Teck Shrugs Off Tariff Risks, While Cameco Says 'It's Kind Of Econ 101' For Uranium Prices

Canadian miner Teck Resources TECK is not worried about the impact of proposed U.S. tariffs on the company’s business. During the latest earnings call, CEO Jonathan Price pointed out that the firm’s exports mainly go to Asia and Europe.

"In the event that tariffs are imposed, we expect trade flows to adjust. Teck has a resilient business driven by the diversification of our products and operations." Price said.

Teck’s latest earnings showed a profit of $385 million, or 75 cents per share, compared to a $167 million loss a year earlier. Adjusted earnings were 45 cents per share, up from just four cents a year earlier. Revenue rose to $2.8 billion, driven by record copper production at its Quebrada Blanca operations in Chile.

Copper production reached 122,000 tons for the quarter, up from 103,000 tons a year earlier, while zinc in concentrate declined to 146,000 tons from 182,000 tons. Management remains focused on copper growth, having completed the sale of its steelmaking coal business to Glencore and using the proceeds to reduce debt and return $1.8 billion to shareholders through buybacks and dividends in 2024.

While most of this business would not be affected by the proposed 25% tariff on Canadian goods, Teck does export about 15% of its revenues to the U.S. in refined zinc, lead, and specialty metals such as germanium, indium, and sulfur products.

The situation in the uranium market is vastly different. Executives from Cameco CCJ, the world’s largest publicly traded uranium company, expressed concerns about a proposed 10% U.S. tariff on Canadian energy imports, anticipated for March 4.

CFO Grant Isaac noted that such a tariff would lead to price inflation across the uranium market, as non-tariff suppliers would raise their prices to just below the tariff threshold.

"A 10% proposed tariff from a major supply source like Canada will effectively raise the uranium price by 10%. It's kind of Econ 101," Isaac said on the earnings call.

CEO Tim Gitzel agreed with the assessment, recalling the 2017 Section 232 investigation into critical minerals imports, which prompted the company to add contractual protections against future tariffs.

"Our neighbor to the south has discovered the hammer in the toolbox, which is tariffs and we began to prepare for a future where they might use it and good thing we did. We wrote a number of contracts that effectively moved tariffs into the tax clause of a contract," he said.

Uranium prices have risen due to concerns over supply constraints, peaking above $100 per pound a year ago. Although they have declined to below $65 per pound since then, Gitzel noted that utilities have secured less than 40% of their required uranium supply through 2040, leaving an estimated shortfall of 2.1 billion pounds.

As bringing on new production is challenging, he expects the shortage will intensify in the mid-2030s, when major mines, including Cameco’s Cigar Lake, reach the end of their mine life without adequate replacements.

"Cigar Lake satisfies 10% of global demand. That's an 18-million-pound hole in supply that the market has not yet fully appreciated," he warned.

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