The turnoff to Teck's Line Creek Operations in the Elk Valley. (Scott Tibballs / The Free Press)

Teck coal profits down in 2020, pins hopes to Chinese recovery

The company released it’s Q4 and 2020 un-audited numbers on Feb. 17

Teck has released it’s un-audited results for 2020, with the company reporting that the fourth quarter was the strongest of 2020 across company operations, despite precipitous falls in the coal division’s gross profits.

Focusing on coal production, Teck reported that it’s steel-making coal sales were “near the top end of our Q4 2020 guidance range at 6.1 million tonnes, with nearly 20 per cent of sales to Chinese customers.”

The hard numbers show that company-wide, Teck’s revenues and gross profits were well down through 2020 compared to 2019, with the company’s profits coming in at $1.333 billion in 2020, down by over 60 per cent from $3.34 billion in 2019.

The fourth quarter was stronger year-on-year, with the company posting gross profits of $505 million – an increase of almost 10 per cent over Q4 2019, when Teck made $460 million in gross profits.

The increase in gross profits in Q4 2020 was mostly thanks to the company’s copper division, which accounted for $368 million (compared to $120 million in 2019).

However, the coal division was significantly down, contributing $36 million in gross profits in Q4 2020 compared to $241 million in profits in Q4 2019.

The drop put the coal division second-last in contributions to the company’s bottom line, ahead of the energy division which made a loss in the last quarter. In 2019, coal accounted for more than half of the company’s gross profits in Q4.

For the whole year the picture was even uglier for the coal division – in 2019 coal accounted for $2.112 billion in gross profits for Teck (of $3.34 billion across all divisions), while in 2020, coal accounted for $277 million – a drop of over 86 per cent.

The company blamed a 19 per cent fall in realized steel-making coal prices for the fall in gross profits (from $US$131 per tonne to US$107 per tonne from Q4 2019 to Q4 2020), as well as the ongoing pandemic.

An increase in prices paid by Chinese buyers midway through Q4 didn’t get fully captured by Teck however, with most sales already concluded by that point. The company has previously noted that Chinese interest in Canadian steel-making coal was rising, as Australian competitors were being frozen out of the lucrative Chinese market.

Teck appears to be pinning many of its hopes to China, which has been leading the recovery in steel-making coal demand.

“Steel production in China returned to pre-COVID-19 levels during the second quarter and has been running at record production levels since May 2020, with full-year production reaching a new record high of 1.05 billion tonnes,” reads Teck’s report.

“During 2020, China increased its seaborne steel-making coal imports by approximately 20 per cent to the second highest level to mitigate supply shortness due to lower imports from Mongolia amid almost stable Chinese domestic production. China’s heightened seaborne import restrictions which came into effect in October 2020, are mainly directed towards Australian coal, creating demand for seaborne steel-making coal from sources other than Australia. A number of Teck’s Chinese contract and spot customers inquired for availability of cargos throughout the fourth quarter and into 2021.”

Despite this, operations were performing in-line with expectations given the COVID-19 pandemic headwinds through the year, with all business units across copper, zinc, coal and energy achieving production and sales guidance.

Looking ahead at guidance, it expects its steel-making coal operations to produce between 25.5 and 26.5 million tonnes of coal in 2021 – up from the reported 21.1 million tonnes produced in 2020, and in line with the 25.7 million tonnes produced in 2019.

The company outlook for the coal division is rosy – with increasing production, inventory and sales opportunities credited for brighter expectations in 2021.

READ MORE: Teck named 263rd-best Canadian employer



scott.tibballs@thefreepress.ca
Like us on Facebook and follow us on Twitter

mining

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Some of the folks behind Angel Flight East Kootenay: Todd Weselake is a director, partner and pilot while Brent Bidston is the president and lead pilot of the not-for-profit. Pictured here with their older plane, they hope to get an upgrade for thanks to RDEK funding. (Image courtesy of Angel Flight East Kootenay)
Angel Flight secures RDEK funding for next five years

$100,000 will go to the not-for-profit each year, with the funds to be used to acquire a larger plane

Interior Health reported 33 new COVID-19 cases on March 5. (Black Press Files)
Interior Health reports 33 new COVID-19 cases on March 5

Over 300,000 vaccine doses have been administered provincewide.

Ryan Bavin of Bavin Glassworks in Invermere. Photo: Submitted
Call for entries for Columbia Basin Culture Tour

Deadline for registration for artists and venues is April 15

A nurse performs a test on a patient at a drive-in COVID-19 clinic in Montreal, on Wednesday, October 21, 2020. THE CANADIAN PRESS/Paul Chiasson
36 new cases of COVID-19, one death in Interior Health

The number of active cases in the region is at 366

Michelle Thorne of Fernie Distillers with some Griz-themed cocktails available for Griz Days 2021. (Scott Tibballs / The Free Press)
Griz Days comes to town

While mostly virtual, there’s Griz-themed food and drink around town

Provincial health officer Dr. Bonnie Henry updates B.C. on the COVID-19 situation. (B.C. government)
Dr. Bonnie Henry predicts a ‘post-pandemic world’ for B.C. this summer

‘Extending this second dose provides very high real-world protection to more people, sooner’

Malawian police guard AstraZeneca COVID-19 vaccines after the shipment arrived in Lilongwe, Malawi, Friday March 5, 2021. Canada is expecting its first shipments of AstraZeneca vaccine next week. (Associated Press/Thoko Chikondi)
B.C.’s daily COVID-19 cases climb to 634 Friday, four more deaths

Currently 255 people in hospital, 66 in intensive care

A crashed helicopter is seen near Mt. Gardner on Bowen Island on Friday March 5, 2021. Two people were taken to hospital in serious but stable condition after the crash. (Irene Paulus/contributed)
2 people in serious condition after helicopter goes down on Bowen Island

Unclear how many passengers aboard and unclear where the helicopter was going

Surrey Pretrial in Newton. (Photo: Tom Zytaruk)
B.C. transgender inmate to get human rights hearing after being held in mostly male jail

B.C. Human Rights Tribunal member Amber Prince on March 3 dismissed the pretrial’s application to have Makayla Sandve’s complaint dismissed

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Supporters rally outside court as Pastor James Coates of GraceLife Church is in court to appeal bail conditions, after he was arrested for holding day services in violation of COVID-19 rules, in Edmonton, Alta., on Thursday March 4, 2021. THE CANADIAN PRESS/Jason Franson
‘Law remains valid:’ Pastor accused of violating health orders to remain in jail

The Justice Centre for Constitutional Freedoms is representing the pastor

The Netflix logo on an iPhone. B.C. delayed imposing sales tax on digital services and sweetened carbonated beverages as part of its response to COVID-19. Those taxes take effect April 1, 2021. THE CANADIAN PRESS/AP, Matt Rourke
B.C. applies 7% sales tax on streaming, vaping, sweet drinks April 1

Measures from 2020 budget were delayed due to COVID-19

Chief Don Tom of the Tsartlip First Nation was outraged after Green MLA Adam Olsen revealed on social media that the community had been experiencing a COVID-19 outbreak – a fact the First Nation had chosen to keep private to avoid racist backlash as experienced by the Cowichan Tribes when an outbreak was declared there in January. (Black Press Media file photo)
B.C. First Nation ‘outraged’ after Green MLA reveals COVID-19 outbreak

Tsartlip First Nation chief shares concerns about racist backlash, MLA apologizes

A lawyer wears a face mask and gloves to curb the spread of COVID-19 while waiting to enter B.C. Supreme Court, in Vancouver, B.C., Friday, Aug. 28, 2020. British Columbia’s highest court has sided with the land owner in a dispute over public access to public land. THE CANADIAN PRESS/Darryl Dyck
B.C. high court finds in favour of large landowner in fight over access to pair of lakes

The Nicola Valley Fish and Game Club launched legal action after the cattle company blocked road and trail access

Most Read