UPDATE 3-Teck may cut dividend if coal prices do not strengthen

Thu Feb 12, 2015 2:51pm EST
 
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(Recasts with comments on coal supply imbalance and dividend, adds CEO quote)

By Susan Taylor

TORONTO Feb 12 (Reuters) - Teck Resources Ltd said on Thursday it might have to reduce its dividend in July if industry-wide cuts in the production of steelmaking coal fail to lift prices from current historically low levels.

To bring the market back into balance, an additional 12 million tonne reduction in supply is needed above the 30 million tonnes announced since January 2014, Vancouver-based Teck said.

Teck, the world's second-largest exporter of seaborne steel-making coal, said the market could be back in balance as early as the second half of 2015 if output cuts and mine closures continue at their recent pace.

Any change in the twice-yearly divided, or capital re-allocation, would be decided by Teck's board between April and June.

"There may be a cut in the dividend, or there may not. If the coal price moves at all significantly, it doesn't look like there would be a need to," Chief Executive Don Lindsay said on a conference call.

"If it doesn't move, then we might decide to be a bit more conservative and retain the cash that would otherwise have been used for dividend."

Prices for seaborne coking coal have dropped from above $300 a tonne in mid-2011 to $117 now due to oversupply and weaker Chinese demand.   Continued...