Rising coal prices push Teck to record profit
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Adjusted EBITDA was a record $2.1 billion, more than triple the third quarter of 2020, the company said this week.
Realised copper, zinc and steelmaking coal prices were US$4.25 per pound, $1.38/lb and $277 per tonne in September, with adjusted EBITDA for the month contributing about half of the quarter's result, Teck said.
PolarX finds extra copper potential in Alaska
SPONSOREDpolarx
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SPONSOREDazure minerals
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SPONSOREDmarimaca copper
Its copper unit gross profit increased 117% for the quarter.
About 1.9 million tonnes, or 32%, of its steelmaking coal was sold to China "significantly above FOB Australia prices," Teck said.
China had snubbed Australian coal amid trade tensions over Canberra's support last year for an inquiry into COVID-19.
The FOB Australia prices increased sharply in the latter half of Q2 and continued to increase to "unprecedented levels" through Q3, Teck said.
"Heading into the fourth quarter, we are focused on continuing to optimise sales and production to capitalise on high commodity prices and advancing our priority QB2 copper project," president and CEO Don Lindsay said.
Cost pressures at QB2
Teck said it was facing more cost pressures at its QB2 copper development in Chile but still expected first production in the second half of 2022.
"Challenges with port offshore and tailings facility construction have placed pressure on our estimated capital cost (disregarding COVID-19-related costs) of US$5.26 billion and we expect our capital cost estimate to increase by up to 5% as we add more contingency to our budget," Teck said.
"There is also pressure on our estimate of COVID-19 related capital of US$600 million."
Construction was paused at QB2 due to the pandemic last year.
The company planned to issue updated capital cost guidance in February and said any increase would partly depend on managing pandemic impacts in the current quarter.
Teck said it had cancelled a $1 billion "side car" credit facility and recently reduced the balance on its $4 billion committed credit facility to zero, and converted it into a Sustainability-Linked facility this month.
Teck shares (TSX: TECK.B) are up about 50% year-to-date.
They last traded at C$34.51, valuing it at $18.4 billion (US$14.9 billion).