Teck defers capital spending; profit sags
By Julie Gordon
TORONTO (Reuters) - Teck Resources Inc TCKb.TO said on Wednesday it will defer C$1.5 billion ($1.51 billion) in capital spending planned through 2013 and cut costs as Canada's largest diversified miner feels the pinch of a global economic slowdown.
Teck's shares closed up 2.8 percent, however, as the miner's third-quarter earnings per share were not far off analysts' expectations despite a sharp fall in profit on sagging coal sales and prices.
The company pushed back numerous development projects, including an expansion at the Quebrada Blanca copper project in Chile and the restart of the Quintette coal mine in Western Canada, joining other top miners that have deferred capital spending in recent months.
Morningstar analyst Daniel Rohr applauded Teck's efforts to cut costs, 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 tonnes. Continued...