Teck takes $2.2B writedown on coal, oilsands, copper
Falling commodities prices force Vancouver firm to declare loss in Q3
Teck Resources Ltd. is reporting a $2.1-billion loss for the third quarter, mostly because of a writedown of its coal assets.
The Vancouver-based company — which has one of Canada's largest mining and smelting operations — says the writedowns reflect lower expectations for commodity prices.
"We are taking significant steps to meet the challenge of low commodity prices," Tech chief executive Don Lindsay said in a statement.
The third-quarter including $2.2 billion of writedowns resulted in a net loss of $3.73 per share, compared with a profit of 14 cents per share or $84 million last year.
Excluding the writedowns — which are a non-cash expense reflecting the lower long-term value of the business — Teck had an adjusted profit of $29 million or five cents per share, down from $159 million or 28 cents per share last year.
Revenue totalled $2.1 billion in the three months ended Sept. 30, down from $2.250 billion a year earlier.
Biggest writedown for steelmaking coal
Analysts had estimated $1.96 billion of revenue, one cent per share of adjusted earnings and net income of six cents per share, according to Thomson Reuters.
The asset impairments totalled $2.2 billion, including $1.5 billion for Teck's steelmaking coal assets.
Teck say its copper assets were written down by $300 million and the value of its share of the Fort Hills oilsands project was cut by $400 million.
Lindsay said the company has taken significant steps to reduce its cash costs and has also raised nearly $1 billion in advance payments for some of its future gold and silver production.
"We used a portion of those proceeds to reduce debt by $400 million and our current cash balance of $1.8 billion exceeds our remaining $1.5 billion share of capital required for Fort Hills," Lindsay said in a statement.
Teck also reduced production and inventories of steel-making coal by shutting down operations for three weeks in the third quarter. It said production in the fourth quarter, which began Oct. 1, will be aligned with sales volumes.
It is using $89 US per tonne as its benchmark for highest-quality coal and total sales in the fourth quarter are expected to be at least six million tonnes.