Teck Resources Shifts Focus to Energy Transition Metals Amid Global Coal Decline

China's Shift from Coal to Renewables: Impact on Global Energy

With 60% of its electricity still powered by coal, China's share of global electricity consumption is projected to rise to one-third by 2025, up from one-quarter in 2015, according to the International Energy Agency. Despite this increase, Sinopec reports that China's coal power consumption is expected to halt its growth by 2025, with non-fossil fuel sources predicted to dominate the country’s power mix by 2045. This transition is part of a broader global shift towards renewable energy.

Coal's Decline in Europe and the U.S.

The European Electricity Review of 2024 highlighted a significant 19% drop in fossil fuel generation last year, with coal and gas experiencing unprecedented declines. Coal generation fell by 26%, making up just 12% of the EU's electricity mix in 2023, while gas generation decreased by 15%, accounting for 17%. In the U.S., coal-fired power generation reached its lowest level in four years during the first four months of 2024, yet it still accounted for 15.6% of the national power mix. Despite the decline in coal output, renewable energy growth, particularly wind power, has been slower than anticipated, maintaining coal's significant share.

Investment Insights: Teck Resources Limited

Teck Resources Limited (NYSE:TECK), headquartered in Vancouver, Canada, engages in the exploration, acquisition, development, production, and sale of natural resources, including steelmaking coal, copper, zinc, and other metals. In Q2 2024, Teck reported a total revenue of $2.9 billion, a 10.1% increase, driven by record copper production and strong sales in the steelmaking coal segment. Despite a 28.8% decline in net profit due to higher operating costs and non-controlling interest impacts, Teck's liquidity position strengthened with $6.4 billion in cash and a net cash position of $2.1 billion after debt repayments.

In September 2024, Teck unveiled a new structure of two regional divisions: North America and Latin America, to focus on energy transition metals. This restructuring aims to boost copper growth, streamline operations, and enhance shareholder value. Teck's 17.2% year-to-date gain is driven by strong copper growth, the ramp-up of Quebrada Blanca (QB) Phase 2, and the sale of its coal business, positioning it as a pure-play energy transition metals company.

Investment Strategy: Following Hedge Fund Trends

As of Q2 2024, 69 hedge funds, with a combined investment of $2.0 billion, are bullish on Teck Resources Limited, according to Insider Monkey’s database. This interest is part of a broader strategy to outperform the market by imitating the top stock picks of leading hedge funds. Our quarterly newsletter’s strategy, which selects 14 small-cap and large-cap stocks every quarter, has returned 275% since May 2014, beating its benchmark by 150 percentage points.

Conclusion

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Further Reading

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Disclosure: None. This article is originally published at Insider Monkey.