Canadian miner Teck Resources Ltd said it has agreed to sell its 21.3% stake in the Fort Hills oil sands project to Suncor Energy Inc for about C$1 billion ($737.19 million) in cash, as it shifts focus to copper from carbon.
“This transaction advances our strategy of pursuing industry-leading copper growth and rebalancing our portfolio of high-quality assets to low carbon metals,” Teck Chief Executive Officer Jonathan Price said on Wednesday.
Canada’s oil sands hold some of the world’s largest but most carbon-intensive crude reserves.
The sale expands Suncor’s majority interest in the Alberta-based project to 75.4%.
French energy major TotalEnergies SE (TTEF.PA), which holds the remaining 24.6% interest, said in September it plans to sell off its Canadian oil sands assets as they are not in line with its climate strategy.
Fort Hills is an open-pit truck and shovel mine, where raw oil sands bitumen is extracted and then upgraded. The project has struggled with operational challenges, delaying production and raising costs.
Canadian energy major Suncor said over the next three years, it expects 5% lower gross production and higher operating costs per barrel at the project due its long-term improvement plans for the project.
“While the Fort Hills mine has faced challenges in the early years of the mine life, including challenges due to government directed production shut-ins, I have full confidence in our current mine plan assembled with fresh external mining perspectives,” said Suncor interim CEO Kris Smith.
Suncor said it will fund the purchase, expected to close in the first quarter of 2023, through ongoing asset sale processes, adding that it will recognize a non-cash impairment charge of about C$2.6 billion for the third quarter on its current 54.1% stake in the project.
Teck said the deal will lead to a non-cash impairment charge of about C$950 million in the third quarter.
