January 19, 2011 / 1:18 PM / in 7 years

UPDATE 2-Teck coal sales held back by weather, rail issues

* Q1 coal sales hit by bad weather, rail disruption

* Sees Q1 coal sales of 5 mln to 5.5 mln tonnes

* Teck shares down more than 1 pct in Toronto, New York (Adds details on sales outlook, background)

By Euan Rocha

TORONTO, Jan 19 (Reuters) - Diversified miner Teck Resources TCKb.TO said on Wednesday adverse weather and a rail traffic disruption and other issues would hold back its first-quarter coal sales.

The Vancouver, British Columbia-based company forecast coal sales in the range of 5 million to 5.5 million tonnes, compared to to 5.25 million in the first quarter of 2010.

Teck is one of the world’s top exporters of metallurgical coal, which is used to make steel.

It said avalanche conditions around a pass in southeastern British Columbia have affected Canadian Pacific’s CP.TO ability to move rail traffic. A mechanical failure at Westshore Terminals, Canada’s largest coal export facility, will likely reduce coal handling capacity for at least two weeks.

Last year, Teck had to trim its 2010 coal sales forecast to a range of 23 million to 23.8 million tonnes due to capacity constraints at Westshore, just south of Vancouver. [ID:nN20272204]

The company is due to report fourth-quarter and 2010 results on Feb. 8.

Teck also said unfavorable weather is causing delays in shipments and the recommissioning of a coal dryer at its Greenhills Mine. The coal dryer was damaged in an explosion last year. [ID:nN28194114]

Teck shares were down 99 Canadian cents at C$62.85 in Toronto and down by a similar margin at $63.31 in New York.

2011 FORECAST

Teck said it expects 2011 coal sales of 24.5 million to 25.5 million tonnes.

Flooding in Queensland, Australia forced many of Australia top coal miners to declare force majeures. Australia, the world’s largest coal exporter, accounts for roughly two-thirds of global coking coal trade, with around 90 percent of that from Queensland. [ID:nL3E7CJ00U]

While the industry limps back to normal in Queensland, analysts expect that increasing coking coal demand, coupled with Australian supply constraints will boost coal prices in the near-term, benefiting Teck.

The company’s shares are up more than 90 percent over the last 12 months on the back of rising commodity prices.

Teck said its 2011 coal sales forecast assumed no interruption of production due to labor disturbances and a reasonably prompt resumption of normal rail service.

The company said the collective agreement with the union at its Elkview mine in British Columbia has expired and negotiations are under way. The mine has an annual production capacity of about 5.6 million tonnes.

Teck said the collective agreement at its Fording River mine expires on April 30. The mine, also in British Columbia, has an annual capacity of 8 million tonnes. (Reporting by Euan Rocha; editing by Janet Guttsman)

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