Vancouver’s Teck Resources quarterly profits surge to $276M

Teck Resources Ltd. raised the cost estimates for its QB2 copper project in Chile as it reported its latest quarterly results and lowered its production guidance for copper, molybdenum and steelmaking coal for the year.

The mining company said Tuesday it now expects the QB2 project to cost between US$8.6 billion and $8.8 billion, up from earlier guidance for between US$8.0 billion and US$8.2 billion.

Teck said delays in construction of the molybdenum plant and port offshore facilities, slower than planned demobilization progress and contract claims risk have put pressure on its capital cost guidance for project.

The update came as Teck said it earned a profit attributable to shareholders of C$276 million or 52 cents per diluted share for the quarter end Sept. 30 compared with a loss of C$195 million or 37 cents per share a year earlier.

The drop came as Teck faced lower prices for steelmaking coal and zinc, as well as reduced sales volumes from steelmaking coal and from Highland Valley Copper, partially offset by higher copper prices and a weaker Canadian dollar compared with a year ago.

Revenue totalled C$3.60 billion, down from C$4.26 billion in the same quarter last year.

On an adjusted basis, Teck says it earned 76 cents per diluted share, down from an adjusted profit of C$1.74 per diluted share a year earlier.

“Positive financial performance was driven by continued strong commodity prices, partially offset by lower steelmaking coal sales due to supply chain disruptions – resulting from the B.C. port strike and wildfires – in the quarter,” Teck CEO Jonathan Price said in a statement.

In its guidance, Teck lowered its annual copper production forecast to 320,000 to 365,000 tonnes from 330,000 to 375,000 tonnes for this year and cut its annual molybdenum production guidance to 3.0 million to 3.8 million pounds from 4.5 million to 6.8 million pounds.

It also said it expects steelmaking coal production this year to be between 23.0 million and 23.5 million tonnes, down from earlier expectations for 24.0 million to 26.0 million tonnes.

Teck has been evaluating offers put forward by prospective buyers for its steelmaking coal business, but did not provide any update on the progress of the review in its financial report Tuesday.

The company announced a plan to split the company in two earlier this year, separating its steelmaking coal business from its base metals operations, but that plan was disrupted when Swiss commodities giant Glencore launched a hostile takeover bid for the company.

Teck’s board rejected the offer, but the company also called off the shareholder vote on its plan to split the company when it became apparent it did not have the required support for the proposal.

Glencore has since presented a new offer to Teck’s board, proposing to acquire the steelmaking portion of the company’s business for an undisclosed amount of cash.

This report by The Canadian Press was first published Oct. 24, 2023.

Companies in this story: (TSX:TECK.B)

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