CALGARY — Surging global commodity prices helped lift Teck Resources Ltd. to a record third quarter and the company said Wednesday it's on track to surpass those results in the fourth quarter of this year.
Commodity prices have skyrocketed this year due to increased economic activity as countries around the world roll out COVID-19 vaccination programs and lift public health restrictions.
"It was a record quarter, but it will likely be exceeded by Q4," said Teck chief executive Don Lindsay in a conference call with analysts. "If you look at the pricing we've experienced in October, it's higher than it was in September, right across the board."
Teck saw strong realized pricing for all of its principal products in the third quarter, particularly steelmaking coal, which rose to US$237 per tonne compared with US$102 in the same quarter last year. Thirty-two per cent of Teck's steelmaking coal sales went to China.
Teck's realized zinc price climbed to US$1.36 per pound, up from US$1.05, while its realized copper price rose to US$4.28 per pound.
"This is a very exciting time for our industry and for Teck in particular," Lindsay said. "There are opportunities ahead with global growth and the transition to a lower carbon economy will drive new copper metal demand. And in the near term, given the current commodity outlook, we have the ability to generate significant EBITDA and free cash flow."
Teck confirmed Wednesday that construction of its massive new QB2 copper mine in Chile is now two-thirds complete, with production expected to begin in the second half of 2022. The mine is expected to produce 300,000 tonnes of copper equivalent per year for the first five years of its life.
Copper is used extensively in renewable energy installations and electric vehicle systems.
However, Lindsay said while QB2 is expected to double Teck's consolidated copper production by 2023, construction costs for the new mine are now anticipated to be up to five per cent higher than the originally estimated US$5.26 billion. The company said this is because of challenges with "port offshore" and tailings facility construction.
Teck also said Wednesday it is facing input cost pressures due to the rising cost of diesel, supplies and labour, as well as ongoing supply chain issues.
"We don't know how it's going to evolve," Lindsay said. "Obviously, there's supply disruptions in the global economy all over the place. And so we want to make sure that we flagged that . . . We're going to hit with it, too."
The Vancouver-based miner reported a third-quarter profit Wednesday of $816 million, up from $61 million in the same quarter last year. Revenue totalled $3.97 billion, up from $2.29 billion.
On an adjusted basis, Teck said it earned $1.88 per diluted share in its most recent quarter, up from an adjusted profit of 24 cents per diluted share in the same quarter last year.
The average analyst estimate had been for an adjusted profit of $1.50 per share, according to financial market data firm Refinitiv.
This report by The Canadian Press was first published Oct. 27, 2021.
Companies in this story: (TSX:TECK.B)
Amanda Stephenson, The Canadian Press