Teck Resources (TSX:TECK.A | TECK.B)(NYSE:TCK), Canada’s largest diversified miner, saw third-quarter adjusted profit fall by 66.6% as steelmaking coal prices collapsed in the period and covid-19-related restrictions continued to hit the commodities market.
Gross profit before depreciation and amortization reached $703 million in the three months to September 30, compared to $1.22 billion in the same quarter last year.
The Vancouver-based miner said coking coal’s sale price decreased 34.6% to $102 per tonne in the third quarter, while sales stood at 5.1 million tonnes compared with 6.1 million tonnes a year earlier.
The cost of coal as it leaves the mine, excluding depreciation, amortization and other factors, fell to $67 per tonne in the July-September quarter.
Adjusted site cash cost of sales are expected to fall even further over the remainder of 2020, Teck said, adding it anticipated the commodity would end the year below $60 per tonne.
The covid-19 pandemic has wreaked havoc on the commodities market in different fronts. Companies have been affected by isolated outbreaks, government-mandated shutdowns and lower demand for many commodities, which has forced them to shut mines and cut production.
Teck said that all of its mines had recovered from pandemic-triggered production disruptions. Labour intensive activities such as maintenance, mine operations and projects, however, continue to be impacted by ongoing safety protocols, the miner said.
Teck expensed $130 million in costs in the past quarter related to the temporary suspension in March of its Quebrada Blanca Phase 2 (QB2) expansion project in Chile.
The company estimates the impact from the suspension, including expensed costs, will be between $350 and $400 million (excluding interest), with a scheduled delay of five to six months.
The miner is also investing a further $45 million in additional camp space that would have not been needed without the coronavirus pandemic.
Teck noted construction work at the copper mine was being ramped up and that it expects the project to be about 40% complete by year-end as activities remain partially on hold to limit the transmission of covid-19.
First production at QB2 is now expected in the second half of 2022, depending on the company’s continued ability to successfully manage through virus outbreaks going forward, it said.
The miner also noted that copper sales in the quarter fell to 69,000 tonnes from 75,000 tonnes.
Based on changes at its Highland Valley Copper mine in south-central British Columbia, Teck has cut its forecast for copper production for the second half of the year by 5,000 tonnes.
The company now expects copper output in the period to be between 140,000 tonnes and 155,000 tonnes.
Shares in Teck Resources dived in early trading in New York. They were trading 6.6% lower to $12.47 by 9:40 am ET, leaving the company with a market capitalization of $6.64 billion.