Canadian miner Teck Resources has given us a good idea of the bonanza September is turning out to be for some lucky mining companies and that October won’t be far behind.
The company reported an eight-fold jump in third-quarter adjusted profit thanks especially to higher prices for coking coal and copper and the company sees the current 4th quarter as being even better.
Revenue leapt 77% to a record $C3.970 billion for the quarter from $C2.291 billion and net earnings totalled a record $C816 million, against $C61 million for the same quarter in 2020.
Adjusted earnings before interest, tax, depreciation and amortisation totalled $C2.1 billion, more than triple the figure a year earlier.
Driving this was the limited supply of coal and higher demand from economies recovering from the COVID-19 pandemic have boosted prices for coking coal used in making steel.
Teck produces hard coking coal for the steel industry from a series of mines in Western Canada. 32% of its sales go to China.
Coal prices in China have also increased steadily since the middle of the 2020 fourth quarter, when China imposed import restrictions on Australian coal – thermal and coking.
Teck said its prices for steelmaking coal more than doubled to $US237 a tonne from $US102 a tonne, while production rose 17.6% to 5.9 million tonnes.
The miner now expects fourth-quarter sales of steelmaking coal of between 6.4 million and 6.8 million tonnes, while record prices in Australia and China in September are expected to bolster the steelmaking division’s earnings in the same period.
The average copper price in the September quarter was $US4.28 a tonne, up 44% in the past year from $US2.96 a pound. Production rose 4.4% in the quarter from a year ago to 70,700 tonnes.
“It was a record quarter, but it will likely be exceeded by Q4,” Teck CEO Don Lindsay told analysts on a briefing. “If you look at the pricing we’ve experienced in October, it’s higher than it was in September, right across the board.”
Teck also confirmed Wednesday that construction of its massive new QB2 copper mine in Chile is now two-thirds complete, with production expected to begin in the second half of next year. The mine is expected to produce 300,000 tonnes of copper equivalent a year for the first five years of its life.
However, Lindsay said while QB2 will double Teck’s consolidated copper production by 2023, construction costs for the new mine are now anticipated to be up to 5% higher than the originally estimated $US5.26 billion. The company said this is because of challenges with “port offshore” and tailings facility construction.
Teck said elsewhere in its businesses it is facing input cost pressures due to the rising cost of diesel, supplies and labour, as well as ongoing supply chain issues.
“We don’t know how it’s going to evolve,” Lindsay said. “Obviously, there’s supply disruptions in the global economy all over the place. And so we want to make sure that we flagged that . . . We’re going to hit with it, too.”
