Teck Resources profits up 247% thanks to copper boom
Teck Resources, Canada’s largest diversified miner, has seen its Q1 profits ramp thanks to the spike in copper prices to record highs driven by global net zero pledges and Covid vaccine rollouts.
“Strong first quarter operational performance, in line with plan, and higher commodity prices contributed to a very solid start to 2021,” said Don Lindsay, President and CEO. “We achieved major milestones for our priority projects, including surpassing the half-way point at our flagship QB2 copper growth project and moving into the commissioning phase of our Neptune steelmaking coal terminal upgrade. We remain absolutely focused on implementing the necessary protocols to mitigate transmission of Covid-19 and protect the health and safety of our people and local communities.”
- Adjusted profit attributable to shareholders1 of $326mn or $0.61 per share in Q1 2021, an increase of 247% compared to the same period last year.
- Adjusted EBITDA1 of $967mn in Q1 2021, an increase of 59% compared to the same period last year.
- Overall QB2 project progress surpassed the half-way point in April.
- Our Neptune port upgrade is now in the commissioning phase and ramp-up will continue as planned. To date 18 vessels have been loaded using the new outbound system.
- Our operations continue to be resilient despite ongoing challenges associated with Covid-19, with production in line with plan across our business units and sales meeting our Q1 2021 guidance.
- Our copper business unit had a strong Q1 2021 with an increase in gross profit before depreciation and amortization1 of 76% compared to the same period last year, supported by an average realized copper price of $3.92 per pound and copper production of 71,700 tonnes, in line with plan.
- Sales of steelmaking coal were 6.2 million tonnes in Q1 2021, with approximately 2 million tonnes sold to Chinese customers based on CFR China prices, which were significantly higher than FOB Australia prices.
- Teck Coal Limited has resolved Fisheries Act charges in connection with discharges of selenium and calcite from our steelmaking coal operations in the Elk Valley of British Columbia in 2012.
- The Elkview Saturated Rock Fill (SRF) was successfully commissioned in Q1 2021, on schedule and below budget. The SRF is now treating and reducing selenium and nitrate and improving water quality in the receiving environment.
- Liquidity of $6.3bn as at April 27, 2021.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”