Alec Kodatsky, CIBC World Markets – Analyst

With inflation and lack of labor and other challenges facing the mining industry, are you commanding higher returns when you look at opportunities than you were a year or two ago? Are you actually raising the hurdle on yourselves when you look at the world?

Ron Millos, Teck Resources Limted - SVP, Finance & CFO

It's an interesting question because when you look at the hurdles, we can make anything work by changing your commodity price assumption. And what we really look at for a particular opportunity is the mine life. Is it long or short? The position where you think it's going to be on the cost curve. The political jurisdiction you're dealing with. The buildability of a project, i.e. is it a nice flat area in Australia, or is it mountaintop mining like we have to deal with in Chile and/or Canada?

So you factor all those things in and then you sort of run, say, what commodity price do I need to get a return on capital, equal to our weighted average cost of capital. And the theory there is you don't want to destroy shareholder value. And if it's a nice low number, then you say, okay, I've got something I can work with. Or if it's a low number, you've got problems. If it is a nice high number -- or a high number, you got problems, but a low number, then you sort of roll the sleeves up and start looking at the opportunity in more detail.

And it ultimately comes down to the decision that price and the capital cost is the key things, but when it comes down to decision time, it's what's the likelihood that the commodity price is going to exceed this for an extended period of time. The key thing that we don't know is -- and probably nobody does -- is what the future commodity price is going to be. So you can pick your price and it is what it is.

The other thing that we know is when you build your models, year-long term price is CAD2.50, CAD3.00, whatever you believe it is going to be. In reality, the price is going to be spiking and the mining industry, you make all your money in the price spikes and that's the rationale for wanting the long life assets is that you get a lot more price spikes than you do with a short life asset. And, of course, a short life asset, you've got to clean up the mess a lot sooner and you don't have the opportunity to get the returns in order to justify the cleanup costs after you cease operations.

So they are tough calls and every single project has different pros and cons of the good, the bad and the ugly, I guess in various jurisdictions or whatever.