The Vancouver-based mining giant also said further transportation disruptions have the potential to require production cutbacks to manage inventory levels.
Since the company’s last guidance update on December 6, 2021, weather conditions have continued to negatively affect infrastructure recovery efforts in British Columbia. Teck said interruptions and substantial reductions to rail service and port activities persisted from mid-November into the first two weeks of January (2022) as extreme cold weather conditions followed heavy rains and mudslides, which affected critical transportation corridors.
As a result, Teck’s realized fourth quarter steelmaking coal sales came in at 5.1 million tonnes, slightly below the low end of the company’s previously revised guidance of 5.2 million to 5.7 million tonnes.
In 2021, the company said it met its previously revised steelmaking coal production targets by producing 24.6 million tonnes, well within the target range of 24.5 million to 25 million tonnes.
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.
Still, Teck said demand for the company’s steelmaking coal remains strong, and the FOB price has risen from US$365 per tonne at the end of December to US$445 per tonne.
The company also said CN and CP have reported demonstrable improvements in train fluidity in recent weeks andT it expects to substantially recover the delayed fourth quarter sales in the first half of 2022.
Meanwhile, Teck said the recent surge in COVID-19 cases has the potential to have a negative impact on the company’s operations. “An increase in cases in southeastern British Columbia has resulted in rising absenteeism at its steelmaking coal operations in the Elk Valley,’’ the company said.
“While the absenteeism has so far not had a major impact on production, the situation poses a risk to the first quarter of 2022 production.’’
However, Teck said logistics chain disruptions had a minimal impact on production at its Highland Valley copper operations in B.C., though the disruptions did result in sales of copper in concentrate from the operation being 5,600 tonnes lower thane production in the fourth quarter of 2021.
“The shortfall in sales versus production volumes at Highland Valley copper was partially offset by strong sales at the company’s other operations, and total copper in concentrate sales were only 1,500 tonnes lower than production in the fourth quarter,’’ the company said.
On January 27, 2022, Teck’s Class B common shares closed at $40.68 and trade in a 52-week range of $44.15 and $21.86.