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Canada's Teck Q1 met coal sales to drag on dryer repair, Westshore port

Canadian miner Teck said Wednesday it expected to sell 6.3 million-6.5 millionmt of met coal in first quarter of 2018, after sales fell to 6.4 million mt inQ4 2017 on transport issues which are still ongoing.

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Sales volumes this quarter are being held back by a problem with a coal-dryingfacility used to process coking coal for shipment to customers, whileunderperformance at Westshore terminals in Roberts Bank has continued intoJanuary from Q4, Teck said in a statement. Teck sold 5.9 million mt of metcoal in Q1 2017.

Teck said Q4 met coal sales were 8% lower than a year ago at average prices of$170/mt FOB British Columbia.

Volume was cut by two Canadian Pacific Railway mainline derailments inNovember, and underperformance at Westshore Terminals. Teck is investing inupgrade facilities at Neptune Terminal in Vancouver in 2018, with an equityinjection of C$85 million ($68 million).

"The investment in the port will further improve the global competitivenessand responsiveness of our steelmaking coal portfolio over the longer term,Teck said.

Coking coal prices remain supported on robust demand and problems withsupplies, Teck said.

"With steel pricing and world economies remaining strong, indications are thatdemand for steelmaking coal will continue to grow while supply issues, mainlyin Australia, are also expected to continue to support prices," Teck said.

"Depletion and closure of some Eastern European domestic mines also createdadditional demand for seaborne steelmaking coal from European steel mills."

Teck said spot index-linked quarterly-priced sales represent about 40% of itscoking coal sales, with the balance reflecting market conditions atconclusion, and PCI and semi-soft negotiated on a quarterly benchmark basis.

Teck said it received permits to start mining in new areas at the FordingRiver, Elkview, and Greenhills coking coal mines, extending mine life andoutput to compensate for the closure of Coal Mountain.

"We are investing in the processing plants and have transferred mining assetsfrom Coal Mountain in order to develop the new mining areas at each of thesites," Teck said.

"The strip ratios in these new areas will be higher in the near term, and wehave invested in some additional mining capacity to balance coal productiontargets."

--Hector Forster, hector.forster@spglobal.com

--Edited by Maurice Geller, maurice.geller@spglobal.com