Miners set for weak quarter, more gloom

By Cameron French

TORONTO (Reuters) - Plunging commodity prices and higher costs will pull down third-quarter earnings of Canadian base metal miners, analysts say, but the recent selloff of mining stocks means the weak results may go largely unheeded by investors.

Rather, with the plunge in metal prices having accelerated in the early weeks of the fourth quarter, the market will be focused on any signals from miners as to how bad things could get through the end of the year.

"To tell you the truth, I think the market will largely ignore the third-quarter numbers," said John Hughes, an analyst at Desjardins Securities in Toronto.

"Certainly the downdraft we've seen among (metal prices) is creating some concerns that the fourth quarter's going to be a messy reporting period for the metals group."

The plunge in metal prices -- which has picked up speed in October -- will weigh on results for the July-September period, particularly those of miners that produce nickel and zinc, which have seen prices hammered by the financial crisis and worries of global recession.

Canadian third-quarter mining earnings will kick off on Wednesday with diversified producer Teck Cominco (TCKb.TO: Quote).

Teck, which is in the process of closing a $13 billion takeover of Fording Canadian Coal Trust, is expected to show a quarterly profit of C$1.16 a share before exceptional items, according to Reuters Estimates, a 9 percent decline from a year earlier.

Despite a substantial exposure to zinc, Teck should be helped by its metallurgical coal production, as coal prices have jumped year-on-year.