Teck coal sales hit by extreme cold weather in Q4
Teck Resources Ltd. (TECK.B-TSX, TECK.A-TSX, TECK-NYSE) said its coal sales volumes were below targeted levels in the fourth quarter of 2022 due to extreme cold weather across Canada during December.
The company said the freezing temperatures negatively impacted rail performance, rail car uploading and overall port performance.
As a result, the company reported Q4 hard coking coal (HCC) sales volumes of only 4.3 million tonnes, a number that was below the guidance range of 5.0-5.4 million tonnes issued in October, 2022.
The company said the realized steelmaking coal price in the fourth quarter averaged US$278 per tonne.
Overall, fourth quarter sales volumes declined by 23% (quarter over quarter) and by 16% (year over year) while the realized price declined by 9% quarter over quarter versus US$304 per tonne in the third quarter.
“We expect to report provisional pricing adjustments of negative $10 million in the fourth quarter,’’ Teck said in a press release.
The coal sales and pricing update was released after the close of trading on January 10, 2023, when Teck shares closed at $53.09. The shares currently trade in a 52-week range of $57.50 and $32.68.
Teck ranks as the world’s second-largest seaborne exporter of steelmaking coal, with six operations in Western Canada and significant steelmaking coal reserves. They include Elkview, Fording River, Greenhills and Line Creek in southeastern British Columbia.
Steelmaking coal – or metallurgical coal – is a higher-grade coal which is a necessary component in the chemical reactions that transform iron into steel.
Coal production is currently shipped via three B.C. west coast ports including Ridley, Neptune and Westshore Terminals. Located in Delta, British Columbia, Westshore Terminals is Canada’s premier coal export terminal and handles over 33 million tonnes of coal annually.
Ridley Terminals is a Federal Crown Corporation, which owns and operates a marine bulk handling terminal on the west coast of B.C. The terminal has the ability to load vessels at rates of up to 9,000 tonnes per hour, unload cars at rates of up to 6,000 tonnes per hour and has an overall shipping capacity of 16 million tonnes.
Teck recently completed an $800 million expansion of the Neptune terminal in Vancouver. The expansion was facilitated by agreements that provide for investments by Canadian National Railway Co. [CNR-TSX, NYSE] (CN) to enhance the rail infrastructure and support increased shipment volumes to Neptune.
Back in September, 2022, Teck released details of a structural failure of the plant feed conveyor belt at its Elkview steelmaking coal operation at Elk Valley. Assuming a two-month suspension of plant operations, Teck expects the impact on 2022 steelmaking coal production will be in the range of 1.5 million tonnes.