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Canada's Teck Q1 met coal sales to drag on dryer repair, Westshore port

London (Platts)--14 Feb 2018 1225 pm EST/1725 GMT


Canadian miner Teck said Wednesday it expected to sell 6.3 million-6.5 million mt of met coal in first quarter of 2018, after sales fell to 6.4 million mt in Q4 2017 on transport issues which are still ongoing.

Sales volumes this quarter are being held back by a problem with a coal-drying facility used to process coking coal for shipment to customers, while underperformance at Westshore terminals in Roberts Bank has continued into January from Q4, Teck said in a statement. Teck sold 5.9 million mt of met coal in Q1 2017.

Teck said Q4 met coal sales were 8% lower than a year ago at average prices of $170/mt FOB British Columbia.

Volume was cut by two Canadian Pacific Railway mainline derailments in November, and underperformance at Westshore Terminals. Teck is investing in upgrade facilities at Neptune Terminal in Vancouver in 2018, with an equity injection of C$85 million ($68 million).

"The investment in the port will further improve the global competitiveness and responsiveness of our steelmaking coal portfolio over the longer term, Teck said.

Coking coal prices remain supported on robust demand and problems with supplies, Teck said.

"With steel pricing and world economies remaining strong, indications are that demand for steelmaking coal will continue to grow while supply issues, mainly in Australia, are also expected to continue to support prices," Teck said.

"Depletion and closure of some Eastern European domestic mines also created additional demand for seaborne steelmaking coal from European steel mills."

Teck said spot index-linked quarterly-priced sales represent about 40% of its coking coal sales, with the balance reflecting market conditions at conclusion, and PCI and semi-soft negotiated on a quarterly benchmark basis.

Teck said it received permits to start mining in new areas at the Fording River, Elkview, and Greenhills coking coal mines, extending mine life and output to compensate for the closure of Coal Mountain.

"We are investing in the processing plants and have transferred mining assets from Coal Mountain in order to develop the new mining areas at each of the sites," Teck said.

"The strip ratios in these new areas will be higher in the near term, and we have invested in some additional mining capacity to balance coal production targets."

--Hector Forster, hector.forster@spglobal.com

--Edited by Maurice Geller, maurice.geller@spglobal.com




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