Teck Resources trims production forecast as quarterly sales fall

Canadian miner Teck Resources says it is progressing “expeditiously” on the split of its coal and copper business after reporting a lower-than-expected quarterly profit on weak sales of steelmaking coal.

The company also trimmed its full-year production forecast for copper, steelmaking coal and molybdenum, sending its shares down 6% in early trading.

CEO Jonathan Price said supply chain disruptions like the British Columbia port strike and wildfires weighed on steelmaking coal sales and offset higher commodity prices in the third quarter.

Teck’s steelmaking coal sales were 5.2-million tonnes in the quarter, missing its forecast.

However, the company said strong demand, particularly from India and China, boosted steelmaking coal prices, which rose through the quarter and into October.

The steelmaking coal unit, Elk Valley Resources (EVR), is “well positioned to deliver strong financial performance in the fourth quarter”, the company added.

Teck reiterated that separation of its base metal and steelmaking coal businesses remains a priority and a decision is likely by the end of this year.

“In light of the improving outlook for met coal due to structural factors, we question whether a sale of EVR should be done at anything less than $11bn,” Jefferies analysts said.

The company lowered its 2023 copper production outlook to the range of between 320,000 tonnes and 365,000 tonnes, from 330,000 and 375,000 tonnes, while steelmaking coal production guidance was trimmed to 23-million tonnes/23.5-million tonnes from 24-million tonnes to 26-million tonnes.

The company increased the capital cost guidance for its QB2 copper project in Chile, but said it expects that the project will generate profit in the current quarter.

Excluding items, the company reported an adjusted profit of C$0.76 per share for the three months to end-September, compared with the average analyst estimate of C$1.09 per share, according to London Stock Exchange Group data.

Reuters