Teck Resources to expand its Fording River coal mine
Teck Resources Ltd. (TSX:TCK) has received the green light from the B.C. Environmental Assessment office to expand its Fording River coal mine near the Alberta border.
But with met coal global glut keeping prices in a prolonged trough, the question now is whether the project will proceed as originally planned.
Teck is planning an $88.5 million expansion at its existing Fording River mine. The Swift project would produce an additional 170 tonnes of coal over 25 years, according to a B.C. government news release.
Like all other coal miners, Teck has been hammered by low steelmaking coal prices, which have dropped from US$300 per tonne in 2011 to below US$95 per tonne.
Lower demand, especially from China, and a global glut of met coal is expected by analysts to keep met coal prices depressed for at least another two years.
The glut has forced several met coal mines to close and new projects to be mothballed, including Teck’s own Quintette mine project.
Even so, Joe Aldina, energy analyst for Wood Mackenzie, said the Swift project is one that he expects Teck will move forward with before any other.
“That said, there is slack capacity at Teck's current operations, which means that any expansion will be slow moving over the next several years,” Aldina said.
“It can be important, however, to move forward with permitting given that the timing of a market turnaround is uncertain and permitting takes a number of years.
“Teck wants to have reserves ready to go when the existing pits at Fording River are depleted, but that should be a few years away as Fording River looks to us to have reserves for a number of years of future operations.”
The Environmental Assessment Office certificate issued by the B.C. government has 19 conditions attached, including the requirement for a new water treatment plant to be built at the Fording River operations.