Teck Resources Ltd. lowered its forecast for steelmaking coal sales after the Canadian producer was hit by extreme weather and rail blockades just as the coronavirus outbreak threatens demand.
The Vancouver-based company will temporarily reduce production and shut down its Neptune shipping terminal, it said in its annual results report on Friday. The move will help address high levels of inventory and allow it to progress an upgrade at the Neptune facility.
It’s been a tough period for Teck, as profit in 2019 was hurt by slumping coal prices and a US$910 million after-tax writedown on its stake in the Fort Hills oil sands mine. Permitting delays and unrest in Chile will affect the cost of the company’s flagship copper project, QB2.
“Given the potential for weaker demand in the short-term due to the effects of the coronavirus and the high inventory levels due to rail and port constraints, we are choosing to temporarily reduce production,” Teck said. “The extent and duration of impacts that the coronavirus may have on the demand and prices for our commodities, on our suppliers and employees, and on global financial markets is not known at this time, but could be material.”
Teck forecast first-quarter steelmaking coal sales of 4.8 million to 5.2 million tons, compared with a Feb. 6 estimate of 5.1 to 5.4 million tons.Full-year coal steelmaking coal sales are seen at 23 million to 25 million tons, down from 25.7 million last year.The company reported fourth-quarter adjusted earnings per share of $0.22, missing the lowest analyst estimate compiled by Bloomberg.
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