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Canada's Teck posts surge in profit on higher steelmaking coal prices

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Visitors pass a sign of sponsor Teck Resources at the PDAC annual conference in Toronto
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(Reuters) -Canadian miner Teck Resources Ltd reported an eight-fold jump in third-quarter adjusted profit on Wednesday, driven by higher prices for steelmaking coal on the back of surging demand from China.

Limited supply of coal and higher demand from economies recovering from the COVID-19 pandemic have boosted prices for coal used in making steel.

Coal prices in China have also increased steadily since the middle of the 2020 fourth quarter, when China imposed import restrictions on Australian coal.

Teck said its prices for steelmaking coal more than doubled to $237 per tonne, while production rose 17.6% to 6 million tonnes.

It now expects fourth-quarter sales of steelmaking coal of between 6.4 million and 6.8 million tonnes, while record prices in Australia and China in September are expected to bolster the steelmaking division's earnings in the same period.

Copper prices also rose 43%, while production was up 4.4%.

Teck said it was expecting the initial production from its Quebrada Blanca Phase 2 project, considered one of the world's largest undeveloped copper resources, in the second half of 2022. Construction was temporality halted at the project last year due to the pandemic.

The company stuck to its previously issued forecast for 2021 but warned of cost pressures in 2021 and into 2022, due to inflation from diesel prices, supplies and labor costs.

Adjusted profit rose to C$1.02 billion, or C$1.88 per share, in the quarter from C$130 million, or 24 Canadian cents per share, in the previous quarter.

That compared to analysts' average estimates of C$1.50 per shares, according to Refinitiv IBES.

(Reporting by Sahil Shaw and Arathy S Nair in Bengaluru; Editing by Anil D'Silva)

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