Teck Resources Ltd. (TSX: TCK.A and TCK.B, NYSE: TCK) said Nov. 17 that in the face of slumping demand for the mined commodities its produces, it will be making big cutbacks across its operations, including at its western Canadian met coal mining operations.
In response to persistent low commodity prices, Teck said it is implementing additional measures to reduce costs and conserve capital:
- Reduction in total spending of C$650 million in 2016, to be achieved through C$350 million of capital spending reductions and deferrals and C$300 million of operating cost savings identified as part of the 2016 operating budget.
- Elimination of an additional 1,000 positions across Teck’s global offices and operations, through a combination of layoffs and attrition. This will include a reduction in senior management positions and brings total labor force reductions over the past 18 months to approximately 2,000 positions.
- Withdrawal of the Coal Mountain Phase 2 (CMO Phase 2) project from the British Columbia Environmental Assessment process and suspension of further work on the project.
These capital reductions and deferrals are in comparison to preliminary 2016 capital spending plans. The 2016 capital budget is still under review and Teck will announce forecast 2016 capital spending in February 2016.
“We are implementing these additional measures to conserve capital, lower our operating costs and maintain financial flexibility in light of very difficult market conditions,” said Don Lindsay, President and CEO. “These steps build on our ongoing cost reduction program and I want to thank all employees for their efforts to improve efficiency and productivity, while remaining keenly focused on safety and sustainability.”
The suspension of CMO Phase 2 means that mining will conclude at the existing Coal Mountain Operations in the fourth quarter of 2017. Teck will identify options between now and the end of 2017 to potentially replace the 2.25 million tonnes of annual coal production that were planned from CMO Phase 2 by optimizing production from its five other steelmaking coal mines.
Teck is a diversified resource company committed to responsible mining and mineral development with major business units focused on copper, steelmaking coal, zinc and energy. It is headquartered in Vancouver, Canada.