Teck has posted an increase in profits from its coal division in its quarterly update, despite economic headwinds and issues with the reliability of company infrastructure at the Elkview mine.
According to the Q3 (July-September) report released at the end of October, the coal division gross profits are up by 37 percent over the same time in 2021, with the company giving credit to continued high prices for steel-making coal at US$304 per tonne (compared to US$237 per tonne in Q3 2021).
Gross profit for the coal division was at $1.2 billion for the quarter, up from $901 million in Q3 2021.Sales for the quarter were at 5.6 million tonnes – reduced from forecasts set at the beginning of the quarter, and at the lower-end of revised forecasts released in September due to an outage at the Elkview mine.
The outage was due to the failure of a conveyor belt that forced the company to cease production, and trim forecasts from 5.8 – 6.2 million tonnes, to 5.5-5.9 million tonnes for the quarter. All four of Teck’s Elk Valley mines contribute to quarterly production. Elkview is listed as the second-largest of the four with an annual capacity of 9 million tonnes per year.
Teck has “substantially completed” finding components to bring the facility back up to speed and reported a restart to production was expected by late November.
The company appears to be winding back expectations for the 2023 year, with the company listing external challenges and Elkview itself as hindrances in reaching the company’s nameplate capacity of 26-27 million tonnes in coal production annually.
“(The obstacles) include severe weather-related events including rain, flooding, extreme cold and wildfire events in 2021, and the COVID-19 pandemic and associated ongoing global disruption to supply chains and labour availability. As a result, to better reflect the increasing frequency of these adverse events and associated risk of impacts to our operations we have reduced our three-year production guidance commencing in 2023 from 26 to 27 million tonnes to 25 to 26 million tonnes.”
With the challenges of 2022, total production for 2022 is expected to be between 22-22.5 million tonnes (guidance range gets slimmer through the year as quarterly updates infill data).
Across all divisions, the company reported that inflationary cost pressures were having an impact with operating costs up by 14 percent for the quarter, “approximately half of which relates to an increase in diesel costs,” reads the report.
The full report can be read on the Teck website.
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