February 13, 2019 - Canadian miner Teck said it expects met coal production in 2019 to be between 26 million and 26.5 million mt, little changed on 2018 volumes, and to sell just over 6 million mt in the first quarter.

Teck said 2019 Q1 sales may be 6.1 million-6.3 million mt, depending on the performance of the logistics chain, compared with 6.1 million mt in Q1 2018, in a statement late Tuesday.

Teck's Q4 met coal production was 7.3 million mt, 6% higher on Q4 2017, and at a quarterly record.

Teck said its average Q4 met coal sales price was $191/mt FOB, while the Q4 price index for coking coal sold under quarterly contracts was $213/mt FOB.

Teck said it has access to terminal loading capacity in excess of planned 2019 shipments.

"Market expectations are that global steel production and demand for steelmaking coal will remain strong in 2019," Teck said.

"A robust steelmaking coal market is supported by the demand effect of continued steel capacity growth in India and Southeast Asia, the relocation of steel production to coastal areas in China, as well as concerns regarding supply from Australia and the US."

Teck added that in 2018, "depletion and reduced production of some Eastern European coal mines continued to increase demand from European steel mills for seaborne steelmaking coal."

Teck said it expects annual production from 2020 to 2022 to be higher than 2019, despite the closure of Coal Mountain Operations in early 2019. This is assuming current market conditions continue.

"We will continue to evaluate raw coal-processing opportunities to capture the latent production capacity of our Elk Valley processing plants in 2019," Teck said.

Teck said it is advancing mining in new areas at Fording River, Elkview and Greenhills Operations, which will extend mining life and increase production to compensate for the closure of Coal Mountain. Coal Mountain had lower production costs than Elk Valley mines, it said. Fording River and Greenhills achieved record annual production in 2018.

Teck said it is investing in processing plants and has transferred mining equipment from Coal Mountain to develop new mining areas at these sites. Elkview is well positioned for expansion, it said.

Elkview is anticipated to see a higher strip ratio in 2019 with a natural reduction of strip ratios over the next three to five years.

In Q4, a portion of Elkview raw coal was transported to Coal Mountain Operations for processing to recover production shortfalls from the Elkview dryer outage earlier in the year, resulting in additional Elkview production.

On February 11, Teck agreed with South Korean steelmaker subsidiary Posco Canada (Poscan), at the Greenhills joint venture, to increase the royalty paid by Poscan in respect of its 20% share of Greenhills' coal production.

The royalty payment paid by Poscan will increase by around $90 million a year, based on prevailing benchmark prices. Teck said a $10/mt increase or decrease in the coal price would increase or decrease the annual royalty by approximately $4 million.

At Neptune Bulk Terminals, an upgrade to increase terminal loading capacity led Teck last year to invest $90 million, mainly in second half of 2018. The program includes further spending of $210 million for 2019 and around $170 million in 2020, with upgrades completing in Q3 of 2020, allowing Teck to reduce reliance on Westshore Terminals at Roberts Bank, where it reported loading delays last year and a coal dumper outage in January.