Adaptability Teck 2014 Sustainability Report Proven Ability to Meet a Changing World In This Report Message from the CEO 2 Theme: Providing High-Quality Employment 80 About Our Report 5 M Building our Workforce 82 Our Business 7 Water 90 Teck Business Units 8 Theme: Implementing Responsible Water Stewardship 92 Performance Overview 11 M Protecting and Conserving Water 94 Where We Are 12 M Managing Tailings Responsibly 101 Adding Value throughout the Mining Life Cycle 14 Description of our Value Chain 16 Biodiversity 104 Theme: Working to Achieve a Net Our Sustainability Strategy 18 Positive Impact 106 Our Approach to Materiality 20 M Protecting and Conserving Biodiversity 108 Communities of Interest 23 M Planning for Closure 112 Progress on 2015 Sustainability Goals 26 Energy 116 Managing Responsibly 32 Theme: Managing Energy and Climate Risks 118 Sustainability Governance 32 M Using Energy Efficiently and 122 Management Systems 35 Reducing Emissions External Commitments and Partnerships 36 Materials Stewardship 128 M Ensuring Integrity and Compliance 37 Theme: Fostering Sustainability in our Value Chain 130 M Preparing for Emergencies 39 M Minimizing Product Impacts 132 M Managing Environmental Performance 40 M Managing our Supply Chain 133 Community 44 Performance Overview Table 136 Theme: Working with Communities 46 Independent Assurance Report 138 M Achieving Community Support 48 M Improving Air Quality 55 Appendix A – Data Tables 140 M Working with Indigenous Peoples 57 Appendix B – Our Memberships, External Theme: Having a Positive Impact on Society 62 Standards and Commitments 154 M Optimizing Economic Contributions 64 Glossary 158 M Respecting Human Rights 67 Global Reporting Initiative Finder 162 Our People 70 Theme: Operating in a Safe Way 72 M = Material Issue M Strengthening our Safety Culture 74 Case Studies Community Consultation at Quebrada Blanca 52 Community Environmental Panel at Carmen de Andacollo 53 Teck’s Involvement in Elk Valley Economic Initiative 54 Dust Reduction at Trail Operations 56 25th Anniversary of Red Dog 60 High-Potential Risk Control Strategy 78 Developing a Highly Skilled Workforce 88 Teck’s Involvement with the Elk River Alliance 99 Selenium Management Successes at Cardinal River Operations 100 Soil Reclamation in the Elk Valley 114 Caribou Penning Program Helps Recovery of Threatened Klinse-Za Herd 115 SunMine Solar Farm Project at the Sullivan Site 127 ZincNyx Renewable Battery Development 134 On the cover: Jevin Wolchuk, Environmental Officer at Teck’s Greenhills Operations in B.C., Canada In This Report 1 Message from the CEO Donald R. Lindsay President and Chief Executive Officer This past year was undoubtedly challenging for our industry, due in large part to a cyclical downturn in commodity markets. However, throughout our 102-year history, we’ve proven time and time again that we are able to meet the challenges of a changing world. That’s why I believe the word Adaptability so fittingly describes the spirit of our company, and why it is the name of our 2014 sustainability report. Our Sustainability Progress While markets may be cyclical, our commitment to sustainability remains constant. Our people live in the areas where we operate, and we care about doing the right thing for their communities, the environment and future generations. It is for that reason we launched a comprehensive sustainability strategy in 2011 that consists of six focus areas that represent the biggest challenges and opportunities for our work in sustainability. Our strategy also sets short-term goals to 2015 and long-term goals that stretch through to 2030 to help us achieve our vision for sustainability. As outlined in this report, this past year we continued to make progress towards achieving all of our short-term goals. Our people are fundamental to the success of our sustainability efforts, and nothing is more important than the safety of our employees and contractors. In 2014, we developed and implemented a new High-Potential Risk Control strategy at all of our operations. This helps us identify and evaluate the controls that will most effectively prevent serious injury or loss of life. We also continued to improve our safety performance – our total reportable injury frequency was 25% lower than in 2013, and our high-potential incident frequency rate declined by 22%. Despite our progress, we were deeply saddened by two fatalities that took place at our operations in 2014 – one at our Coal Mountain Operations in March and one at an exploration project in Chile in November. We have carried out in-depth investigations into each loss to learn as much as possible and to implement measures to prevent a reoccurrence. These learnings have been shared across all of our sites, as well as with our industry peers. These fatalities serve as important reminders that we must remain diligent in our efforts to achieve our vision of everyone going home safe and healthy every day. Water is another important issue for our company. It is critical for ecosystems, for communities and for mining processes. In November 2014, the government of British Columbia (B.C.) approved our first area-based water quality plan. The Elk Valley Water Quality Plan defines short-, medium- and long-term water quality targets and sets out our approach to achieving them near our five steelmaking coal operations in B.C. Under the plan, we will continue to implement and improve aquatic monitoring, water quality testing and various water quality management measures, including construction of water diversions and water treatment facilities. This marks a significant step forward in our ability to address water quality concerns throughout the watershed. Unfortunately, in the fall of 2014 we had a fish mortality incident at our new Line Creek Operations water treatment facility as the result of a problem with the start-up of the newly constructed plant. We are now working to restart the facility and are taking steps to prevent a reoccurrence. We also continue to focus on facilitating long-term economic opportunities and strategic community investments to encourage lasting positive benefits for the communities where we operate. This includes everything from salaries and local spending to taxation and community investment. Notably, we invested almost $20 million in 2014 to support communities in achieving their development and social goals. 2 Teck 2014 Sustainability Report | Adaptability Our Operations Our operations continued to perform well in 2014 and we achieved a number of production milestones. In our copper business, Antamina set a record for throughput of approximately 138,000 tonnes per day. In zinc, we achieved record annual zinc production of 596,000 tonnes at our Red Dog mine. Finally, in steelmaking coal, we saw record annual production of 26.7 million tonnes and sales of 26.2 million tonnes. We also executed well on a number of major capital projects. The Mill Optimization Project at Highland Valley Copper was completed in 2014 and resulted in a substantial increase in mill throughput, and has already exceeded the design capacity by 10,000 tonnes per day. In addition, our Pend Oreille zinc mine was successfully restarted on time and under budget, and we completed construction of a new acid plant at our Trail Operations that has increased reliability and environmental performance. In 2015, we will continue to advance our Quebrada Blanca Phase 2 project while working to achieve significant capital cost reductions. We will also maximize learnings from the construction of the Fort Hills oil sands project and establish plans to market our share of bitumen. Our Response to Global Economic Factors The changing nature of growth in China is causing ripple effects in our industry, as economic policies introduced by the Chinese government are supporting a shift from an infrastructure- and construction-driven economy to one that is more consumer-led. This shift is one of the contributing factors to changing demand and a fall in prices for certain commodities used in infrastructure development. For some commodities, such as steelmaking coal, this challenge is compounded by market oversupply. In light of this environment, in 2014 we focused on the factors that were within our control. This has included a major focus on cost reduction that continues to deliver results, with significant sustainable operating cost reductions being achieved. As a result of the hard work of our employees, in 2014 we reduced unit costs at 10 of our operations. We also reduced capital expenditures by approximately $400 million compared with our plans at the start of the year. Further, our liquidity remains strong, as we came to the end of 2014 with a cash balance of $2 billion and we have only $300 million of long-term notes due by early 2017. We will continue to focus on reducing costs and improving efficiency to ensure we are well-positioned for when markets improve from the current price cycle. We are targeting an additional $100 million in savings through operating excellence and production optimization at our operations in 2015 – while at the same time, prudently managing our capital spending. With continued market weakness and low prices for our steelmaking coal products, we have also taken a disciplined approach to managing coal production in 2015, rather than pushing incremental tonnes into an oversupplied market. Our External Environment Recent court decisions have focused attention on the relationship between industry, Indigenous Peoples and local communities in Canada – and the implications for future resource development. These rulings, such as the Canadian Supreme Court’s historic Tsilhqot’in decision, provide clarity on Aboriginal title. They also reinforce our belief that Message from the CEO 3 relations and agreements with Indigenous communities must be based on genuine, respectful engagement and on the creation of shared value for resource development activities. In 2014, we reached a Joint Relationship Agreement with the Nlaka’pamux Nation Tribal Council near our Highland Valley Copper Operations.