Teck has released its unaudited third quarter (Q3) financial results, with company CEO, Don Lindsay, partially crediting the favourable market prices for steel-making coal for what he said was a record quarter for profits.
EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) was $2.1 trillion for the last quarter, “more than triple the same period last year,” reads the company report.
The realized price of steel-making coal was reported at US$277 per tonne for the quarter, well above the same time last year when it was around US$100 a tonne.
“Profitability in the third quarter improved significantly from a year ago as a result of increases in the prices for all of our principal products,” reads the report. “Realized steel-making coal prices in the third quarter benefited from approximately 1.9 million tonnes of sales to customers in China.”
Coal is on top of Teck’s portfolio at the big earner, with the division earning $901 million in gross profits for the quarter, compared to a loss of $63 million at the same time last year.
Of the other divisions, copper and zinc were profitable, but energy made a loss.
“Substantially higher steel-making coal prices, combined with increased sales and production volumes, contributed to a strong operating performance when compared to the third quarter of 2020, which was impacted by COVID-19.”
As mentioned, 1.9 million tonnes of coal was sold to buyers in China - about 30 percent of all coal sold by the company in the quarter (5.9 million tonnes).
The proportion of Teck coal sales going to China is steady - the 30 percent share sold to buyers in China is similar to the two previous quarters.
Wildfires disrupting railway supply chains didn’t put much of a dent in the division for Q3. The company had warned of possibly disruptions as rail links to ports on the B.C. coast were cut during active wildfires and for the recovery effort.
The report noted that prices paid for coal in China have been increasing since late 2020 when that country began enforcing import restrictions on Australian coal due to ongoing diplomatic disputes.
The company said that it was seeing demand remain high, not just within China but without, pushing prices higher heading into Q4.
Production was chugging along nicely - with the company’s Elk Valley mines producing 6 million tonnes of coal between them - an increase of 18 percent in Q3 2020.
According to the company the unit is well positioned to deliver another strong performance in the next quarter and into 2022.
“We are expecting sales of 6.4 to 6.8 million tonnes in the fourth quarter. Annual production is expected to be at the lower end of our 2021 production guidance range of 25 to 26 million tonnes, as wildfire impacts in the third quarter are not expected to be fully recoverable by the end of the year.”
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