Teck Provides Update on Severe Weather Impacts
- Dec
- 06
Teck Resources Limited today provided an update to sales and production guidance, related to logistics disruptions caused by heavy rain, flooding and mudslides in British Columbia.
B.C. Logistics Disruptions
Rail service between west coast terminals and Teck’s B.C. operations remains impacted by recent heavy rains and flooding, with both CN and CP operating at reduced levels following service interruptions.
As a result of the rail disruption, primarily affecting shipments to Neptune and Westshore terminals in the Lower Mainland, we now estimate our fourth quarter steelmaking coal sales at 5.2 – 5.7 million tonnes, compared to 6.4 – 6.8 million tonnes previously. We have diverted shipments to Ridley Terminals in Prince Rupert to maximize sales during the quarter, which will affect our transportation costs for the quarter. CN and CP are reporting positive progress on restoring service capacity and are continuing to increase Teck shipments to Lower Mainland terminals. We expect that when rail service is fully restored we will be able to substantially recover delayed fourth quarter sales in the first half of 2022.
Strong logistics chain performance leading up to the heavy rain events resulted in historically low clean coal inventories at our operations, mitigating impacts on production volumes. To date, we have not idled any processing facilities and continue to stockpile clean coal at sites and manage available railing capacity to minimize production impacts. As a result, we expect annual steelmaking coal production of 24.5 – 25.0 million tonnes, compared to our previous guidance following the wildfires in the third quarter of nearly 25 million tonnes.
We now estimate our 2021 annual adjusted site cash cost of sales to be approximately $64 – $66 per tonne, slightly above the upper end of our previous guidance of $59 – $64 per tonne.
Due to the ongoing rain-related rail disruptions and associated demurrage costs in the fourth quarter, in addition to previously disclosed wildfire impacts and inflationary pressures, we now expect 2021 full year transportation costs of $44 – $46 per tonne compared to our previous guidance of $42 per tonne or slightly higher for the year.
We note that increased costs are more than offset by continued strong steelmaking coal prices through the second half of 2021. The average steelmaking coal price for the three months ending November 30, 2021 settled at US$371 per tonne, US$168 higher per tonne on an FOB basis than the three month average at end of August 2021, and US$254 higher than the three month average at the end of May 2021, compared to only $3 per tonne higher transportation cost, based on the mid-point of our updated annual guidance.
While there has been no impact to production at Highland Valley Copper, up to 4,500 tonnes contained copper in concentrate sales are also at risk of being delayed into the first quarter of 2022 due to logistics chain disruptions.
Teck is focused on protecting the health and safety of employees and contractors, and there is currently no risk to health and safety or infrastructure at Teck’s B.C. operations from heavy rain impacts.
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Elk Valley Coal Links
- Centerpoint Resources Inc. A mine exploration and development company that owns Bingay Coal.
- City of Fernie The cultural and activity centre of the Elk Valley.
- Crowsnest Pass Coal Mining Ltd. Potential for a significant underground mine operation producing high quality coking coal.
- District of Elkford Founded in 1971 as a home for miners working at Fording Coal.
- District of Sparwood Sparwood, BC is yours and mine to discover!
- Elk River Alliance The Elk River Alliance has spent over a decade monitoring the Elk River Watershed
- Elk Valley Resources Elk Valley Resources (EVR) operates four steelmaking coal mines in the Elk Valley.
- Fernie.com Everything you need to know about Fernie BC.
- Glencore Owns a 77% interest in Elk Valley Resources.
- Grizzly Discoveries Grizzly is a Canadian exploration company exploring for gold and base metal deposits.
- Jameson Resources Ltd. Coal Mountain Coking Coal in Alexander Creek.
- Ktunaxa Nation Working together, managing our lands and resources, within a self-sufficient, self-governing Nation.
- Mining Association of British Columbia Represents the needs and interests of coal, metal, industrial mineral companies and smelters.
- Nippon Steel Japan’s largest steelmaker with a 20% interest in Elk Valley Resources.
- North Coal Ltd. Focused on the exploration and development of the Michel Creek Coking Coal Project.
- Pacific American Coal Ltd. Identified a 257 million tonne JORC resource at its Elko Coking Coal Project
- POSCO A South Korean steel-making company headquartered in Pohang with 3% interest in EVR.
- Teck Resources Ltd. Canada’s Largest Diversified Resource Company.
- United Steelworkers Local 9346 The Trade Union for the hourly employees at Teck Coal Ltd. – Elkview Operations
- Wildsight Working to protect wildlife, water and wild places in Canada’s Columbia and Rocky Mountain regions.