There are several reasons I believe Teck Resources Ltd (USA) (NYSE:TECK) is a great company; and TECK stock a buy. They are an extremely diversified mining and exploration company. First, Teck is the Largest North American producer of steelmaking coal, an essential ingredient in the production of steel. Teck’s steelmaking coal comes from five mines located in British Columbia and one in Alberta, Canada.

Second, Teck Resources Ltd (USA) is a significant producer of copper, with four operating mines in Canada and South America. Third, as one of the world’s largest Zinc producers, Teck provides Zinc to meet the World’s growing infrastructure demands. Fourth, Teck Resources is a World Leader in the production of lead and specialty metals such as germanium, indium and cadmium.

Lastly, as if that’s not enough, they also produce Gold and Silver and are advancing oil sand projects in Alberta, Canada! As long as oil stays above $35.00 a barrel and we continue to have strong demand for steelmaking coal, copper, and zinc, Teck Resources Ltd (USA) stock will gain even more traction in 2017.

Those three commodities, copper, zinc and steelmaking coal are actually very popular right now. The price of copper alone increased by approximately 30% in the past six months, and zinc prices have doubled! However, coking coal prices have increased from $81 a tonne in Q4 of 2015 to $207 a tonne in Q4 2016!

About Teck Resources 

Teck Resources Ltd (USA) is headquartered in Vancouver, Canada. They are one of the largest base metal companies in the World that offers exposure to copper, zinc and steelmaking coal. Teck is the third largest producer of Zinc and second largest seaborne exporter of steelmaking coal. The company owns or has interests in 12 mines in Canada, the USA, Chile and Peru. Teck is building an energy business that will further diversify their assets and generate significant long-term value.

The number of active steelmaking coal operations Teck has currently is six. 54% of Teck’s gross profit in 2016 came from steelmaking coal when the price was much lower. They produced 27.6 million tonnes in 2016 and had $9.3 Billion in Revenue in 2016. The importance of the fourth quarter cannot be underestimated as Teck generated 67% of its full-year net income in just the final quarter! Teck generated free cash flow of $830M in the fourth quarter of 2016.3

Teck Resources Fort Hill project is a possible hidden gem. Construction as of year-end has surpassed 76% complete. All major plant equipment are on site. Trucks and equipment are mobilizing for operations. 58% of operation personnel have been hired. Their Fort Hills project is fully funded and will contribute as early Q4 2017, as long as oil stays above $35 per barrel. With cash balances increasing by $1 billion per quarter Teck will have lots of options as to what to do with all the cash, all of which bode well for TECK stock.

What is Steelmaking Coal?

Steelmaking Coal or metallurgical coal is a higher grade coal which is a necessary component for transforming iron into steel. In the fourth quarter of last year, Teck Resources produced 7.3 million tonnes of this coal. As the price of this commodity went up, so did the gross profit for Teck Resources Ltd (USA), which increased by almost 500% to $1.2B.

Just to emphasize the importance of this fourth quarter, Teck generated total free cash flow of $1.2B in the entire financial year. So, once again, Teck generated 2/3 of its full-year free cash flow in just one quarter. Once the purchasers of Teck’s commodities pay their bills, the net debt will decrease by several hundreds of millions of dollars overnight. And Q1 is shaping up to become an even better quarter as the prices of steelmaking coal are now at $285 a tonne! Take a look at current prices below. Keep in mind, TECK stock is flat for 2017.

“Change” in the top row, third column