Teck CEO Sees Seaborne Steelmaking Coal Prices Remaining High
By Bob Matyi
February 15, 2019 - Teck Resources President and CEO Donald Lindsay doubled down Wednesday on his forecast for strong seaborne metallurgical coal prices, saying they should average above $200/mt for the foreseeable future given healthy demand.
"Demand for seaborne steelmaking coal remains robust," said Lindsay during Teck's fourth-quarter earnings call, noting the spot price touching $209/mt on Wednesday.
Teck, based in Vancouver, has financed much of its metals operations on the back of high export prices, and Lindsay does not expect that to change anytime soon. He pointed out that the 10-year average of $197/mt.
Teck is still transitioning production from its closed Coal Mountain mine in British Columbia to its other four mines in the province. As such, the company forecasts 2019 coal output to be 26 million mt-26.5 million mt, with transportation costs of $37.39/mt.
After producing a record 7.3 million mt in Q4, Teck expects to produce 6.1 million mt-6.3 million mt in Q1.
Seaport Global estimated in a research note Wednesday Teck, the world's second-largest seaborne met producer, will turn out about 27 million mt this year.
Teck is developing "several new mining pits" in British Columbia, said Lindsay, which should be operational soon.
Teck also intends to take advantage of strong pricing by investing several million dollars "to capture an additional $100 million of margin." Should there be a downturn in met prices, Lindsay said, Teck could ramp down costs.
Additionally, Teck is expanding its Vancouver Neptune terminal to replace an existing contract with nearby Westshore Terminals which will expire in March 2021. Neptune will have a rated capacity of 18.5 million mt/year.
Although Teck officials declined to say how much they are spending on Neptune, they said the project should result in a "significant cost savings" when completed.