Teck Resources Ltd. [TECK.B-TSX, TECK.A-TSX, TECK-NYSE] shares were down by almost 15% Friday after the company reported weaker than expected fourth quarter results and disappointing coal production forecasts.
Teck reported adjusted earnings per share of 22 cents in the fourth quarter of 2019, which was well below the consensus estimate of 40 cents. The fourth quarter earnings before interest, tax, depreciation and amortization (EBITDA) of $649 million was 24% below consensus of $854 million.
Meanwhile, Teck said it expects to produce between 23.25 million tonnes of coal this year, marking a 7% reduction from 2019 production levels. The softer volume guidance is attributed to weak short-term demand and record high inventory levels due to rail and port constraints.
“Our first quarter 2020 steelmaking coal sales are being negatively affected by severe weather in British Columbia, causing rail and port terminal performance issues and by blockades on rail lines,” the company said in a press release. “The estimated impact on first quarter sales is expected to be in excess of 1.0 million tonnes.”
Teck’s Class B common shares fell 14.4% or $2.46 to $14.63 on Friday on volume of almost 4.7 million. The shares are currently trading in a 52-week range of $16.85 and $34.32.
On Friday, the Federal Government was looking for ways to end rail blockades led by Indigenous protestors that have being going on for more than two weeks.
Teck Resources is a diversified resource company with business units focused on steelmaking coal, copper, zinc and energy. The company currently has interests in 13 operating mines, a large metallurgical complex and several major development projects in the Americas.
Teck recently said it wants to be carbon neutral across all of its operations and activities by 2050.
The mining giant said the carbon neutrality plan demonstrates its support of the transition to a low-carbon economy and worldwide efforts to meet the goal of the Paris Agreement to limit global temperature increases. “It also aligns with commitments by Canada and Chile – which are home to the majority of Teck’s operations – to be carbon neutral by 2050,” the company said.
Teck is pledging its commitment to climate action following reports that the Canadian Federal Government is close to making a decision on an Alberta oilsands operation known as the Frontier Project. The project is owned by Teck.
Located between Fort McMurray and Fort Chipewyan in northeastern Alberta, Frontier is truly large. The $20 billion truck and shovel oil sands mine is expected to produce 260,000 barrels per day of bitumen, while delivering $55 billion in provincial royalties and taxes over a projected lifespan of 41 years. The project is also expected to generate $12 billion in federal income and capital taxes.