Gregory A. Waller - Vice President of Investor Relations & Strategic Analysis Ronald A. Millos - Chief Financial Officer and Senior Vice President of Finance Ian C. Kilgour - Senior Vice President of Coal Roger J. Higgins - Senior Vice President of Copper Andrew A. Stonkus - Vice President of Base Metals Marketing Donald R. Lindsay - Chief Executive Officer, President, Non Independent Director and Member of Executive Committee Robert W. Bell - Chief Commercial Officer of Coal and Vice President

Garrett S. Nelson - BB&T Capital Markets, Research Division Ralph M. Profiti - Crédit Suisse AG, Research Division Jorge M. Beristain - Deutsche Bank AG, Research Division David Charles - GMP Securities L.P., Research Division Orest Wowkodaw - Canaccord Genuity, Research Division Brian MacArthur - UBS Investment Bank, Research Division Oscar Cabrera - BofA Merrill Lynch, Research Division Harry Mateer - Barclays Capital, Research Division Meredith H. Bandy - BMO Capital Markets Canada Alec Kodatsky - CIBC World Markets Inc., Research Division Greg Barnes - TD Newcrest Capital Inc., Research Division Unknown Analyst - Chelsea Bolton - Goldman Sachs Group Inc., Research Division

Ladies and gentlemen, thank you for standing by. Welcome to Teck's Third Quarter 2011 Results Conference Call. [Operator Instructions] This conference call is being recorded on Thursday, October 27, 2011. I would now like to turn the conference over to Greg Waller, Vice President, Investor Relations and Strategic Analysis. Please go ahead.

Thank you, operator. Good morning, everyone, and thanks for joining us this morning for our third quarter earnings results conference call. Before we start, I'd like to draw your attention to the forward-looking information slides on Pages 2 and 3 of our presentation package. This presentation contains forward-looking information regarding our business. Various risks and uncertainties may cause actual results to vary. Teck does not assume the obligation to update any forward-looking statement. And at this point, I'd like to turn the call over to Don Lindsay.

Thanks very much, Greg, and good morning to all. I will start with a review of the results for the quarter and then turn the presentation over to Ron Millos, our Senior Vice President of Finance and CFO, to address some of the more in-depth financial topics. And I do have a number of the other members of management team on the call this morning and available to answer your questions. So first, this was a very exciting quarter for us. I'm very proud to report that we recorded one of our highest quarterly profits ever, and this is backed up by record revenues, gross profits, record pretax profits and EBITDA on a normalized basis. The very strong quarter is a reflection of the strong fundamentals of our business, particularly in coal and copper where prices continue to provide great margins. Underscoring our strong financial position is our $4.5 billion cash balance as of today. And of course, that continues to grow in a very healthy way. And finally, in coal, we also set a record for material movement in the quarter, which is an important milestone as we continue to advance our plans for greater coal production. Turning to Slide 6. Q3's record revenues stood at almost $3.4 billion, up 40% from Q3 in 2010, and a gross profit before depreciation and amortization of over $1.8 billion. Third quarter adjusted profit was $742 million, which is up 64% from last year's third quarter while over the same period, EBITDA was $1.7 billion. On Slide 7, we show our view of normalized or adjusted profit for the quarter. Profit attributable to shareholders before adjustments was $814 million. We had unusual items this quarter in the form of a minor asset sale, some FX losses and derivative gains that are related…

Thanks, Don. I've summarized our changes in cash for the quarter on Slide 18. Our cash flow from operations was approximately $1.3 billion in the quarter, which is up about 35% from the same period last year. Capital expenditures on investments were $432 million for the quarter, and that included $154 million on sustaining capital and $210 million on our major development project. Our major development project expenditures included $18 million for stripping on the Highland Valley's mine life extension project, $48 million for Antamina's expansion, $32 million on QB's hypogene project and $66 million at Teck Coal. And in July, we issued $2 billion in aggregate amount of 5, 10 and 30-year notes. And in our view, this represents a good time to secure long-term, low-cost money to help fund our expected investment program. Dividends paid in July amounted to $177 million. And after allowing for the effect of exchange rate changes and other items, our cash increase in the quarter was almost $3 billion, and we ended the quarter with almost $4.3 billion in cash. And as Don mentioned earlier, it now stands at about $4.5 billion. Slide 19 shows our final pricing adjustments for the quarter. In 2011, our pricing adjustments are included in nonoperating income expense. Pricing adjustments were previously included in our revenue or concentrate purchases as appropriate. This is a presentation change only. There's been no change in the methodology used to calculate the pricing adjustments, and our comparative figures from previous periods have been reclassified to conform with this new presentation. Total adjustments for the quarter were negative $192 million on a pretax basis. Copper experienced the most significant negative adjustment this quarter due to the dramatic decline in the copper price late in the quarter. The nearly $1 change in the price…

Thank you, Ron. Before we close, I would like to update you on the status of the many development projects that we have underway. In our energy division, we are working on the pre-feasibility study for the Frontier oil sands project with the possibility of Equinox as the satellite mine. And this study is expected to be complete in Q4 of 2011, and it will also be marked by the filing of a regulatory application fairly soon. At Andacollo, the study of a possible expansion is in progress, as previously mentioned. And our preliminary engineering work is expected to be complete in the fourth quarter. In coal, the feasibility study for the restart of the Quintette coal mine is proceeding, with additional work revolving around water management plan. We now expect the feasibility study to be complete in the first quarter of 2012. And assuming the results of the study are positive and development proceeds, we expect that the mine could be in production in the latter half of 2013, ramping up to an annual rate of 3 million tonnes per year. At Quebrada Blanca, a full feasibility study commenced in early 2011 and is expected to be completed by the end of the first quarter of 2012. A positive feasibility study could potentially result in a decision to undertake the project development with production in early 2016. At Relincho, we have moved forward into a full feasibility study and expect it to be complete by the end of next year. And at Fort Hills, we expect to have an engineering update some time in late 2012. And we anticipate project sanction decision by the partners in 2013. And finally, the Galore Creek pre-feasibility has been completed, and more work is being planned through the end of the year. So we have lots of exciting growth opportunities coming. And I look forward to reporting on the development status of these projects. In summary, the record results this quarter demonstrate the strength of our company. We have a very strong balance sheet. We're well positioned to pursue our strong growth potential. Our Coal business is increasing production for a very nominal amount of capital and generating tremendous cash flow. Our copper production will grow over the next year with the completion of the expansion in Antamina. And we're moving forward with several development projects to further enhance shareholder value. And with that, I would like to turn the call over to questions.

[Operator Instructions]

Operator, while we're waiting for questions. I just like to inform the audience, we've got people dialing in from a couple of different locations. So it may take us a moment to sort out who's going to respond to your question as it arrives, but we will respond to it.

The first question is from Meredith Bandy of BMO Capital Markets.

My first question is on the coal side. You mentioned that late in the last quarter you did see some deterioration, I think, in volumes and price. Obviously, we've all seen the spot price over the last few weeks. But on the volume side, what types of things were you referring to?

Okay. So we'll turn that over to Ian Kilgour first, and probably Bob Bell as well.

Meredith, basically what we've seen is that a number of steel makers are reducing their production. We've seen a number of steel makers reduce their inventories. I guess the global uncertainty has led people to be cautious. And of course, we're also seeing quarterly pricing trend down. So actually people are being cautious with their purchases. And a number of shipments have been deferred from the fourth quarter into the first quarter of 2012.

Okay. And in terms of the amount that you're selling on spot, could you remind us how much around that you're selling on spot, and is most of that to China?

Meredith, it's Bob Bell here. Our spot sales -- in the spot, we also have what we call development sales where we're trying to build the relationships with customers with good potential going forward but which would be sold on a best of way, best of pricing basis. It's around 10% of our sales, and we wouldn't expect to see that arise as we go forward. We would focus on making sure we have a solid contractual base for the balance.

And for the 255 guidance that you gave us seems that 10% of spot?

The 255 includes all of our pricing, so it's all weighted into that number. And that's about 89% of the benchmark price. And I think if you look at previous quarters, that's more or less in line with what you would expect, about 9% of the benchmark.

The next question is from Jorge Beristain from Deutsche Bank.

It's Jorge Beristain from Deutsche Bank. I just wanted -- you gave pretty explicit guidance on the expected incremental output at Quintette and the timing there. Could you just re-clarify again on the Elk Valley expansions, where those sit and where you would expect the production increases to come over the next 2 years?

Okay. Ian Kilgour?

Yes. Well, in the Elk Valley, our production increases are principally coming at our larger mines, that is Fording River, Greenhills and Elkview. That's coming through expansion of earth movement, material movement capacity and shovels, trucks, drills, basically the suite of earth-moving equipment. That's progressing very well. We've got 3 expansion shovels now operating. And 23 of our 41 expansion trucks are also operating. When it comes to expansion of the preparation plants, processing plants at Greenhills and Elkview, the Greenhills expansion was successfully completed in the third quarter and is operating very well. And Elkview's expansion will come online about 1 month later than originally expected in January next year. So our expansion plans are progressing well, and we see that coming to fruition over the -- well, we've already seen, as Don said, the expansion in our material movement coming through to this year, and that's going to continue over the next 2 years.

But concretely, could you say that you would expect 2 million or 3 million incremental tonnes from Elk Valley in 2012?

Basically, we're moving to expand our production from what has been a base level, about 23 million tonnes to over 28 million tonnes, and we expect that to be completed in 2013 to 2014.

The next question is from Harry Mateer of Barclays Capital.

As you highlighted, you have a tremendous amount of liquidity right now, both between whichever your bank facilities and obviously, the cash on hand. Can you just maybe update us on use of the cash and how much liquidity you think is really optimal to hold at this point in time? I know when you do bond deal, you're looking to just shore up liquidity. But maybe just given some of the recent macro developments, can you give us a sense for what your users are right now? And then related to do that, any further thoughts on whether some further high-cost debt buybacks are on the table? Or is that still not a priority at this point in time.

Okay. So this is a classic capital allocation question. I'd highlight that the decision on QB 2 is not that far off. We'll have a very thorough discussion about that project at both the November and February board meetings. And I think until we know what direction we're going on that and whether we're making full sense of decision in building it, then we have to be quite cautious about maintaining maximum liquidity. And so we've built up the cash on the balance sheet in advance of building these projects. Fort Hills, of course, is not that far off as well. And frankly, Relincho, again, is not that far behind QB 2. So we think it's prudent to keep cash on the balance sheet. We did increase the dividend 33% yesterday, and that should be a strong signal to our shareholders that we have a lot of confidence in the business. And we feel we're very strong financially and able to build all of these projects from our cash balance and cash flow will increase the dividend. We do review the high-yield debt. We did quite a bit last year, as you know. We haven't done any more recently. It's always an option, but again, we're looking at building the company first. If you go back to -- and look in the history of how Teck was built, in 1981, Teck had a strong balance sheet just at the right time in order to be able to get the Hemlo assets from a company that didn't have a strong balance sheet. And if you roll the clock forward to 1997, during the Asian crisis, Teck was able to get a position in Antamina because it had a strong balance sheet as a result of the Boise bay transaction that our Chairman had initiated and made good money on. That money was available to be redeployed into Antamina, which is one of the mainstays of the company. So when you're building a mining company for the long term, having cash in the balance sheet during a downturn is very important. And so that's just what we've done to be able to either build our projects straight from cash or to take advantage of other opportunities that may be out there. So we're comfortable with our position and where it is right now.

The next question is from Garrett Nelson of BB&T Capital Markets. Garrett S. Nelson - BB&T Capital Markets, Research Division: Sticking with the state of core strategy as opposed to going down the acquisition route as we've seen some many others do over the last 12 months. Just on the organic growth, you have a pretty extensive pipeline, which you've listed on Slide 22. I'm just trying to get a better sense of what CapEx might look like over the next 2 years. Are there any preliminary indications you'd like to provide?

It wouldn't be quite the time to give more detail on QB 2 because right in the midst of it now in advance of finishing the full feasibility study and getting the project sanctioned. At that time, of course, we'll publish a lot of detail. I guess the comment I would make is, as you look throughout the industry, day after day, you see projects that are now seeing big increases in capital costs. There's been a lot of inflation in that end of the business, and we're seeing the same. So all of these projects are costing more than people anticipated a year or so ago. But at the same time, we're seeing copper prices hold up pretty nicely despite significant weakness in the global economy. So maybe the long-term copper prices that we normally use to evaluate these things haven't been correct either. The only thing you know for sure when you do your net present value calculations and IR calculations is that the result you're getting is wrong. You don't know what the assumptions are going to be in the end when the project is built and once it's running. But we feel we have good projects in a good geopolitical jurisdiction. They're very buildable, straight copper cost traders. And we just built one. So we've got the same team to go and do it again and benefit from that experience. So in the end, these are projects that should be built that the world is going to need. So sorry, we can't be too much -- too detailed on what CapEx is coming, but you could think of it is as it will be in line with industry and what you're seeing elsewhere. Garrett S. Nelson - BB&T Capital Markets, Research Division: Okay. Just on the coal side on Quintette. Obviously, the feasibility study is pending, but assuming you receive the permits and development proceeds as scheduled, could you give us some idea of what production cost might look like at that mine and the quality specs of that coal?

Again, it's just a little bit too soon to be answering that. I'll turn it over to Ian Kilgour in a moment, but I just want to make the comment that while everything is taking a little bit longer in terms of a few months longer than we'd hoped. We are very excited about Quintette that the production that you get for the capital deployed, it's very, very efficient deployment on capital. Ian, over to you on more specifics.

Yes, we're really going through the final stages of the Quintette feasibility study. And we've had some recent additional information coming from further drill holes that the things revise mine plan and associated board of management strategies, hence, a little bit longer to that study. But overall, the operating costs of Quintette are going to be in the range of our other mines. We have -- we're going to be utilizing state-of-the-art mining equipment, a totally new fleet of the largest-scale shovels, trucks drills that we're employing in our other mines. We have a very good processing plant up there, which we're refurbishing. Basically, all of the elements are there for a very, very successful project. The coal quality is a little different from the Elk Valley, but still a desirable coal, particularly it has cost fluidity than Elk Valley coal, which is a plus. So we see it coming together very successfully over the next couple of years.

The next question is from Ralph Profiti of Credit Suisse. Ralph M. Profiti - Crédit Suisse AG, Research Division: By my calculations, there's been a net inventory drawdown in coal of about 600,000 tonnes. I'm just taking the difference between sales and production this year. So my question is, Don, are you comfortable with the level location and movement of coal in the Teck system in order to meet your new guidance? And if we can get a breakdown of what's at mine, what's at the port and what's in transit, that would be very helpful. And the second question is, how comfortable are you with the measures that CP Rail is taking in order to set themselves up for winter this year versus last year? And how reliant are you on their performance in order to meet this new guidance for Q4?

Okay, that's an excellent question. I'll make some overview comments and then turn it over to Ian or Bob. First, I am very comfortable with the investments that CP is making. We have an excellent working relationship, and we are very pleased with their performance since we signed the 10-year deal with them. There's an ongoing daily dialogue with CP. They're working with us head and glove. They understand our budgets and keeping close touch in the markets. So obviously I just want to say that we're very, very pleased with that relationship. In terms of inventories, you're quite right that we have been drawing down inventories. But -- and there's room to build those up again, and this might be a very good time to do so because in the long run, you do want to have a range of product available depending on the orders that customers then ships and these kind of things. So it was probably getting a little low and a little tight, and now would be a good time to build the backup touch in anticipation of as the world recovers for next year. With that one, I'll turn it over to you Ian or Bob.

It's Bob here, Ralph. Our inventory levels at the beginning of the quarter were actually very low, as Don pointed out, at the mines and at the ports. Right now, our mine inventories are at the low end of comfortable. And they remain low because CP has been really moving all of our production very smoothly. And at the port, at the beginning of the quarter, they were very low. Right now, they'd be in a comfortable level, and we see the levels at the port through the quarter at a comfortable level but not excessive. Ralph M. Profiti - Crédit Suisse AG, Research Division: I think in previous calls and disclosure, there was a sort of target range about 2 million and 2.5 million tonnes in the entire system. Is that still the target? Or do you think you can work with lower inventory levels?

We are at lower levels than that. We've been operating at lower levels in that for the whole year.

The next question is from Oscar Cabrera of Bank of America Merrill Lynch.

First, I would like to make clarification. I think it was the first question when you talked about your coal guidance for the fourth quarter at 255, was 10% of your sales at spot, was that the comment?

I'll let Ian or Bob give more detail. But the comment was that, on average, that would be about what we've been targeting for. And it can vary certainly from quarter-to-quarter depending upon what the contracted volume customers actually do in terms of nominating ships and that sort of thing. So that was sort of an overall general target. But Bob, do you want to comment?

And that's more or less where we are now. And it really depends on how the sales finish for the quarter. We're a little less than 10% now. And we could reach 10% if we continue to work with the potential customers.

And then just if I could just get back to -- your capacity is about 23 million tonnes with existing operations. And you mentioned during your trip that the strip of the mines were -- was basically completed. So with that in mind, with the additional trucks that you have coming over the next 12 to 18 months, what do you think that capacity may be by the end of 2012?

Ian, do you want to comment?

The strip ratio, I guess, has been rising over the last year or so. And as our presentation showed that we've sort of reached that peak, and we're going to be fairly steady for the next few years. Our capacity has increased over the year in terms of production. If you look at our third quarter, production at 6 million tonnes. So that's your annual 24 million tonne rate. We expect to be higher than that rate in the fourth quarter and operating at a substantial increase rate next year. But we're still working at our budget expectations for next year, and that will come out in guidance in the fourth quarter.

Ian, that's very helpful. And then, lastly, if I may, over the last 3 to 4 quarters, we're focusing a lot on coal and copper but haven't really talked about the zinc market. And I just wanted to get your overall impressions on how you see zinc fundamentals developing over the next 12 months to 24 months as we're starting to see now closures of mines in North America and shift in Antamina to mine more copper and less zinc?

Andrew Stonkus, would you like to answer that one?

Yes. Oscar, regarding the specific mark on the concentrate side, the International Lead and Zinc Study Group just recently put up their latest statistics, which indicate a concentrate deficit of approximately 60,000 tonnes contained to the end of August. So the concentrate deficit is happening today, and we expect the concentrate deficit to continue. And as you mentioned, we will be seeing some mine closures in the years ahead. But the market is tight, and that's reflective of the spot market as well, which is considerably below the benchmark terms. On the zinc metal side, the metal is still in the surplus situation, but the inventories are being drawn down on the LME. As you can notice, the trend is downwards. So the metal demand is still relatively stable, which is reflected in the drawdown of the inventories.

Oscar, I just want to go back to your question on the spot volumes and just give you a little bit more color, so you can see how we think about it. So if you start out -- if your starting point is 90% of your coal has contracted -- contracts in place and 10% of spot. And then you have a period like we've gone through, a lot of concern about Western Europe and the U.S. and people lose confidence and the steel companies get cautious about their purchases and defer a shipment or 2, then we have a choice as to what we want to do. We know those shipments are still going to come in at their contract price the next quarter. But we have the coal available, we're producing it. So we can choose to either go and sell it in the spot market, which means we now have more than 10% spot available, or we could choose to build up our inventory because it's been a little tight, or we could choose to slow down production and do more maintenance or something. There's a number of choices that we have. And as I look at it, I sort of assess well, what volumes are we at. And you come to sort of a balance where you may reduce the sales relative to what you are able to produce and hold it back until you think the world is a little more confident and Western Europe solves its problems and that kind of thing. And so it's always a balance. You're always going to make these decisions. I mean, I note that the steel companies may have been quite conservative about purchasing coal, but they haven't shut production down that much. They have still been running…

The next question is from Chelsea Bolton of Goldman Sachs.

I have a couple of questions on behalf of Sal Tharani. The first being, last quarter's call, you mentioned being able to bring onsite cost down to $65 a tonne for 4Q. Does still look possible with the lower production guidance?

Ian?

We think we're going to continue the downward trend we're seeing throughout this year. Certainly, our production is going to be running at record levels for this month -- quarter. And I guess, the overall cost per tonne is obviously going to depend on our final sales position.

Okay. And then, my second question was for Quebrada Blanca, what run rates will you be looking for as you guys continue to move to dump leach for 4Q in 2012?

Roger?

Quebrada Blanca, as we've talked before, has had a number of weather events in the year, which has slowed it down. It's worth just recalling that in a leach operation such as we have there, the processing time to material between when we mine it and then the leach process is about 300 to 400 days on the heat and about 600 days on the dump. So it's quite a long time to recover back to production levels after a serious disruption as we had a couple of from the weather results in the early in the year. So we're expecting that the recovery of the production is coming back up. Our numbers for the following quarter will be higher than they were in the last quarter, principally as we recover the gradients in the solutions. We're expecting a number in the order of the 63,000 tonnes for the year in total.

The next question is from Brian MacArthur of UBS Securities.

I was wondering -- could I just get a clarification in Antamina? In the presentation, you talked about -- or in the first quarter ramping up for the first part of the year, but then there's a comment in the text that talks about not all the capital and requirements we've done till the end of next year. Do those facilities present -- prevent you from getting to 130,000 tonnes by midyear next year? Or how should I think about the ramp-up as we go through the year?

Roger?

The facilities that are being completed now, the milling facilities, which we expect to see feed in Q -- by the end of this Q4 and in the flotation facilities in the first half of 2012, are essentially the production facilities. The other capital that we're talking about expansions to down facilities and such like, are not production-related. So we are comfortable with the ramp-up in Q1 of 2012 can be achieved and full production will get to the new design levels.

The next question is from David Charles of GMP Securities.

Don, I have just a short question for you. When we visited Vancouver in September, you talked that you regularly speak with your shareholders, CIC. I was just wondering, have you spoken to them since we met in September? And what color can you give us following the chat that you had?

The short answer is yes. We speak to them frequently. I talked to them last night. We had senior representatives visit us in Vancouver last week and had dinner and meetings and so and so. There's an ongoing dialogue, and it's not for me to speak to CIC. And of course, Felix Chee is in the Toronto office and represents CIC here in Canada. So I wouldn't want to presume in any way what they are thinking, but what I could say is that they have a lot of confidence in the Chinese economy. And I'd put it this way, betting on the 5-year plan has been a pretty good bet every time. And they're sticking to the plan. And within that, take copper as an example, currently China's about 40% of world copper consumption. Almost 1/2 of that is related to power generation and transmission in China. And if you think about it, if they want to grow their economy at the target 7%, they must lead that by getting a power capability installed in advance of that GDP growth. So there's a base of copper demand that's quite large and is very stable and is part of the plan. So I think that gives me a lot of confidence, gives us at Teck a lot of confidence that the consumption of commodities that we've seen will carry on. There will always be volatility, and there'll always be periods of time when people have less confidence, but the macro trend seems firmly in place for copper consumption, steel production and thereby, coking coal demand. And so we don't see anything has really changed very much.

Good. I was just wondering, maybe if we just went a little bit beyond that, you also mentioned in the presentation that you gave that you've been following shipping schedules very closely, both in the third quarter and looking ahead into the fourth quarter. I was just wondering, have there been any significant changes in the shipping schedules obviously for your coal business since we visited in September?

It depends how you define the word significant. At that time, we've had no changes. Since that time, we have had some changes, I'd call it moderate. And the kind of thing that's occurred is someone would defer a ship from October to November or from November to January, there are a couple going to January. We certainly haven't had any cancellations of shipments. Nothing even remotely close to what we saw in 2008. So it's customers being conservative, as Ian said earlier, and stretching out their purchases a bit longer than they might otherwise have done and I think drawing down their inventories. So we still sell the same coal for the same price. It will just come in to a different schedule next quarter.

The next question is from Greg Barnes of TD Securities.

In your comments on QB 2, I sensed a real sense of caution I don't think I've heard before. What are some of the challenges you are seeing there?

Actually, I think I have said it a few times, but it's just that the capital costs keep going up. And it's nothing that you haven't seen elsewhere. There was another one announced yesterday where capital jumped by $1.2 billion. So we're saying that we're seeing the same thing. It doesn't mean that we don't think it's a good project, we do. Because I think if you think about it, first of all, it's a kind of asset that we know is going to run for probably 50 years. We have a very good feel for what the total resource will be and it's measured in billions of tonnes. We can only report what we've actually drilled the first billion tonnes or so. But we know that's the kind of project that once built, it will be expanded 2 or 3x over the life of the project. We have a seasoned workforce already there. We have the shovels and trucks already there. Their first 5 years of the operation, I think, is a 0-strip ratio because the stripping has already been done by the current mining operation. It's a straightforward copper concentrated project. We just built one. So we've got to experience people there. And it's in Chile, which notwithstanding some recent unrest is still one of, if not the best, geopolitical jurisdiction to invest in if your a mining company. And of course, the cash costs will be solid middle range. It's not a high-grade operation, so we won't have a very, very low-cost operation like we'd always like to have, but it's going to be very solid. So that's the kind of thing you just know you should build it, but you still get astounded by how much it cost. And so that's basically all I'm saying is…

So there's no metallurgical challenges. There's no water issues that are really giving you pause or concern at this point then?

First, I think I called you Brian.

You did call me Brian, yes.

Yes, sorry, Greg. But in any event, no, there's no particular unusual challenges. This is a straightforward project.

And there's no flipping up and down your priority queue?

No, no, it's the first one on the rank.

The next question is from Alec Kodatsky of CIBC.

Just a quick question. Just to try and better understand the production side at the Coal business. Given that you're seeing deferrals and outright cancellations, have you done anything to ship your operating plans at this point? Or is it pretty much status quo?

Ian, do you want to answer that?

Yes. No, we're carrying on full swing with our expansion plans. Our orders for the key equipment have already been placed. So they're all coming, and we strongly believe in the fundamentals of the business going forward. So our best option is just to maintain our plans as they stand.

Okay. So your strategy is to have a coal there for when they need it?

Exactly.

Okay. And I guess, and just sort of feeding from that, there were, I guess, at the margin different activities you were doing with contractors and so forth. And again, just to clarify, they're still going ahead and you're just continuing business as usual there as well?

That's right. We're building contract in a number of mines to get ahead, open new pits in a couple of them and to compensate for a couple of equipment problems that we had early in the year. All those contracts are going well, but they will all be phasing out as planned over the next 6 months.

The next question is from our Orest Wowkodaw of Canaccord Genuity.

I just was looking for a little bit more color on the depth of the spot market for coal right now. I mean, with some of the deferrals that you're seeing from your traditional customers, have you started testing the waters to see how much depth there is in the spot market, specifically to China? Like will they take every tonne you're willing to sell them?

Just a quick comment and back to you Ian or Bob. I wouldn't want to over weight these deferrals. We are trying to make sure people understood kind of we think about it and ship-by-ship, but you wouldn't run your business sort of on each different ship. On balance, the volumes being sold in the quarter are still pretty solid. So I just don't want to over weight a deferral here and deferral there. Ian, back to you.

Orest, and I think Don actually covered this earlier. The actual proportion we're selling of spot or our development tonnes is about the same as it has been in the past. So at the moment, we've increased our inventories to a comfortable level at the port, still operating at the low end of comfortable at the mines. And whether we place more in the spot market between now and the end of the year really depends on the developments we see whether we just hang on to the inventory to be ready for the purchases in the New Year.

The next question is from Daniel Roots [ph] of Wood Mackenzie.

Real quick question here. I believe I heard Ian say earlier about future coal production in the 28 million tonne range by 2014. Has that come down? I thought you were shooting for like 30 million to 31 million by then, or am I wrong?

You have to add Quintette on top of the 28. We are definitely aiming for the 31 million tonne.

So the 28 is without Quintette?

That's right.

The next question is from Alexander Mack [ph] of SDA.[ph]

Using zinc as fertilizer when will that have an impact on zinc demand do you think?

Well, that's good question. We're very excited about the process for zinc in fertilizers. I've just finished a 4-year term as Chair of the International Zinc Association. One of the things we were very proud of is the deal that we've signed with the Ministry of Agriculture in China. And this year, they are completing their tests where they add 1% zinc to fertilizers. And they see substantial crop productivity improvements. With some of the main staples, such as rice and wheat and corn, you can get up to 10% or more improvement in crop productivity. Once those tests are completed, and we believe they will be successful because they've been done many times before, we understand that as many as 400,000 field agents who work for the Ministry of Agriculture will go out to speak to 100 million farmers in China and recommend that they use zinc in their fertilizers. Now this is the nature of the agreement. It will take some time for all that to happen. And will it happen on that scale? We don't know. But directionally, it's certainly positive, and there's a potential if China does implement this for it to add as much as 500,000 tonnes of demand to the zinc market. And then we're seeing good progress in India as well, which from a fertilizer point of view, it's about the same size. So in theory, you could get an additional 1 million tonnes of zinc demand from just 2 countries. Now things never go quite 100% on these kind of things, and it probably take 2 or 3 crop cycles before people really adopt it in the scale. But even if you could just get half of that, that will make a material difference to the zinc market, and just at a time when production at some of the larger mines of the world is actually decreasing or shutting down completely. So somewhere out there, there's going to be quite a shift in the zinc market. We just don't know when.

There are no further questions registered at this time. I'd like to turn the meeting back to Mr. Lindsay.

Okay. Well, thank you very much, all, for attending today. As we said, we are very proud of the strong quarter, record revenues, record operating profit, record cash flow or cash balance of $4.5 billion gives us a lot of flexibility to carry on with our growth projects, the state of course strategy while at the same time increasing dividends by 33% and also looking at other opportunities. So we feel the company is in a very strong position, and we look forward to talking about the fourth quarter with you in February. Thank you very much.

Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.