Teck details impact of railway disruptions in B.C.

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Teck Resources Ltd. (TECK.B-TSX, TECK.A-TSX, TECK-NYSE) on Monday released an update to sales and production guidance related to logistics disruptions caused by heavy rain, flooding and mudslides in British Columbia.

The company said rail service between west coast terminals and Teck’s B.C. operations remains impacted by recent heavy rains and flooding with both CN and CP operating at reduced levels following service interruptions.

As a result of the rail disruptions, primarily affecting shipments to Neptune and Westshore terminals in the B.C. Lower Mainland, the company now estimates fourth quarter steelmaking coal sales at 5.2-5.7 million tonnes. That compares to an earlier estimate of 6.4-6.8 million tonnes.

“We have diverted shipments to Ridley Terminals in Prince Rupert to maximize sales during the quarter, which will affect our transportation costs for the quarter,” the company said. “CN and CP are reporting positive progress on restoring service capacity and are continuing to increase Teck’s shipments to Lower Mainland terminals,” the company said.

“We expect that when rail service is fully restored, we will be able to substantially recover delayed fourth quarter sales in the first half of 2022.”

To date, Teck said it has not idled any coal processing facilities and continues to stockpile clean coal at sites and manage available railing capacity to minimize production impacts. As result, the company expects annual steelmaking coal production of 24.5-25 million tonnes, compared to previous guidance following wildfires in the quarter of nearly 25 million tonnes.

However, Teck said increased costs are more than offset by continued strong steelmaking coal prices through the second half of 2021.

Due to ongoing rain-related rail disruptions and assorted demurrage costs in the fourth quarter, in addition to previously disclosed wildfire impacts and inflationary pressures, Teck now expects 2021 full year transportation costs of $44 to 46 per tonne, up from the previous estimate of $42.

While there has been no impact to production at Highland Valley Copper, the company said up to 4,500 tonnes of contained copper in concentrate sales are also at risk of being delayed into the first quarter of 2022 due to logistics chain disruptions.

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.

On December 3, 2021, Teck’s Class B common shares closed at $33.05 and trade in a 52-week range of $37 and $19.23.


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