Teck defers capital spending; profit sags
TORONTO (Reuters) - Teck Resources Inc TCKb.TO said on Wednesday it would defer C$1.5 billion ($1.51 billion) in capital spending planned through 2013 and implement a cost-cutting plan as Canada's largest diversified miner felt the pinch of a global economic slowdown.
Teck's shares were up more than 2 percent at midday, however, as its third-quarter earnings per share were not far off analysts' expectations despite a sharp fall in profit on sagging coal sales and prices.
Morningstar analyst Daniel Rohr applauded Teck's efforts to cut costs and defer spending, noting that profits will remain under pressure through the fourth quarter as lower metallurgical coal prices weigh.
"It's probably wise, despite a pretty strong balance sheet, that the company's going to be undertaking some counter-measures to conserve cash," he said.
Shipments of steelmaking materials coal and iron ore have dropped in recent months on slowing demand from China and other emerging nations, prompting some to worry that the decade-long commodity supercycle is coming to an end.
The tough market has led such coal miners as Alpha Natural Resources Inc ANR.N and Walter Energy Inc WLT.N, which produce both steelmaking and thermal coal, to cut output.
Teck, the world's second-largest exporter of seaborne steelmaking coal, said it remains on track to meet the lower end of its full-year coal production forecast of 24.5 million to 25.5 million metric tonnes (28.1 million tons).
Included in the Vancouver-based miner's capital spending cuts are two major development projects that have been delayed due to permitting issues.
At the Quebrada Blanca Phase 2 copper project in Chile, Teck now plans to resubmit its environmental assessment no sooner than the second quarter of 2013, while it now expects the restart of the Quintette coal mine in Western Canada in 2014. Continued...