Teck has updated its sales, production and guidance numbers for Q4 2021 ahead of the complete Q4 report in light of logistics snares and COVID-19 disruptions in the last months of last year that caused coal sales to fall short of the bottom bracket for expected sales.
According to the company, “weather conditions have continued to negatively impact recovery efforts in B.C.”, with rail disruptions complicating the transport of minerals from sites within Interior B.C. to terminals in Vancouver and Prince Rupert.
“Interruptions and substantial reductions to rail service and port activities persisted from mid-November into the first two weeks of January as extreme cold-weather conditions followed heavy rains and mudslides, which affected critical transportation corridors,” said the company in a release.
The company had forecast coal sales of between 5.2 million and 5.7 million tonnes for Q4, but due to the disruptions the final number for the quarter was 5.1 million tonnes.
For the entire year, sales just squeaked into expectations, with the company selling 24.6 million tonnes across all of 2022. Guidances had been between 24.5 million and 25 million tonnes.
According to the company, while transportation breaks hadn’t caused many issues early on, coal was beginning to pile up at it’s Elk Valley sites.
“Due to ongoing weather-related logistical challenges which have continued through January, clean steel-making coal inventories at our mine sites are currently near record-high levels.
“Further transportation disruptions have the potential to require production cutbacks to manage inventory levels. CN and CP reported meaningful progress on recovery in mid-January, with demonstrable improvements to train fluidity last week. We expect to substantially recover delayed fourth quarter sales in the first half of 2022.”
The logistics challenges also pushed the cost of sales and transportation above the upper range of company guidances, to $72 and $49 per tonne, respectively, but Teck said that the increase in costs was offset by ‘continued strong prices’ for coal, with average prices coming in at US$351 per tonne.
“The increase in steel-making coal prices from the third quarter further resulted in positive pricing adjustments of approximately $70 million.”
Beyond logistics troubles, the company said that a local spike in COVID-19 cases in the Elk Valley had seen “rising absenteeism at our steel-making coal operations in the Elk Valley.”
“While the absenteeism has so far not had a major impact on production, the situation poses a risk to Q1 2022 production. However, in recent days we have seen some improvement, with the number of employees returning from COVID-19 isolation exceeding the number of new cases.”
The complete Q4 2021 report from Teck is expected to be released on Feb. 24.
READ MORE: Teck spends up big to filter the Elk Valley’s water
scott.tibballs@thefreepress.ca
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