Teck’s first quarter results for 2022 have shown gross profits of over $2.5 billion, with the vast majority – some $1.78 billion – coming from the coal division.
In Q1 2021, Teck’s coal division only accounted for $196 million in gross profits.
The massive increase year-on-year reached record levels of profit, according to Teck.
“The significant increase in gross profit was driven by record high steel-making coal prices, partly offset by higher unit operating costs and logistics issues which curtailed sales volumes in the quarter,” reads the company’s Q1 report.
Demand was well up, with the company citing the Russian invasion of Ukraine as a major driver, due to Russia’s major contributions to the steel-making coal sector.
“Steel mills were urgently seeking alternative supply of steel-making coal, causing a short-term price spike.”
Chinese demand is also driving up prices, while their dispute with Australia continues to hamper Australian competition with Teck’s Canadian mines.
The combination of global events lead to a record coal price of $357 a tonne for the quarter.
The massive profits were offset by some challenges however – the company sold six million tonnes of coal in the quarter – slightly down from Q1 2021 due to CP Rail work stoppages in March which resulted in a stoppage for Teck, which transports coal in the Elk Valley to the B.C. coast using CP infrastructure. Ongoing repairs to rail lines due to the November 2021 storms also throttled some export capacity.
Despite the challenges, with solid numbers behind them, Teck’s outlook for the division is rosy, helped along by an upgraded logistics network allowing it to ship even more coal.
“We expect sales of 6.3 to 6.7 million tonnes in the second quarter of 2022, as we capture deferred sales from the previous two quarters.”
Production guidance for the year remains the same, at 24.5 - 25.5 million tonnes for 2022, while this far out, the company is estimating it will be in the lower half of those guidances.
The three other divisions of the company also posted gross profit, with copper drawing in $451 million, zinc $247 million, and the energy division $90 million.
Copper operations for Teck are in B.C., Peru and Chile. The company mines zinc in the United States and has a zinc refinery in Trail, B.C., while the energy division is based on Albertan oil sands.
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scott.tibballs@thefreepress.ca
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