Canadian coking coal producer Teck Resources claimed a record 7.6 million mt of coal sales in the third quarter, up 36% from a year ago, the company said Thursday.
But Don Lindsay, president and CEO of the Vancouver, British Columbia-based miner, said during the earnings conference call that "the current price for steelmaking coal remains below what we believe is required to sustain adequate production in the industry in the long term."
He added that Teck, to date, has reached agreements with coal customers to sell 5.6 million mt in Q4 at an average price of $145/mt, and the company expects total Q4 sales, including spot sales, to be at or above 6.3 million mt. Teck's average price compares with the current benchmark for premium coking coal of $152/mt.
In Q3, Teck sold 7.6 million mt at an average realized price of $139/mt, compared with 5.5 million mt at an average realized price of $193/mt a year ago. That also compares with 6.3 million mt sold in Q2 at $156/mt.
Thursday, Platts assessed premium low-vol coking coal at $145.50/mt FOB Australia, up 50 cents, and low-vol hard coking coal FOB US East Coast at $134.50/mt, unchanged.
Company executives told analysts that, while the pricing environment remains at unsustainable levels, the global economic situation is stabilizing, with manufacturing and steelmaking picking up in Asian nations like China.
Meanwhile, Teck executives said they are focused on containing costs. During Q3, site costs plus transportation costs tallied in at C$88/mt ($84.41/mt), compared with C$89/mt in Q2 and C$95/mt in Q3 2012.
"We continue to implement our cost-reduction program and to date our existing operations have identified over $330 million of annual ongoing potential cost savings at constant production levels and have implemented $300 million of these initiatives," Lindsay said.
Teck also is delaying development of certain projects, like the Quintette surface mine near Tumbler Ridge, British Columbia, and has deferred capital spending.
"At Quintette, we delayed the final stage of development for the mine and will not start the development until we see a sustained improvement in demand for steelmaking coal," Teck said in its earnings statement.
Teck will review whether the mine should be brought into production in the spring of 2014 and is continuing engineering work so production could potentially begin in mid-2015.
All told, Teck realized $1.1 billion in Q3 coal sales, flat with the year-ago quarter, and gross profit of $217 million, down from $421 million in the year-ago quarter.
