Teck Resources Ltd. (TECK.B-TSX, TECK.A-TSX, TECK-NYSE) said its logistics chain between west coast terminals and operations in British Columbia has been temporarily disrupted due to heavy rain, flooding and mudslides.
The Vancouver-based mining giant said it has implemented measures to mitigate the effect of the disruption, diverting some trains to Ridley Terminals in Prince Rupert. It said CP and CN have begun repairs but do not currently have estimated return to service dates.
It also said the overall impact of any potential effect on fourth quarter sales will be dependent on the duration of the logistics chain disruption. “Production at our operations has not been impacted at this time,’’ Teck said in a press release that came after the close of trading on November 16, 2021.
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.
Coal disruptions caused by flooding have been announced just months after operations at Highland Valley Copper in south-central B.C. were suspended due to an evacuation order that was issued in response to wildfire activity in the area.
Due to the impact of west coast wildfires on transportation, Teck trimmed its 2021 coal production forecast to between 25.0-26.0 million tonnes. That compares to the previous estimate of 25.5-26.5 million tonnes.
However, Teck recently said earnings more than tripled in the third quarter of 2021, thanks to an “extremely favourable commodity price environment – particularly for steelmaking coal.”
On November 16, Teck’s Class B common shares closed at $34.14 and trade in a 52-week range of $37 and $19.23.