Teck joins cost-cutting brigade

TECK Resources reported a mixed set of third-quarter results, with coal sales down on the same period last year, but copper production jumping 29% to 99,000 tonnes.
Teck joins cost-cutting brigade Teck joins cost-cutting brigade Teck joins cost-cutting brigade Teck joins cost-cutting brigade Teck joins cost-cutting brigade

A Teck operation.

Kristie Batten

The Vancouver-based miner said prices for base metal products remained constant or declined slightly compared to the June 2012 quarter, but average realized coal prices fell $US202 to $193 per tonne compared to the preceding quarter.

The company’s gross profit before depreciation and amortisation nearly halved to $C933 million from $1.8 billion in the same period of last year.

Adjusted profit was $349 million, or 60c per share, compared with $742 million or $1.26 per share in 2011.

"The uncertainty in global economic conditions resulted in lower commodity prices and sales volumes of steel-making coal compared with the third quarter of 2011,” Teck chief executive Don Lindsay said.

“This resulted in profits and cash flow from operations being less than the third quarter of last year.

The company said it had reached agreement to sell 6.2 million tonnes of coal in the fourth quarter at $163/t so far, and expected to hit the lower end of its guidance of 24.5Mt coal for 2012.

Despite a healthy cash balance of $C4.2 billion, the company has deferred $1.5 billion capital spending from its 2012 and 2013 budgets and implemented a cost-reduction program.

The company has reduced capital spending for the Quebrada Blanca phase 2 copper project in Chile and the Quintette coal project in Canada due to permitting delays for each project. It delayed the Relincho copper project in Chile due to factors relating to power and port facilities, and the Fort Hills oils sands project in Canada as its partner updates the design basis, and deferred the construction of the Number 4 slag fuming furnace at its Trail zinc operations in Canada.

The final budget for 2013 has not yet been determined.

The company will also implement programs to save a minimum of $200 million from its annual operating costs.