Teck ramps up zinc output, settles coal pricing
miningweekly.com
By: Liezel Hill
30th July 2009
TORONTO (miningweekly.com) – Vancouver-based Teck Resources had more good news for the market on Thursday, announcing that it will return its Trail smelter, in British Columbia, to full production from September 1.
The company has also settled coal contracts with most of its traditional customers on 2009 coal year deliveries, at $128/t.
The group expects to realise an average coal price for the 2009 calendar year of between $155/t and $160/t, including some higher-priced tonnage that was deferred during the 2008 coal year and will be shipped during the current period.
For the 2009 coal year, which began April 1, Teck expects to deliver 3-million tons of coal at 2008 prices, of which 1,5-million tons were delivered in the second quarter, the miner said on Thursday afternoon.
Coal production in the second half of 2009 is expected to be around 12-million tons, the company said.
At Trail, where the firm cut zinc output by 20% in November last year, in response to sharply lower demand and pricing for the industrial metal, refined zinc production will ramp back up to 25 000 t/m.
“Strengthening customer demand over the past several months has depleted refined metal inventories to minimal levels, and orders for specific products by a large number of steel mill customers for Q3 and Q4 are 44% above the order rate for the first half of the year,” Teck said
The decision to scale back operations at Trail last year was part of a broader plan by Teck to conserve cash, as it worked to refinance and repay its heavy debt load, amid hostile financial markets and weak demand and pricing for its commodities.
The company had taken on almost $10-billion in debt to fund its acquisition of Fording Canadian Coal Trust, just before markets soured.
Since then, it has sold several noncore assets, scaled back spending and cut jobs in an effort to free up cash.
However, the big breakthrough came when the company announced in April it had renegotiated payment schedules with its lenders, and then sold $4,23-billion in notes a few weeks later, to take a big chunk out of the outstanding debt.
Most recently, Teck announced that Chinese sovereign wealth fund China Investment Corp would buy 101,3-million of Teck's class B subordinate voting shares for C$1,74-billion, giving the Chinese firm about 17,2% of equity and 6,7% voting interest in Teck.
The company fully expects to eliminate the remaining debt from cash flow, CEO Don Lindsay said at the time.
Teck shares gained 7,6% on Thursday, to C$27,25 apiece by 16:20 in Toronto. |
