Teck Resources and NANA, Red Dog Mine Case Study

Overview of Red Dog Operations

Red Dog Operations is one of the world's largest zinc mines, located about 170 kilometers (105 miles) north of the Arctic Circle in northwest Alaska. It is an example of a collaborative partnership and rights-respecting approach with Indigenous communities. Red Dog is a partnership between Teck Resources and 15,000 Iñupiat shareholders of NANA Regional Corporation, one of the Alaska Native Regional Corporations formed under the Alaska Native Claims Settlement Act (ANCSA). Red Dog sources nearly 5% of the world’s zinc supply.

Development and Mining Methods

Red Dog Operations was developed in 1982 through an innovative operating agreement between the operator Teck and the land-owner NANA. The mine and concentrator properties are leased from, and were developed under, the agreement with NANA. Red Dog, an open-pit truck-and-loader operation, uses conventional drill and blast mining methods. Concentrates produced at the mine are shipped to metallurgical facilities in Trail, British Columbia, and to customers in Asia and Europe. The current mine life, based on existing developed deposits, is expected to extend through to 2031.

Operating Agreement and Royalty Structure

In accordance with the operating agreement governing the Red Dog mine between Teck and NANA Regional Corporation, Inc. (NANA), Teck pays a royalty on net proceeds of production to NANA, which increased from 35% to 40% in October 2022. This royalty increases by 5% every fifth year to a maximum of 50%, with the next adjustment to 45% anticipated to occur in October 2027.

The NANA royalty expense in 2024 was US$327 million compared with US$195 million in 2023. NANA has advised Teck that it ultimately shares approximately 60% of the royalty, net of allowable costs, with other Regional Alaska Native Corporations pursuant to the Alaska Native Claims Settlement Act.