Canada’s largest diversified miner is feeling the pinch of the global economic slowdown.
Teck Resources Ltd., one of the world’s largest exporters of coking coal used in steel production and a key supplier to China, pledged on Wednesday to defer some $1.5-billion in capital it had expected to spend this year and next year, and said its third quarter profit was slashed by more than half.
“"The uncertainty in global economic conditions resulted in lower commodity prices and sales volumes of steelmaking coal compared with the third quarter of 2011,” Don Lindsay, Teck president and chief executive officer Don Lindsay said in the third quarter results statement.
“Notwithstanding our strong financial position, some of our planned capital spending has been deferred for a variety of reasons and we have also implemented a cost reduction program."
As the first of the major Canadian-listed miners to report results, Vancouver-based Teck echoed what other global miners have reported in recent weeks, that demand for their products has declined and is having a direct impact on profits.
Global miners like Teck are also dealing with some of the highest cost run ups the industry has ever seen at the same time that the United States and euro zone countries try to right their economies and as growth slows in China, the engine of commodities demand for over a decade.
Teck reported third quarter profit of $349-million, or 60 cents a share, compared with $742-million, or $1.26 a share in the same quarter a year ago. The result was in line with the average forecast of analysts polled by Bloomberg of 59 cents a share.
Teck said it reduced coal production in the quarter to align with declining market demand, but still expects annual production to come in at the lower end of its guidance of 24.5 million tonnes for 2012.
It said it was deferring $1.5-billion in expected capital spending for a variety of reasons. Projects affected include its Quebrada Blanca (phase two) and Relincho copper projects in Chile, its Fort Hills oilsands project in Alberta, and the Trail zinc operations in British Columbia.
It said it was also considering a delay of a number of other projects.
“Ongoing economic uncertainties in Europe and the United States and less robust growth rates in China, India and other emerging markets have impacted both demand and prices for some of our products,” the company said.
“In the meantime, the Company's financial position is strong and we continuously monitor all aspects of our key markets as conditions evolve in order to be in a position to take whatever actions may be appropriate.”
http://www.theglobeandmail.com/globe-investor/teck-resources-hit-by-global-economic-woes/article4633723/
