Teck stock dives after China announces coal tariffs

Thu Oct 9, 2014 11:35am EDT
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TORONTO Oct 9 (Reuters) - Shares of Canadian diversified miner Teck Resources Ltd dropped to a five-year low on Thursday after China, the world's top coal importer, said it will levy tariffs of 3 percent to 6 percent on imports of coal as of Oct. 15.

Teck shares were down more than 4.5 percent at C$18.43 on the Toronto Stock Exchange. Teck is one of the world's largest exporters of seaborne steel-making coal.

The Vancouver-based company's sales of commodities directly into China accounted for more than 26 percent of overall revenue in 2013, or nearly C$2.5 billion ($2.25 billion).

It is unclear what portion of Teck's revenues from China were generated by coal sales, but coal represented 44 percent of the company's total revenue in 2013, followed by copper and zinc, which accounted for 27 percent and 12 percent, respectively.

China's sudden announcement of the import levies is its latest effort to limit coal imports and follows nearly a year of intense lobbying by China's top miners, which have pressed the government to stem a flood of cheap supplies that has inundated the domestic market and dragged local prices to a six-year low.

China's Ministry of Finance said in a statement on Thursday that import tariffs for anthracite coal and coking coal will return to 3 percent after having been dropped almost a decade ago, while noncoking coal will have an import tax of 6 percent. Tariffs on briquettes, a fuel manufactured from coal, and other coal-based fuels will return to 5 percent.

China had scrapped tariffs on coking coal in 2005 and on all other coal imports in 2007.

Teck is expected to report third-quarter financial results on Oct. 29 before the market open.

The company reported a 44 drop in earnings in the second quarter, due mainly to "significantly" lower coal prices, which had fallen to $111 a tonne from $156 a tonne a year earlier.

Pressured by weak metals and minerals prices, Teck announced plans in April to cut about 600 jobs, or 5 percent of its global workforce.

($1=$1.11 Canadian) (Reporting by Susan Taylor and Euan Rocha; Editing by Peter Galloway)