TORONTO (Reuters) - Diversified miner Teck Resources TCKb.TO TCK.N believes that concerns about a slowdown in the Chinese economy are overblown, Chief Executive Don Lindsay said on Monday.
“We are often asked about our view of the Chinese economy and whether we expect a hard landing or a soft landing,” Lindsay said in an address to the BMO Global Metals and Mining Conference in Hollywood, Florida. “Judging by the recent economic data and the Chinese government’s recent actions on bank reserve ratios, we think neither will occur.”
Vancouver, British Columbia-based Teck is one of the world’s top exporters of sea-borne coking coal, a key raw material used in manufacturing steel. In addition to its sizable coal exports to China, Teck also exports large amounts of copper and zinc to the country.
“With recent (China) gross domestic product (GDP) growth at 8.9 percent and industrial production growth at 12.8 percent, these numbers look very good indeed,” Lindsay said.
“Keep in mind that this is a policy-driven slowdown. They want to slow down and they are targeting GDP growth in the 7 percent range. In absolute terms though, this is still more growth than five years ago, when the percentages were 10 or 12 percent on a smaller economic base,” he added.
“Similarly, fixed-asset investment is still strong and we continue to see the growth of the consumer economy in China with strong retail sales growth. So no, we don’t see any landing, we see managed growth at a somewhat lower trajectory,” he said.
Lindsay said the company is still keen to add iron ore to its portfolio of assets, given that it is also a key component in the steel-making process.
“We’ve been fairly public that we think iron ore would be a good fit with our portfolio. I am obviously quite comfortable with iron ore, having started my career in the business,” said Lindsay, who has been at the helm for Teck since 2005.
“The reality is we’ve been looking at opportunities in iron ore for quite some time,” he added. “We don’t want to get into the iron ore business by project development because, as you can see, we have quite a number of projects on our plate right now.”
The Canadian miner is in the process of expanding its coal and copper production base at its mines in Canada and Chile. Earlier this year, Teck also agreed to buy SilverBirch Energy Corp SBE.V for C$435 million ($435 million) in cash and stock to take full control of the Frontier oil sands project in northern Alberta.
Teck, whose roots date back more than a century to the Kirkland Lake gold rush in Ontario in the early 1900s, has struggled to find a producing iron ore asset at an attractive price.
“The people in the industry are enjoying the best times they have had in their lives and nobody wants to sell at a reasonable price, so it’s been pretty difficult,” Lindsay said.
“It makes sense to have it in our portfolio, but it hasn’t happened yet and I’m not sure that it is going to,” he added.
Reporting By Euan Rocha; Editing by Peter Galloway