Teck’s coal division may be reaping benefits of recent import bans imposed on Australian commodities by China.
In mid-October, global news outlets reported that Chinese coal power plants and steel mills had been directed to stop buying Australian coal.
As is customary by Chinese state actions, reporting on why the ban was enacted wasn’t made clear, but Australia and China have seen relations decline over the last few years, especially since the beginning of the COVID-19 pandemic.
In its most recent quarterly report, Teck, which operates four metallurgical coal mines in the Elk Valley, reported that it was keeping an eye on what was happening, noting that Chinese restrictions “appear directed mainly towards Australian coal.”
A spokesperson for Teck said that the company was closely monitoring the situation between China and Australia, adding that “Teck is being approached by China customers for prompt sales in Q4, and we are starting to see some sales to China above original expectation.”
They added however that while sales were above expectation – they were mainly up over 2019, and far from record levels seen in 2012-2014.
Currently, about 10 per cent of Teck’s steelmaking coal sales are made to China. In total, about a quarter of all Australian coal (both thermal and metallurgical) is sold to China.
In 2018, Australia exported 249 million tonnes of coal, with its primary markets being China, Japan and South Korea.
Teck’s spokesperson said that the company’s sales market was spread throughout the world in Europe, the Americas and other parts of Asia.
The company’s Q3 report was sobering for the steelmaking coal division, reporting a gross loss of $63 million based on a precipitous fall in revenues due to decreased demand because of the global pandemic.
Nevertheless, the company remains optimistic for the remainder of 2020, saying its sales guidances are unchanged for the quarter at 5.8-6.2 million tonnes. Combined with the rest of its 2020 sales, it would put its total sales for the year at 21.6 and 22 million tonnes. The company maintains its annual capacity of 26-27 million tonnes.
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