TORONTO (Reuters) - Teck Resources Inc TCKb.TO on Wednesday said it would defer some C$1.5 billion ($1.51 billion) in capital spending planned through 2013 and implement a cost cutting plan, as the diversified miner felt the pinch of the global economic slowdown.
Shares rose 2 percent shortly after the market open on the cost reductions, which came as the Canadian miner reported a 78 percent drop in third-quarter profit on sagging coal sales and prices.
“Ongoing economic uncertainties in Europe and the United States and less robust growth rates in China, India and other emerging markets have impacted both demand and prices for some of our products”, the company said.
Shipments of steelmaking materials like 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 average realized coal price fell to $193 per metric tonne in the third quarter from $202 in the second quarter, while prices were down 33 percent from the same period a year earlier, Teck said. The company also warned that recent weakness in the seaborne steelmaking coal market may continue into the first half of 2013
The Vancouver-based company, which also mines copper and other base metals, said it had deferred some C$1.5 billion of capital spending for 2012 and 2013, with two major development projects 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 the restart of the Quintette coal mine in Canada is now expected in 2014.
Teck also deferred the construction of a new furnace at its Trail operations in British Columbia and said the feasibility study for its Relincho project in Chile has been paused on changes to local infrastructure plans.
Capital spending in 2012 will be reduced by C$300 million to C$1.8 billion, while 2013 capital spending is being cut by C$1.2 billion. Teck has also implemented a plan to reduce operating costs by at least C$200 million a year.
Teck, which operates numerous coal mines in Canada, said it expects coal production for the year to be around the lower end of its earlier forecast at 24.5 million metric tonnes (27 million tons).
The company sold 5.6 million tonnes of coal in the third quarter of 2012 compared with 6.2 million tonnes in the year-ago period.
Shares were up 2 percent at C$31.15 shortly after market open on Wednesday on the Toronto Stock Exchange.
Net income fell to C$180 million, or 31 Canadian cents per share, in the quarter ended September 30. That compared with C$814 million, or C$1.38 per share, in the year-earlier period.
On an adjusted basis, third quarter profit fell 52 percent to 60 Canadian cents per share. Analysts on average had expected a profit of 61 Canadian cents per share on revenue of C$2.5 billion, according to Thomson Reuters I/B/E/S.
Revenue fell 26 percent to C$2.5 billion as metal and coal prices sagged.
Teck’s coal production rose about 6 percent to 6.32 million tonnes in the quarter, while copper production increased 29 percent to a record 99,000 tonnes.
Reporting by Julie Gordon in Toronto and Sandhya Vijayan in Bangalore; Editing by Theodore d'Afflisio