By Robb M. Stewart
Teck Resources scaled back its target for annual copper production despite record output of the metal in the recent quarter that helped drive stronger-than-expected earnings.
The Canadian miner overnight reported a second-quarter profit of 385 million Canadian dollars ($279.3 million), or C$0.69 a share, down from C$469 million, or C$0.97 a share, a year earlier.
Earnings fell in part due to the earlier sale of a minority stake in its steelmaking coal business, an exit Teck recently completed with the sale of the remaining interest in the coal unit's operations, as well as a rise in finance and depreciation and amortization expenses.
On an adjusted basis, per-share earnings from continuing operations came in at C$0.79, beating the C$0.72 mean estimate of analysts polled by FactSet.
Revenue for the three months rose 10% to C$3.87 billion, below the C$3.98 billion expected by analysts.
Vancouver-based Teck benefited from higher production at its Quebrada Blanca mine in Chile and elevated prices, with copper nudging to an all-time high in late May. Copper prices increased by 15% in the recent quarter and averaged $4.42 a pound, while zinc prices on the London Metal Exchange were up 12% and averaged $1.29 a pound.
Teck's copper production jumped to 110,000 metric tons in the latest quarter, with output at its Quebrada Blanca mine climbing to 51,300 tons, from a total of 64,000 in the same period last year. Output of refined zinc slipped to 65,000 tons from 68,000 tons a year earlier, while zinc in concentrate rose to 140,000 tons from 134,000 tons.
Production of coal climbed to 6.3 million tons from 5.8 million tons last year, though gross earnings from coal fell due to a lower realized price and higher operating costs.
Despite the rise in copper output for the quarter, the company said it now expects production of the metal to hit 435,000 to 5000 tons for 2024, where it previously was aiming for 465,000 to 540,000 tons.
Teck completed all major construction on an expansion of Quebrada Blanca in the first quarter and continues to ramp up output, but said it expects slightly lower grades from the operation in the second half of the year due to short-term access issues related to removing water from the pit and a localized geotechnical issue. Production this year at Quebrada Blanca is expected to be 200,000 to 235,000 tons, down from previous guidance for 230,000 to 275,000 tons.
Earlier this month, Teck closed the sale of its outstanding 77% stake in its steelmaking coal business to Glencore for total proceeds of $7.3 billion. This was part of a move to focus on copper and zinc operations in North and South America and followed the earlier sale of the minority interest in the coal assets to Japan's Nippon Steel and South Korean steelmaker Posco. Proceeds from the sale have been earmarked for cutting debt, funding growth in copper and cash returns to investors.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
July 24, 2024 07:26 ET (11:26 GMT)
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