, or $0.01 per share; a change in the estimated DRP, otherwise known as decommissioning and reclamation provision, of $12 million, or $0.02 per share; the inventory writedowns of $8 million, or $0.01 per share; and the loss on commodity derivatives of $8 million, or again $0.01 per share.

I will now run through some highlights of -- business unit by business unit, starting with steelmaking coal on Slide 8. Sales were in line with our guidance; however, results were impacted by logistical issues in May, including a work force lockout at Neptune, unplanned outages at Westshore, and material handling issues. Production in the quarter was also constrained by logistic issues resulting in mine site stockpiles reaching maximum capacity at times and causing plants to be idle.

However, second quarter production of 6.4 million tons was still higher than a year ago as a result of quarterly products records at our Line Creek and Greenhills operations, and improved processing throughput at other operations. Demand remained quite strong in the quarter. Without the logistical issues, our Q2 sales would've easily exceeded the high end of our original guidance of 6.4-6.6 million tons. Site unit costs were higher than last year, but they are in line with our annual guidance range. Looking forward, we expect sales of approximately 6.3-6.5 million tons in Q3.

The second half of the year, site costs are expected to decrease to between $62.00-65.00 per ton, within our annual guidance range, as we anticipate a higher production run rate in the second half of the year. For the full year, we expect transportation costs to come in at the high end of our guidance range of $37.00-39.00 per ton. As a result of the logistics chain issues, combined with mining challenges at Cardinal River operations, we have reduced our 2019 production guidance range to between 25.5-26 million tons.

Turning to our copper business unit, our Q2 results are summarized on Slide 9. Copper production was up year-over-year, primarily due to higher mill throughput and recovery at Highland Valley. Net cash unit costs were higher in Q2 2019 versus a year ago, impacted by substantially lower coproduct and byproduct credits. Antamina had substantially lower zinc sales volumes, as was expected in our plan. The additional D3 ball mill at Highland Valley was successfully commissioned and ramp-up is in progress. The new mill is expected to contribute to continued improvement in recoveries in the second half of the year. And in June, we signed a new three-year collective agreement at Antamina.

Looking forward, we expect continued improvement in throughput, and grades, and recoveries at Highland Valley, and our full-year copper production guidance is unchanged. But we have lowered our net cash unit cost guidance to US$1.40-1.50 per pound for the full year.

Moving on to Slide 10, I would like to provide a quick snapshot of our progress on QB2 over the last quarter. To the end of June, we've expanded approximately US$330 million in 2019 and have approximately 60% of the total budget committed under contracts and purchase orders to date, with the majority of the major contracts and purchase orders now completed. Engineering is now well advanced at 29% complete. Procurement is approximately 88% complete, and contracting is approximately 96% complete. All of these are tracking very well and we are moving into closeout activities for engineering.

Overall, the project progress is over 14%. And speaking of ramp-up, we now have a work force of about 3,100 on the project. The photo on the right shows some of the progress that we have made in the grinding area of the concentrator.

Turning to Slide 11, I'm pleased to report that the construction activities for our critical path are on track. Here, you can see the first major concrete pour in the grinding area of the concentrator. Concrete placement for the mill foundations is advancing well and has been ongoing since the initial SAG mill No. 1 pour on May 20, 2019.

On Slide 12, earthworks activities are advancing in all areas with approximately 7.7 million cubic meters moved to date. And this photo shows the main access road to the tailings management facility, which was completed June, as well as lateral access roads that have been developed on the hillside. And these roads will be used for hauling materials to construct the tailing starter dam.

Slide 13 shows progress at the port site. You can see the laydown of work area for the manufacture of the piles to be used in construction of the jetty for the ship loader. Shortly, the marine works contractor will begin installing piles from the jetty abutment. Overall, we are satisfied with the progress to date, with the project team working effectively with the EPCM contractors and field personnel to safely deliver the project on time and within budget.

And beyond QB2, drilling and engineering studies are under way to divine our expansion options for QB3 with the potential to double or more the throughput capacity of what is currently being built at QB2. These early stage engineering studies are expected to conclude in the third quarter before kicking off for prefeasibility study before year end.

Our zinc business units are summarized on Slide 14. And as a reminder, Antamina zinc related financial results are reported in our copper business unit. Red Dog sales of zinc and concentrate were above guidance. Red Dog recovered more quickly than anticipated after the severe winter weather closed the port road and impacted production in Q1. And second quarter production was higher than for the same period last year.

Profit of trail operations was negatively affected by the historically low treatment and refining charges from before, and also higher electricity costs post Waneta. The construction of the No. 2 Acid Plant is complete, and it is now fully operational. So, we're delighted to see that come in on budget and ahead of schedule. Looking forward. We expect Red Dog's contained zinc sales to be 165,000-170,000 tons in Q3, reflecting the normal seasonal pattern. Higher treatment and refining charges are expected to positively effect profits and trail operations in the second half of the year.

And finally, Red Dog's net cash unit costs are expected to decline in the second half of the year due to the normal seasonal partner. In addition to that, we have lowered our net cash unit cost guidance to US$0.30-0.35 per pound for the full year.

Our energy business unit results are summarized on Slide 15. And despite the government of Alberta's production curtailments, our energy business unit had strong performance in the second quarter with our share of Fort Hills EBITDA of $70 million compared with $22 million in the first quarter of this year and $13 million in the second quarter of last year. And this was supported by higher realized prices and strong operating performance. Production and unit operating costs in the quarter reflected the production curtailments, offset with the purchase of curtailment credits.

Looking forward, the government imposed production curtailments have been extended to at least the end of August. And as a result, we expect to come in at the low end of the guidance range for our shares of bitumen production of 12-14 million barrels for the full year. And with the lower production that we expect Q3 and Q4 operating costs to be similar to the first half of the year, at the high end of our original annual guidance of C$26.00-29.00 per barrel of bitumen.

And with that, I'll pass it over to Ron Millos for some comments on our financial results.

Ronald A. Millos -- Senior Vice President, Finance & Chief Financial Officer

Excuse me. Thanks, Don. Slide 16 summarizes the changes in our cash position during the second quarter. We generated just of $1.1 billion in cash flow from operations this quarter. We spent $599 million on capital projects and C$835 million redeeming the US$600 million notes.

Our capitalized stripping costs were $170 million. We purchased $153 million Class B shares, which were cancelled. And we paid $101 million in interest and finance charges. We spent $48 million on investments and other assets, $39 million on lease payments, and $28 million in our regular base dividends. And after these and other minor items, we ended the quarter with cash and short-term investments of around $1.5 billion.

Turning to a summary of our financial position on Slide 17, our liquidity remains strong at about $6.8 billion currently, and that includes $1.6 billion in cash, our US$4 billion unused line of credit. $1 billion of the cash is in Chile for the development of the QB2 project. And, as Don mentioned earlier, we signed a US$2.5 billion limited recourse project financing facility to fund the development of the QB2 project, and that financing is expected to close in the third quarter.

As we've previously mentioned, the QB2 partnering transaction and financing plan dramatically reduces our funding requirements for the project to just US$693 million, and that includes escalation. And no cash is required from Teck until late 2020. With the redemption of the US$600 million of notes, our outstanding notes have been reduced to $3.2 billion. And, as Don mentioned, there's no significant debt maturities prior to 2035.

With that, I'll turn the call back to Don for his closing comments.

Donald R. Lindsay -- President & Chief Executive Officer

Thanks, Ron. As I've said before, this is a very transformational time for Teck. Overall, I'm feeling very good about the direction of the company and the strong foundation that we've built. We finalized the QB2 financing and advanced the project's major works. We increased our share buyback to $1 billion. And we further strengthened our balance sheet by redeeming the US$600 million of notes.

And we announced three key developments. First, we updated our capital allocation framework under which we are prioritizing returning cash to shareholders by adding at least 40% of free cash flow to our base dividend. Then, the BC government has endorsed saturated rock fills as an alternative form of water treatment, which will significantly reduce capital and operating costs. And we are accelerating RACE21 to generate an initial $150 million in annualized EBITDA improvements by the end of the year. And we believe it will be multiples of that in the future.

These milestones are part of our straightforward strategy of running our operations safely, efficiently, and sustainably to generate cash, to successfully executing our QB2 project, and returning additional cash to shareholders.

And with that, we would be happy to answer your questions. And please note that some of our management team members are calling in from different locations, so there may be a brief pause after you ask your question.

...

So, back to you, operator.

Questions and Answers:

Operator

Thank you. We will now take questions from telephone lines. If you're using a speakerphone, please lift your handset before making a selection. If you have a question, please press *1 on your telephone keypad. If at any time you wish to cancel your question, please press *2. There will be a brief pause while the participants register for questions. Thank you for your patience. We will take our first question from Matthew Korn with Goldman Sachs. Please go ahead.

Matthew Korn -- Goldman Sachs Group, Inc. -- Analyst

Hi. Good morning, everyone. If you could, just a little bit more. What exactly was the detailed analysis done that prompted the pushback of so much of QB2 spending this year? And does it all push into 2020?

Donald R. Lindsay -- President & Chief Executive Officer

I'm going to turn that one over to Alex Christopher.

Alex Christopher -- Senior Vice President, Exploration, Projects & Technical Services

Yes, so what -- in terms of the QB spending, it's being pushed into 2020. And that's really a function of some -- two things. No. 1, it's a bit of a slower mobilization in some of the noncritical path areas, and that's a function of some of the environmental clearances and weather impacts, as well as some of the timing of some of the initial invoices coming out of the contractors as we wrap up activities.

Matthew Korn -- Goldman Sachs Group, Inc. -- Analyst

Got it. And then, the other one I wanted some clarification on -- on the saturated rock fills, is the approval and endorsement you've gotten from the BC government for Elkview, and Elkview only, under that SRF? And do you still need to do some more work to prove the viability for future SRF buildouts? Thanks.

Donald R. Lindsay -- President & Chief Executive Officer

The short is answer yes, it's approval for Elkview only at this stage. But they have endorsed the approach and technology overall. And we fully expect that the Elkview one will be successful. We've been running it now for over a year. And remember, it recovers more selenium and more of the nitrates than the tank based active water treatment plants, and it's -- it gets into operation two years faster. So, it's not just the cost advantages, but there are a number of very significant advantages that lead us to believe that that's the technology of the future.

Matthew Korn -- Goldman Sachs Group, Inc. -- Analyst

Thank you.

Operator

We will now take our next question from Christ Terry with Deutsche Bank. Please go ahead.

Christopher Terry -- Deutsche Bank Securities, Inc. -- Analyst

Hi, Don and team. A couple of question for me. Just in terms of this Slide 4 on the capital management, and thinking about where we're at today, and that framework for the future -- given you've already announced the buybacks out, I imagine when you get to November, you're then talking about what you might announce from that point forward. Is the 30% the historic cash flow, as in what you've delivered from 2019? Or is it your forecast for 2020 when -- once you get to the end of this year and make a decision on your next capital management announcement? Thanks.

Donald R. Lindsay -- President & Chief Executive Officer

I'll turn that over to Ron Millos.

Ronald A. Millos -- Senior Vice President, Finance & Chief Financial Officer

Yeah, so the 30% will be based on effectively our operating cash flow less the lease payments, the interest payments, and the minority interest, and knock off the capital that Don spoke to earlier, and any debt payments that we would have to make. So, once we get to the end of the year or have our forecast for the end of the year, we would then look at what that 30% number would kick out, and talking about paying -- as Don mentioned, this is in addition to the base dividend that we're paying. That cover your question?

Christopher Terry -- Deutsche Bank Securities, Inc. -- Analyst

Okay. Yeah, and I was just trying to check because you've already gone above that 30% this year. When you get to the end of this year, you will have already met that, and thinking about what you could announce at the end of the year, ready for 2020, assuming you've already exhausted the current US$600 million buyback program.

Donald R. Lindsay -- President & Chief Executive Officer

Yeah, no, that's a good observation for this year. We have allocated more capital than the formula would suggest in terms of returning capital to shareholders. But probably, you should use this framework to look at 2020 -- whatever your model throws out on the 2020. You could apply this framework to it. I should say that, while historically we've made the decision in November, there is a bit of a debate among -- shareholders have even given us feedback that some would prefer the payout to come from the final year-end results, which means you do it in February. Others think that November, you can predict what your year-end results are going to be. So, it's one or the other. We'll see.

Christopher Terry -- Deutsche Bank Securities, Inc. -- Analyst

Okay. Thanks for that. And then, just in terms of the coal guidance change, it's quite minor. But splitting out, I guess, the different parts to how we've evolved through the year, is it -- so, that's more to do with what wasn't produced in the first half rather than what would be produced in the second half. That's how we read that?

Donald R. Lindsay -- President & Chief Executive Officer

Robin and Real are both nodding their heads in answer to your question. I do want to highlight, though, that as we've reduced the guidance, that the bulk of the tonnage that's within the reduction is the lower margin products. So, it has very little effect on our financial results. But it does highlight the logistical challenges that we've had, which we are, of course, investing in new capacity at Neptune to try to alleviate those challenges.

Christopher Terry -- Deutsche Bank Securities, Inc. -- Analyst

Okay. And then -- and just on the SRF, is there any federal government approval needed for that, or is it just by the state? And when would you expect to be able to quantify the capex and operating savings going forward?

Donald R. Lindsay -- President & Chief Executive Officer

There is no federal approval involved. It is the province only. And we have, I think, indicated in our disclosure that we believe that the capital costs will be less than a quarter of -- about 20% of what it would cost to build an equivalent size tank based water treatment, and that the operating costs would be about 50% of what a tank based plant would have.

Christopher Terry -- Deutsche Bank Securities, Inc. -- Analyst

Okay. I --

Donald R. Lindsay -- President & Chief Executive Officer

[Crosstalk] And those plants are -- order of magnitude for those plants of about $400 million. So, if you extend that throughout the model over the next 10 years, that's very significant savings.

Christopher Terry -- Deutsche Bank Securities, Inc. -- Analyst

Okay. Thanks [crosstalk] for the comment on that one. Just a last one for me, the met coal costs obviously weakened just a little bit in the last month or so. Just after an updated view of how you're seeing the current conditions in met coal. Thanks.

Donald R. Lindsay -- President & Chief Executive Officer

I'll turn that over to Real Foley.

Real Foley -- Vice President, Coal Marketing

All right. Thanks, Chris. So, when we look at met coal, one important point to note is that the fundamentals for demand and supply remain strong. Yes, there has been steel production cuts announced in mainly the EU and also US. But when you look at hot metal production, which is a good proxy for steelmaking coal demand because it relies on coke, the reality is that May year-to-date the global hot metal production is up by 0.1% and it's based on really strong production out of India, Southeast Asia, China. And when you compare the EU and US versus the hot metal production in the rest of the world, they only represent somewhere around 10% or so of that production. So, the strong demand in those other market areas more than offset the cuts that have been announced in EU and US.

Christopher Terry -- Deutsche Bank Securities, Inc. -- Analyst

Okay. Thanks, guys, for all the answers.

Donald R. Lindsay -- President & Chief Executive Officer

Thank you.

Operator

The next question is from Orest Wowkodaw with Scotia Bank. Please go ahead.

Orest Wowkodaw -- Scotiabank -- Analyst

Hi. Good morning. Just a little bit more clarity, if we could, on the water treatment. And congratulations on getting the endorsement here on the first plan at Elkview. Can you just remind us about how many water treatment plants do you still have to build in the valley? And of those, how many do you think are suitable for SRF versus the active water treatment facility?

Donald R. Lindsay -- President & Chief Executive Officer

Robin Sheremeta.

Robin B. Sheremeta -- Senior Vice President, Coal

Yeah, I'll -- there's a number of plants that have been established. And we talked about that back a ways, but there's the Fording River South tank based active water treatment plant that's being built right now. It's about 20,000 cubic meters a day, or 2 million liters, of water a day. And then there's the SRF at Elkview that's being constructed right now. Both those will come online at the end of 2020. And then, there's a third large plant, which would be the fourth plant after the Line Creek, the Elkview, and the Fording River South -- there'll be the fourth plant constructed at Fording River. And that's the optionality, I guess, that we discussed as a best case scenario, which would be to replace that tank based plant with a saturated rock fill.

So, that's the path we're trying to establish right now around options in terms of water treatment at that end of the valley. That's what was defined across the five years. And then, there are future plants that are really defined by updated modeling and measurements that are taken in the valley. And we had guided rough numbers around annual costs and operating costs out 10-15 years. So, those projections need to be now reassessed with what is extraordinarily positive news, which is we are able to now advance the SRF strategy. It's got an enormous amount of potential. So, really, that has to be brought into the long-term strategy.

Donald R. Lindsay -- President & Chief Executive Officer

Maybe if I could just simply if it all, that in the -- from the big picture point of view in the original plan with the government, there were nine plants contemplated. We've built one and we're building the second. And now, we're switching to SRF. And we would hope that SRF would be the technology for the rest of them, or similar technology --

Orest Wowkodaw -- Scotiabank -- Analyst

[Crosstalk] Okay, and do you -- so, you think that the remaining seven plants were -- are all suitable potentially for SRF?

Donald R. Lindsay -- President & Chief Executive Officer

I would say SRF or technology very similar to it.

Orest Wowkodaw -- Scotiabank -- Analyst

Okay.

Robin B. Sheremeta -- Senior Vice President, Coal

I think it's important just --

Orest Wowkodaw -- Scotiabank -- Analyst

[Crosstalk] Okay, so --

Robin B. Sheremeta -- Senior Vice President, Coal

We continue to do a considerable amount of research, and that is opening possibilities of other techniques that are even more appropriate for specific applications than SRFs are. So, lots of work's still being done on this.

Orest Wowkodaw -- Scotiabank -- Analyst

Okay. When do you think you'll be in a position to give the market guidance, then, on the net implications for the capital and operating costs?

Donald R. Lindsay -- President & Chief Executive Officer

Well, we are disclosing in our release today that the operating costs will be about half of what a tank based -- large treatment plant would be. And the capital cost's about 20%. So, that's what we've established so far, and that's what we would apply to the Elkview plant and other plants would be similar.

Orest Wowkodaw -- Scotiabank -- Analyst

Okay. All right. Thank you.

Operator

The next question is from Greg Barnes with TD Securities. Please go ahead.

Greg Barnes -- TD Securities -- Analyst

Thank you. Question for Don or Real -- there is a lot of talk lately about China imposing quotas or meeting quotas, I guess, on coal imports in September in a number of ports and what the impact -- might that have on coal -- coke and coal imports into China beyond that in the market -- broader market in general.

Donald R. Lindsay -- President & Chief Executive Officer

Okay. Real can start.

Real Foley -- Vice President, Coal Marketing

All right. Thanks, Greg. So, the first thing, I guess, to keep in mind is our exposure to China is a lot lower than it's been. If you look at 2018, our sales to China were less than 3 million tons compared to a peak in 2013 of around $8 million. And for the first time in 2018, our sales to India exceeded the sales to China. And second point is that China has imposed import restrictions at a number of ports -- actually, at all the ports in China pretty much -- since February this year. But when you look at the actual numbers, seaborne imports continue to be strong into China. They're up 3 million tons year-to-date, year-over-year. And most of the impact actually has been on terminal coal.

There were reports, if I recall correctly -- it was last week -- saying that two ports in the north were placing additional restrictions on import from traders. When we talk to our customers in China, and also to domestic analysts, their view is that this will have a very minimal impact if any. So, what will happen is the steel mills will actually import directly from the producers as opposed to traders.

Greg Barnes -- TD Securities -- Analyst

Thanks, Real. Don, could I follow up with you and just get a broader sense of what your view is on China macroeconomic growth, and obviously commodity demand, from this point forward? I'm not sure if you've been to China this year yet or not.

Donald R. Lindsay -- President & Chief Executive Officer

I was there about a month ago. I met with our key contacts there. Look, a lot depends on the trade negotiations with the US, but the Chinese have been very capable of transitioning their economy from a FAI based -- fixed asset investment based -- growth model to more of a consumption model. It's been very impressive what they've been able to accomplish in the last three to five years. I think that will continue. It's structural. They also have the BRI -- the Belt and Road Initiative -- that is really gaining traction now. You've heard the expression that most people overestimate what they can do in on year, but they vastly underestimate what they have accomplished in five years. And I think that's going to be something that we see in the BRI.

They are quick to stimulate to our loose monetary policy and -- if they see spots of weakness, but they're also managing the percent GDP growth rate down on a gradual basis, which you would expect because the base is just that much larger. So, the incremental dollar amount of additional GEP is actually the same or, in some quarters, higher. So, there will be moments of weakness that get exaggerated by media -- generally, US-based media. But on balance, I think China's doing pretty well.

Greg Barnes -- TD Securities -- Analyst

Thanks, Don.

Operator

Our next question is from Curt Woodworth with Credit Suisse. Please go ahead.

Curt Woodworth -- Credit Suisse Group -- Analyst

Hey, good morning Don and team. Don, I was wondering if you could provide some of your initial thoughts or expectations around the QB3 scoping study? And I know there's been some additional drilling done on the resource base. If you could just broadly talk about expectations there, and then how potential development of QB3 would fit into the capital return program in the sense of how do you view organic growth priority versus capital return priority going forward?

Donald R. Lindsay -- President & Chief Executive Officer

Okay, so I'll make four or five quick points. I don't want to get too far ahead of this one until the scoping study is finished and we can release the details. But it starts with the fact that we have a resource that's much larger than we had realized a year ago. We've increased the published resource from 4 billion to 6.5 billion. So far, we have five drills on site. So, we anticipated getting much larger, that we'll publish by the end of the year and beyond that. So, a target of toward 10 billion tons.

So, clearly the operation that we're building now is not optimal for the size of the reserves. Second, the strip ratio -- which is the key structural competitive advantage that QB2 has -- is consistent for the whole vast resource. The mine plan that we published is 0.7:1 -- for the whole resource, it's 0.8:1. And that is significantly lower than some of the major names in the copper business such as Kolwezi next door or Antamina or Escondida itself. It's between a third and a quarter of the strip ratios that they have to deal with. So, that just means that we'll have that many fewer trucks, and fewer shelves, and graders, and loaders, and smaller maintenance shop, fewer maintenance people. And it just makes your ongoing all-in sustaining costs that much more competitive.

Third, the nature of the terrain is rolling hills with lots of space to be able to build large plant -- which is quite -- in some of the operations that you would've been to that have very steep mountainous terrain, where there really isn't room.

Fourth, the tailings capacity that we are building with this operation will be about 5 billion tons. And then, we have a second location already designed and analyzed from our 2012 engineering study that could add a further 8 billion. So, there's no limitation from tailings.

I forget if I'm at four or five points, but the source of water is the ocean -- is a desal plant. We're not drawing from a solar or interfering with the agriculture communities or those sorts of things. And we have good community support. We were able to sign all of the communities in the area to support agreements.

So, that -- those combination of factors don't occur that often and in such a great country -- a good geopolitical jurisdiction -- to be able to just focus on gradually expanding QB2 and what we call QB3 over the next 10 years or so. So, we're looking at different models. First, is a clear 50% expansion, which would be incredibly capital efficient because we think we could do that without building new pipelines, just adding pumps and so on and getting another line -- a line being a SAG mill and two ball mills.

We're also looking at doubling QB2, to take it up to over 600,000 tons of copper concentrate -- copper in concentrate per year. And the capital costs for that we estimate -- and this is in the forward-looking statement category. These are just estimates which we'll support with the scoping study. But that would be between $3-3.5 billion, versus the roughly $5 billion for QB2. So, again, much more capital efficient than most alternatives out there in the copper world.

But because of the size of the resource and we've got the space and we've got the water and so on, you could also triple it, or even quadruple it, and go to four SAG mills and eight ball mills and so on. So, we'll do the homework and the scoping study on that and come back. One of the clear instructions that I've given to the team doing that is that I want it to be something that's moderate in capital needs in any one year.

And remember, we do have the arrangement with Sumitomo where, when we go to sanction QB3, that their capital obligations to contribute 12% of the then net present value of what QB3 would be then. So, that combined with, I suspect, another project finance since the providers of capital have already started lobbying us to be able to participate in QB3 would suggest that Teck would have to come up with very little of our own equity capital to build QB3. And that would mean that the decks would stay clear to be able to continue to return cash to shareholders.

So, that's the design. That's what we're focused on. We've designed a balance sheet that way with no significant maturities for another 16 years. So, we think it's pretty exciting and that's our priority.

Curt Woodworth -- Credit Suisse Group -- Analyst

And when do you expect to have the scoping study done? By the end of this year?

Donald R. Lindsay -- President & Chief Executive Officer

We said the end of the third quarter, but probably saying the end of the year would be safer. But we're intensely working on it now.

Curt Woodworth -- Credit Suisse Group -- Analyst

Okay. Sounds really good. And one follow-up on the ongoing issues with logistics at Westshore and then rail issues. Can you talk about your expectations maybe over the next 12-18 months in terms of how you're going to reposition your port capacity and what you think that could mean for your logistics costs? I mean, clearly the Westshore contract is up in early '21. You have Neptune, and then we'll relieve -- continue to play a role given the new ownership. Any comments on that, I think, would be greatly appreciated.

Donald R. Lindsay -- President & Chief Executive Officer

Sure. Well, we'll finish the Neptune expansion up by November of 2020, that's next year. I was on site on Friday and had a good visit. And that'll leave us lots of time for commissioning, and that -- and then, really, we'll certainly be a part of our logistical chain going forward as it is now. We think having new owners there is a good thing because they'll be wanting to maximize the value and throughput in their new investment, and it'll be great working with the private sector. So, we're very encouraged by that. And in terms of the -- how much tonnage will go where will determine that in due course. But net -- no matter --

Curt Woodworth -- Credit Suisse Group -- Analyst

[Crosstalk] Thanks very much.

Donald R. Lindsay -- President & Chief Executive Officer

-- what configuration you can think of, our costs will be going down significantly.

Curt Woodworth -- Credit Suisse Group -- Analyst

Yep. Okay. Thanks.

Operator

The next question is from Timna Tanners with Bank of America Merrill Lynch. Please go ahead.

Timna Tanners -- Bank of America Merrill Lynch -- Analyst

Hey, good morning, guys. I was wondering if you could provide a little bit more color on thoughts around zinc since we last heard from you, and it's been a pretty weak market. So, just wanted your take on that. Any plans to address maybe some of the oversupply with curtailments? If you could address that.

Donald R. Lindsay -- President & Chief Executive Officer

Okay, over to Andrew Stonkus.

Andrew A. Stonkus-Senior Vice President, Marketing & Logistics

Thank you. The zinc market, if you look at the concentrate market, it remains still very well supplied. TC's -- spot TC's are above the benchmark levels. But they have capped out and they're starting to trend a little bit downwards as Chinese smelters are trying to increase their utilization rates. But what we're seeing in the zinc concentrate market is disruptions or -- and some disruptions on the mining side. So, the surplus is not as big as it was initially forecast. And so, the significant surplus that was initially forecast is coming down. The international zinc study group is forecasting a smaller deficit today than they were early.

On the metal side, we're still at historically low levels on the LME exchanges. We're down to about seven days to consumption. So again, to -- as Real pointed on the call side, the fundamentals on zinc are still pretty solid. The demand for zinc metal is holding up. And inventories are low. Prices are being reflected by the macroeconomic negativity. But in terms of fundamentals, metal inventories are still at historically low levels.

Donald R. Lindsay -- President & Chief Executive Officer

Maybe just to add a bit of color, as we call it, to -- on fundamentals. We met with a longtime friend of Teck's yesterday, the CEO of one of the very largest base metal companies in China. And he gave an assessment that he thinks it's now easier to get a permit and to build a mine in Canada than it will be in China because the environmental restrictions in China are so tough that he doesn't think there'll be any new zinc mines built in China. And they're actually investing in building a zinc mine in Canada. So, to the extent that people do analysis and think a lot of zinc will show up in the China market, apparently the locals don't think so.

Timna Tanners -- Bank of America Merrill Lynch -- Analyst

Okay, helpful. Thanks. The only other two questions I had was -- one, I was interested to hear about some of the RACE21 debottlenecking productivity, lower costs. But in light of what Freeport elaborated on yesterday, does that also entail perhaps more volume or is that just cost-cutting at this point? I believe you're talking about some similar instances of debottlenecking and using big data. So, just wondering again if you were also looking at volumes and not just cutting costs.

And the second question just relates to just any update you can provide us on how you're tracking or thinking about Zafranal, San Nic, and all of them. Thanks.

Donald R. Lindsay -- President & Chief Executive Officer

Okay, the short answer to your [audio cuts out] is both. But I'll turn it over to Andrew Milner to talk about the RACE21 target.

Andrew Milner -- Senior Vice President, Technology and Innovation

Yeah, so it is -- in the processing space, a lot of the value will come through the increase in productivity. And some of our other initiatives are in analytics in the mining environment -- haul cycle analytics, mining analytics, etc. There'll be cost savings. What we're seeing is that there's going to be a program that we're building here that's in excess of 20 initiatives right now. We've got a great deal of confidence in delivering the $150 million uplift in EBIDTA this year. And from our perspective, that is just the start. So, we're going to see huge increases in that over the next couple of years. We've got a program after 21 where that number of initiatives will probably reach in excess of 100 initiatives across a range of areas looking in the processing space, maintenance area, and other areas within the mining environment. So, it's in both areas.

Donald R. Lindsay -- President & Chief Executive Officer

On your second question, then, on project Satellite, and Zafranal within it, nothing has changed in our position there. We continue to optimize each of the five projects within that and, given what I've just said about QB3 being so excited -- that certainly reinforces that, with the five projects in Satellite, that in a point in time, we'll be looking for partners, or sales, or some sort of transaction to realize value from that. But given the weaker copper markets, or just general commodity markets that we're in right now, we're in no rush to do so. We clearly don't need the cash. So, we'll take our time on that. But it's certainly going to be something that would add value over the next year or two.

Timna Tanners -- Bank of America Merrill Lynch -- Analyst

Okay. Thank you.

Operator

The next question is from Jackie Przybylowski with BMO Capital Markets. Please go ahead.

Jackie Przybylowski -- BMO Capital Markets Corp -- Analyst

All right. Thanks. I just had a really quick one, I guess. You mentioned in the release that you had a work force lockout at Neptune, and I was wondering if you could give us a little bit more color on the circumstances around that?

Donald R. Lindsay -- President & Chief Executive Officer

Andrew?

Andrew A. Stonkus-Senior Vice President, Marketing & Logistics

Yeah, it was the longshoreman lockout on the Northshore. So, that was -- the lockout itself was -- I believe was only eight hours. But it had an effect on the stacking up railcars, or trainsets -- had an impact of about two to three days for us on the Neptune situation. We had to divert trains to other ports to overcome that lockout situation.

Jackie Przybylowski -- BMO Capital Markets Corp -- Analyst

Okay. And the fact that you've had shipping challenges, or delays, at both Neptune and Northshore -- I'm assuming at this point, you've got a fairly good stockpile of coal at the ports. So, shipping going forward -- assuming that the ports themselves are shipping out, it shouldn't be constrained by rail or other logistics at this point. Is that fair?

Donald R. Lindsay -- President & Chief Executive Officer

No. Portside inventories are where we would like them to be. They're at normal levels and that's not impacting the loading of vessels on port inventories. We have higher inventories than normal at the mine sites, and that's what we still need to work on and draw down those inventories.

Robin B. Sheremeta -- Senior Vice President, Coal

But we've had some reasonable progress lately. Their services has been better.

Jackie Przybylowski -- BMO Capital Markets Corp -- Analyst

Okay, great. And maybe -- just to follow-up on something Chris Terry asked about earlier to Ron, when we're talking about the 30% distribution going forward -- I think he asked this, but I didn't quite catch the answer. Is it going to be a forward-looking free cash flow so the estimate of what your free cash flow would be in the following year, or is it a backward looking so the free cash flow that you've actually realized in the previous year? Can you just repeat that because I missed the answer on that?

Ronald A. Millos -- Senior Vice President, Finance & Chief Financial Officer

So, it'll be based on the current year. So, as Don mentioned, the board has looked at the supplemental distributions in November and there's been some discussion whether they should wait until February. But whatever is decided, if it's done in November, it'll be based on the forecast for 2019. And if it's done in January, it'll be looking backwards on what the actual results for 2019 were. And then, of course, the timing of the payments -- whatever they might be -- will be dictated by whenever the board makes that decision.

Jackie Przybylowski -- BMO Capital Markets Corp -- Analyst

Okay. That's great. Thanks very much. That's it for me.

Donald R. Lindsay -- President & Chief Executive Officer

What I would add, Jackie, is that I would anticipate that the buyback will continue throughout the year, at -- when we finish the billion dollars, there will be more allocated by the board. Because our philosophy is we want to have that buyback in place year in and year out.

Jackie Przybylowski -- BMO Capital Markets Corp -- Analyst

Okay. Thanks, Don.

Operator

The next question is from Lucas Pipes with B. Riley FBR. Please go ahead.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

Hey. Good morning, everyone, and congrats on a good quarter and good updates. I wanted to follow-up on Neptune. In the release it mentioned an additional project scope? Could you elaborate on what you mean by that and is the targeted capacity still the same as it was before? Thank you.

Donald R. Lindsay -- President & Chief Executive Officer

Oh, Andrew or Alex? Who wants to --

Andrew A. Stonkus-Senior Vice President, Marketing & Logistics

I think Alex.

Donald R. Lindsay -- President & Chief Executive Officer

Alex will do it.

Alex Christopher -- Senior Vice President, Exploration, Projects, & Technical Services

Yeah, in terms of target capacity, the target capacity is still the same target capacity. The additional costs -- I'd say that increase is really a function of several factors. We've advanced our engineering design, which is now about 78% complete. We've advanced our efforts in our contracting and procurement, which now is 60% complete. And then our construction in the field is about 32% complete. So, all of these resulted in advanced definition of the project scope, the material quantities, the subsurface geotechnical conditions -- as well, we have better line of sight of market pricing for equipment materials and installation costs. So, those are the things that contribute to the additional capex increase that you see.

Donald R. Lindsay -- President & Chief Executive Officer

We should say that the --

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

[Crosstalk] That's helpful. Thank you.

Donald R. Lindsay -- President & Chief Executive Officer

We announced the capacity at 18.5 million tons, but the people involved think that's a very conservative number.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

Interesting. Any sense on what a best guess would be on the max capacity if 18.5 million is conservative?

Donald R. Lindsay -- President & Chief Executive Officer

No, it's best to leave it at that.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

Okay. Quick clarification on your capital allocation framework. I assume, when you speak about committed enhancement and gross capex being subtracted, that is only the net contribution. So, things like project financing would be added back. So, when it comes to QB2, it's really a minimal jack on this 30% of potential distribution -- or at least 30% contribution -- over the next couple of years? Is that right?

Ronald A. Millos -- Senior Vice President, Finance & Chief Financial Officer

That's correct. We would -- the contributes from Sumitomo and the project financing would be pulled out.

Donald R. Lindsay -- President & Chief Executive Officer

Yeah. I mean, bottom line, because it's -- we think, if you model this on your forecast for 2020, it's going to look pretty good.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

I would agree with that. Maybe one last one on RACE21. The way I understand it, the $150 million is in guidance for 2019. Would it be netted out against other cost pressures so that we wouldn't be seeing, for example, cost guidance in the coal segment come down? How should we think about that? Where would we find the $150 million? I guess, it's sprinkled in, but if you could maybe elaborate that would be helpful.

Donald R. Lindsay -- President & Chief Executive Officer

So, our intention in February, when we report the results for the year, would be to report more detailed results of RACE21 so you can see where the $150 million came from -- the 12, or 14, or 15 different projects -- and the source of them.

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

Got it. Okay. Well, thank you very much and best of luck.

Donald R. Lindsay -- President & Chief Executive Officer

Thank you.

Operator

Your next question is from Brian MacArthur with Raymond James. Please go ahead.

Brian MacArthur -- Raymond James & Associates, Inc. -- Analyst

Good morning. So, I just want to go back to the water treatment. There's a statement in here saying we expect active water treatment will continue to be required in some locations when SRFs aren't at work. Is that now just referring back to the current AWT plant that's in place? You can't convert it -- because I think you were mentioning you think you can make all the plants going forward SRFs -- or is there something different in there?

Donald R. Lindsay -- President & Chief Executive Officer

So, I'll start and then we've got a couple people wanting to jump in here. So, we're very, very pleased with the government's endorsement of the SRF. We think it's a much better technology -- we know it's a much better technology because it's been proven and running for the last year. And so, that technology -- and technologies similar to that -- we think will be what will be recommended in all the different things going forward. But we won't know until we get to each of those different situations and have to get government approval and endorsement. We will start with SRF or light technology. And only if some circumstance presents itself that we weren't going to get approval for that would we go back to a tank based technology. But we really don't think that's going to happen. But in terms of disclosure, we have to leave all the options open. Robin, did you want to add anything on that or is it --

Robin B. Sheremeta -- Senior Vice President, Coal

[Crosstalk] No, that covers it.

Donald R. Lindsay -- President & Chief Executive Officer

Okay.

Brian MacArthur -- Raymond James & Associates, Inc. -- Analyst

So, just then -- when we did the Investor Day, they talked about between 2000 -- and through 18-22, there was $600 million coming down to $650 million -- or going down from $650 million to $600 million in capital if you could do this. Was that just for this Elkview plant or where there other plants in there? That is to say, now that we think we can do this, assume we can do it -- that $650 million will come down to $400 million or something?

Ronald A. Millos -- Senior Vice President, Finance & Chief Financial Officer

No, the $600 million to $650 million would be SRFs replacing -- not -- one of them was the SRF replacement at Elkview. The other would be the replacement of the Fording River North plant, which would be the second tank based plant. It would be replaced with an SRF. And we know we have capacity at that end of the valley to do that. And that's what would create the $600 million to $650 million.

Brian MacArthur -- Raymond James & Associates, Inc. -- Analyst

But it wouldn't be better than that because you're saying the capital costs are 50%. So, if you can do that second tank based one at SRF, does not bring that capital number down?

Donald R. Lindsay -- President & Chief Executive Officer

No, the capital costs are 20%. The operating costs are 50%. So --

Brian MacArthur -- Raymond James & Associates, Inc. -- Analyst

[Crosstalk] Oh, OK. So, that 20 --

Donald R. Lindsay -- President & Chief Executive Officer

Let me take another shot at it. That -- in the Elkview case, if we had to have built a tank based plant, that would've been $400 million plus. And now, order of magnitude, we think it'll be $100 million or something like that. In the Fording River South plant, Robin, that would've been $400 million to $500 million. And now, we believe -- it's not approved yet, but we believe that we'll go with SRF there as well. So -- yeah, Fording River North. So, these are substantial chunks of capital that, if they were in your model, they should be taken out of the model.

Brian MacArthur -- Raymond James & Associates, Inc. -- Analyst

Right. That's what I was just trying to figure out the magnitude. So, that's very helpful doing it that way. One other quick question, just on the capital allocation, we keep talking about November or February. So, I assume this is going to be an annual decision, not a quarterly decision, i.e, like some people put in back base looking cash flow and pay out 30% excess. Is this going to be a one-time year thing and the share buyback will be throughout the year to give support? Is that the way you're thinking here, so you don't get a total variable dividend if you go that way all the time?

Donald R. Lindsay -- President & Chief Executive Officer

In a normal year, yes, the way you described it would be how it would work. I mean, the board has the flexibility to do what it wants at any time. If we sold an asset, for example, they may decide to do something in mid-year, but generally how you described it is the way it would work.

Brian MacArthur -- Raymond James & Associates, Inc. -- Analyst

Great. Thanks very much, Don.

Donald R. Lindsay -- President & Chief Executive Officer

Thanks, Brian.

H Fraser Phillips -- Senior Vice President, Investor Relations & Strategic Analysis

Operator? Jen? I think we're at -- I think we're past time here and we'll hand it over to Don for his closing comments.

Donald R. Lindsay -- President & Chief Executive Officer

Okay. Well, thanks, Fraser, and thank you all for joining us this morning. As I said, we're very excited to hear there's a number of really important good news items that we've just reviewed. The SRF government endorsement is a very big deal in terms of capital savings and operating cost savings for the future. RACE21 is off to a racing start. It's -- I was visiting four of our operating sites last week. Got to speak to the engineers right on the front lines, who are implementing these things, and they are so excited. It's fantastic to see the passion with which they speak about these projects and the potential for it. And of course the buybacks up to $1 billion, and going strong. So, lots of excitement ahead. Thank you all. We'll speak to again, I guess, next in October. Thank you.

...

Operator

The conference has now ended. Please disconnect your lines at this time. Thank you for your participation.

Duration: 64 minutes

Call participants:

H Fraser Phillips -- Senior Vice President, Investor Relations & Strategic Analysis

Donald R. Lindsay -- President & Chief Executive Officer

Ronald A. Millos -- Senior Vice President, Finance & Chief Financial Officer

Andrew Golding -- Senior Vice President, Corporate Development

Real Foley -- Vice President, Coal Marketing

Andrew A. Stonkus-Senior Vice President, Marketing & Logistics

Robin B. Sheremeta -- Senior Vice President, Coal

Alex Christopher -- Senior Vice President, Exploration, Projects, & Technical Services

Andrew Milner -- Senior Vice President, Technology and Innovation

Matthew Korn -- Goldman Sachs Group, Inc. -- Analyst

Curt Woodworth -- Credit Suisse Group -- Analyst

Greg Barnes -- TD Securities -- Analyst

Christopher Terry -- Deutsche Bank Securities, Inc. -- Analyst

Orest Wowkodaw -- Scotiabank -- Analyst

Lucas Pipes -- B. Riley FBR, Inc. -- Analyst

Brian MacArthur -- Raymond James & Associates, Inc. -- Analyst

Jackie Przybylowski -- BMO Capital Markets Corp -- Analyst

Timna Tanners -- Bank of America Merrill Lynch -- Analyst

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