June 20, 2011 / 6:31 AM / 7 years ago

UPDATE 2-Teck forecasts lower coal sales, higher costs

* Q2 coal sales seen at low-end of forecast range

* Expects lower average Q2 coal selling price

* Sees higher average 2011 coal production costs

* Shares down 2.5 pct on TSX, NYSE (Adds details on outlook, background; in U.S. dollars unless noted)

By Euan Rocha

TORONTO, June 20 (Reuters) - Teck Resources TCKb.TO warned on Monday that its second-quarter coal sales would be at the low-end of its forecast range as Japanese clients have deferred shipments following the earthquake and tsunami.

Vancouver-based Teck also said it expects the average selling price for coal in the period to be lower than previously forecast and that production costs this year would be higher than expected.

Teck, one of the world’s largest exporters of metallurgical coal, used in the manufacture of steel, previously cut its full-year coal sales forecast in March because of a strike at its Elkview coal mine in British Columbia.

The latest warning sent shares of Teck down 2.5 percent, or C$1.10, to C$42.56 on the Toronto Stock Exchange, and down $1.12 to $43.49 on the New York Stock Exchange.

Teck’s coal sales this year have also been hit by shipping issues and weather-related disruptions. Shares of the diversified miner have fallen roughly 30 percent year-to-date on the TSX and the NYSE.

The company is expected to announce its second-quarter results on July 28.


Teck said it now expects coal sales in the second-quarter to be at the low end of its previously announced range of 5.5 million to 6 million tonnes.

The company also said it expects coal production costs this year to be in the range of $71 to $76 a tonne, due to one-time costs related to labor settlements and higher than expected costs for external mining contractors and diesel.

Teck had earlier forecast coal productions costs of $63 to $67 a tonne for 2011.

The company expects second-quarter production costs of $80 to $84 per tonne, with costs trending lower in the third and fourth quarter as coal volumes increase.

It also expects lower average selling prices in the second-quarter at about $270 a tonne, down from its prior outlook of $280 to $290 per tonne.

Teck said that deferred sales to Japanese customers have skewed the mix of its coal sales toward more low quality coal in the quarter and this in turn has hurt its average selling price.

In April, Teck said it expected the earthquake and tsunami in Japan to have a minimal impact on coal, copper and zinc sales within the country. [ID:nN18242433] (Reporting by Euan Rocha in Toronto and Vaishnavi Bala in Bangalore; Editing by Dan Lalor and Rob Wilson)

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