Teck’s Elkview operations seen from Sparwood. (Scott Tibballs / The Free Press)

Teck’s Elkview operations seen from Sparwood. (Scott Tibballs / The Free Press)

Teck reports $1.4 billion jump in quarterly profits from coal division

The company has released its Q4 and 2021 financial results

Teck has released its unaudited financial report for Q4 2021, detailing a $1.4 billion gross profit increase from the steel-making coal division of the company over the same time in 2020.

In Q4 2021, steel-making coal brought in $1.45 billion in profits, compared to just $36 million in Q4 2020.

For the whole of 2021, company-wide gross profits were over $5 billion, with steel-making coal accounting for almost $2.8 billion of that.

By comparison, in 2020, steel-making coal accounted for only $277 million of Teck’s $1.3 billion in yearly profits.

“Substantially higher steel-making coal prices drove record quarterly gross profit in our steel-making coal business unit,” according to Teck’s report.

The steel-making coal price averaged $441 per tonne in Q4 2021, compared to $140 in Q4 2020. The yearly average was $262 a tonne, compared to $152 in 2020.

Despite the high prices and high profits, Teck said it could have been better: the company reported that a raft of disruptions through British Columbia between it’s steel-making coal operations in the Elk Valley, and export terminals on the coast disrupted transportation links.

“Heavy rains and flooding caused rail infrastructure damage that disrupted westbound rail service in the second half of November,” reads the report, which explained that services not being fully restored until the end of the year means that there were delayed sales due to bottlenecks in the system.

The company has resorted to diverting shipments to Prince Rupert instead of Vancouver, and also used rail links in the US to send empty trains into interior BC.

Those bottlenecks were yet to be fully cleared, and the Elk Valley mines saw ‘minor production curtailments’ to limit buildup of coal in Q4.

“As a result of these unprecedented challenges, our fourth quarter sales volumes were 5.1 million tonnes, 16 percent lower than the same quarter a year ago.”

Exports to China remained steady, with fallout from an ongoing trade dispute between Australia – the other primary producer of high-quality steel-making coal – and China continuing to yield dividends for Teck.

“In the fourth quarter, we sold 1.8 million tonnes of steel-making coal to customers in China, similar to the three previous quarters of 2021. Annual sales to customers in China represented approximately 30 percent of our total 2021 annual steel-making coal sales volumes, in line with our expectations.”

Markets remain good for the company, with demand still high and returning to pre-COVID levels.

Despite the bottlenecks, the company reported high production rates with 6.3 million tonnes produced by the four Elk Valley sites in Q4 2021 – up by 5 percent compared to the same time last year.

Outlook for the division within the report is as to be expected, rosy.

“Sales previously planned for the fourth quarter of 2021 are expected to be largely recovered in the first half of 2022, which should result in inventories returning to normal levels. Assuming full recovery of the rail network, we expect sales to be between 6.1 and 6.5 million tonnes for the first quarter of 2022.”

Production for 2022 is forecast to be in line with production from 2021, with the company providing yearly guidances of between 24.5 and 25.5 million tonnes for the year. In 2021, the company produced 24.6 million tonnes across Line Creek, Fording River, Elkview and Greenhills operations.

READ MORE: Sales below expectations, Teck gives a sneak peek at Q4 report

READ MORE: Report backs coal’s economic contribution to Elk Valley



scott.tibballs@thefreepress.ca
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