VANCOUVER (Reuters) - Teck Resources Ltd TCKb.TO, North America’s largest producer of steel-making coal, does not expect two months of surging coal prices to trigger a flurry of restarts by idled mines anytime soon, company officials said on Thursday.
New supplies would take time to come to market, they said, noting that many shuttered mines, especially in the United States, need big capital injections for new equipment and labor before they can re-open after being starved of funds during a four-year price downturn.
The slump ended this year, as steel-making coal prices have more than tripled to hit $250 a tonne on the spot market on the back of mine operating restrictions in China, global cutbacks and weather issues. Most of those gains have come in the past two months.
“Management teams won’t typically don’t make any significant restart decisions based on a few weeks of prices,” Teck Chief Executive Officer Donald Lindsay said on a conference call to discuss the Canadian miner’s third-quarter results.
Teck does not believe current high prices are the “new normal”, Lindsay said, but they could persist for “some time” because of limited new supplies.
Earlier on Thursday, the Canadian-based miner reported third-quarter earnings that just missed market expectations but it raised its coal production forecast slightly for the year. Its shares rose 0.3 percent to C$28.23.
Teck said it now expected 2016 coal production of about 27-27.5 million tonnes, compared with its previous forecast of 26-27 million tonnes.
For the current quarter, the company forecast total steel-making coal sales to be at least 6.5 million tonnes.
The company said the construction of the Fort Hills oil sands project in northern Alberta was more than 70 percent complete. Teck owns a 20 percent stake in the 180,000 barrel-per-day project, which is majority-owned by Suncor Energy Inc (SU.TO).
Net profit attributable to Teck shareholders was C$234 million, or 40 Canadian cents per share, for the quarter, compared with a loss of C$2.15 billion, or C$3.73 per share, a year earlier when Teck took an impairment charge of C$2.2 billion related to the writedown of its assets.
Excluding items, Teck earned 26 Canadian cents per share in the latest reported quarter, missing analysts’ estimate of 28 Canadian cents.
Reporting by Nicole Mordant in Vancouver and Anet Josline Pinto in Bengaluru; Editing by Amrutha Gayathri, Don Sebastian and David Gregorio