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Teck Resources Cuts Q4, FY21 Steelmaking Coal Sales View, Ups Costs Forecast - Quick Facts

Teck Resources Limited (TECK, TECK_A.TO, TECK_B.TO) Monday issued an update to sales and production guidance, related to logistics disruptions caused by heavy rain, flooding and mudslides in British Columbia or B.C., Canada.

The company noted that rail service between west coast terminals and Teck's B.C. operations remains impacted by recent heavy rains and flooding, with both CN and CP operating at reduced levels following service interruptions.

Citing the B.C. Logistics disruptions, the company said it now estimates fourth-quarter steelmaking coal sales at 5.2 - 5.7 million tonnes, lower than previous estimate of 6.4 - 6.8 million tonnes.

Further, the company expects annual steelmaking coal production of 24.5 - 25.0 million tonnes, compared to previous guidance following the wildfires in the third quarter of nearly 25 million tonnes.

The rail disruption primarily affects shipments to Neptune and Westshore terminals in the Lower Mainland.

The company said it has diverted shipments to Ridley Terminals in Prince Rupert to maximize sales during the quarter, which will affect transportation costs for the quarter.

Teck Resources expects that when rail service is fully restored, it will be able to substantially recover delayed fourth quarter sales in the first half of 2022.

For 2021, annual adjusted site cash cost of sales is expected to be around $64 to $66 per tonne, slightly above the upper end of previous guidance of $59 - $64 per tonne.

Full-year transportation costs would be $44 - $46 per tonne, compared to previous guidance of $42 per tonne or slightly higher for the year.

The revision reflects the ongoing rain-related rail disruptions and associated demurrage costs in the fourth quarter, in addition to previously disclosed wildfire impacts and inflationary pressures.

Further, up to 4,500 tonnes contained copper in concentrate sales are also at risk of being delayed into the first quarter of 2022 due to logistics chain disruptions.

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