Teck to lay off workers, cut spending as US-China trade war weighs on profit
Teck Resources (TSX:TECK.A | TECK.B)(NYSE:TCK), Canada’s largest diversified miner, has kicked off a cost-cutting program that will see layoffs and the deferral of capital spending projects as the ongoing US-China trade hit the company’s third-quarter profit.
Revenue for the three months through September declined by 5.4% to C$3.04 billion, compared to a year ago, even as its energy and zinc units partly offset weak base metal and steelmaking coal prices caused by global economic uncertainty.
The Vancouver-based mining giant’s adjusted profit fell to C$403 million, or C$0.72 per share, in the quarter ended Sept. 30, from C$466 million, or C$0.81 per share, a year earlier. Analysts on average were expecting it to earn 66 Canadian cents per share, based on estimates by financial markets data firm Refinitiv.
“Over the past few years, we have focused our attention on maximizing production to capture margin during periods of higher commodity prices,” the company’s president and CEO, Don Lindsay, said. “However, current global economic uncertainties are having a significant negative effect on the prices for our products, particularly steelmaking coal.”
As part of the planned cost-cutting measures, Teck said it would eliminate around 500 full-time jobs. Some of them, it said, will come from attrition, the expiry of temporary or contract positions and current job vacancies.
Lindsay noted that while Teck would focus on improving efficiency and productivity across its business for the balance of 2019 and 2020, it will continue to forge ahead with certain key projects.
One of them, the company said, is Quebrada Blanca Phase 2 (QB2) project in Chile. Construction at one of the world’s largest undeveloped copper resources is expected to be completed in the fourth quarter of 2021, with ramp-up to full production expected during 2022.
In late 2018 Teck teamed up with the Japanese Sumitomo Metal Mining Co Ltd and Sumitomo Corp to boost the production of its aging open-pit mine in northern Chile to 300,000 tonnes of copper a year from 23,400 tonnes in 2017.
Copper, one of four business units at Teck besides steelmaking coal, oil and zinc, is considered a company priority.