Strong zinc price, production drive increased profit for Teck; NANA gets extra boost from royalty rise.

Due to a combination of strong zinc prices and production, the Red Dog Mine in Northwest Alaska generated strong profits for Teck Resources Ltd. and revenues for NANA Corp. during 2022.

Red Dog produced 553,100 metric tons (1.22 billion pounds) of zinc during 2022, a nearly 10% increase over the 503,400 metric tons (1.11 billion lb) produced during 2021. The Northwest Alaska operation also produced 79,500 metric tons (173.5 million lb) of lead, along with appreciable amounts of silver and germanium, though the amounts of the latter two metals are not reported by Teck.

The higher 2022 zinc output was the result of higher-grade ore, which averaged 16% zinc last year compared to 14.3% in 2021.

The realized price per pound of zinc sold by Teck during 2022 was US$1.52; this is roughly 9% higher than the US$1.39/lb zinc price realized by the company in 2021.

As a result, Red Dog generated C$2.11 billion (roughly US$1.56 billion) in revenue for Teck during 2022, a 40% increase over the C$1.57 billion (US$1.16 billion) in revenues during 2021. After backing out costs, this comes to C$862 million (roughly US$638.5 million) in gross profit for Teck, a 27% increase over the C$678 million (roughly US$502.2 million) in 2021.

NANA, which owns the land that hosts the world-class Red Dog deposits and receives a 40% net proceeds royalty from the metals produced there, realized an even larger percentage increase in revenue from the zinc mine on its lands in Northwest Alaska.

During 2022, NANA received C$461 million (roughly US$341.5 million) in royalties from Teck, a nearly 43% increase over the C$323 million (roughly US$239.3 million) in 2021 royalties from Red Dog production.

Alaska Industrial Development and Export Authority

Teck's Red Dog Mine on NANA land in Alaska's Arctic produced 1.22 billion lb of zinc, about 4% of global production in 2022.

This royalty payment made to NANA benefits all 12 ANCSA regional corporations and the villages within them.

Under ANCSA, which was passed by the U.S. Congress and signed into law by President Nixon in 1971, NANA shares its revenues from the Red Dog Mine with the 11 other Alaska Native regional corporations.

ANCSA Section 7(i) requires regional corporations to distribute 70% of net revenues from resource development on ANCSA lands among all 12 regional corporations. In turn, Section 7(j) requires that half of the Section 7(i) payments be distributed to the respective village corporations within each of the ANCSA regions.

As a result, the royalty payments NANA receives from Red Dog flow to communities across Alaska.

NANA's net proceeds royalty from Red Dog increases by 5% every five years, up to a maximum of 50%. The increase to 40% happened during 2022.

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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