Teck Resources expects 2013 copper output decline on lower grades
Washington (Platts)--7Feb2013/341 pm EST/2041 GMT
Canadian miner Teck said Thursday that, while it achieved record copper
production last year, its copper output would fall in 2013, on factors such
as depleting assets and mines shifting to lower grades.
As part of a fourth-quarter earnings conference call Thursday, Teck
estimated it would produce 340,000-360,000 mt of copper in 2013, compared
with a record 373,000 mt in full-year 2012, which included 103,000 mt in Q4
alone. Last year's output compares with 321,000 mt of production in 2011.
"In copper, it's all about grades," said Teck President and CEO Don
Lindsay during the conference call. "The average grades [in 2013] won't be as
high as what we had in the fourth quarter." Lindsay specifically mentioned
Teck's Chile-based Quebrada Blanca copper mine, which is approaching the end
of its mine life.
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The company said it would spend $450 million of its roughly $1 billion
new-mine development budget for 2013 on the next phase of that project, QB
Phase II. A Teck official said the company is currently in discussions with
its two QB development partners on whether the partners will continue into QB
Phase II or sell off their respective interests.
Teck's total capex budget for 2013 is roughly $2.3 billion, the company
said in its 2013 guidance, but officials said during the call that the only
budget committed for 2013 to date is the portion covering projects already in
progress, including QB Phase II and the Quintette coal mine.
Teck estimated its 2013 zinc concentrate output at 560,000-590,000 mt,
with refined zinc production flat from 2012 levels at 280,000-290,000 mt. The
company said it produced 284,000 mt of refined zinc in 2012, down from
291,000 mt in 2011. Q4 2012 output was down 8,000 mt at 67,000 mt.
Lindsay noted that Teck's coal production has decreased due to
under-utilization of capacity, based on current market conditions.
Regarding the market going forward, Teck Senior Vice President of
Finance and CFO Ron Millos told call participants, "What we're seeing is a
gradual improvement, compared with 2012, but we're still being prudent." He
said the company is leveraging long-term agreements with its global customers
to maximize sales.
Referring to the company's current cash balance of $2.9 billion, Lindsay
said Teck is pursuing a "stay the course" strategy with a focus on ongoing
projects like Highland Valley -- with mill optimization expected to be
completed at year-end -- and upcoming projects like QB Phase 11.
However, the company also has an eye on potential acquisitions, he
said. "Iron ore is a good fit for us," Lindsay said, adding that the
values for potential acquisitions in iron ore have been too high, but that
prices are now coming down. He also identified copper as a priority regarding
In its earnings statement, Teck said its gross profit before
depreciation and amortization in 2012 was $4 billion compared with a record
$5.8 billion in 2011.
"Copper production at Highland Valley in Q4 of 37,400 mt was 37% higher
than a year ago, primarily as a result of significantly higher grades," the
company said in the statement. "Production was focused on the higher grade
ore in the Valley pit during Q4 of 2012," the miner said. Highland Valley
Copper production in 2013 is expected to be in the range of 100,000-110,000
mt of copper.
Copper production in Q4 at its Antamina mine in Peru rose 28% to 121,600
mt, compared with 95,000 mt in the prior-year, "reflecting the additional
mill throughput and slightly improved recoveries," it said.
"Our 22.5% share of Antamina's copper production in 2013 is expected to
be in the range of 90,000-100,000 mt and our 22.5% share of zinc production
is expected to be in the range of 45,000-50,000 mt," Teck said.
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