The largest diversified miner in Canada, Teck Resources, announced that it plans on slashing 600 jobs, delay the restart of its B.C Quintette coal mine and also cut spending by 5% as part of its strategy to reduce costs and adapt to a lower metal price environment.
According to the news release by Teck Resources, the company posted a $105 million adjusted profit, which is less than half the profit it made last year ($328 million). The low profit is due to the low metal prices.
“We are pleased with our operating performance in the first quarter, with higher production volumes for our major products,” said Don Lindsay, President and CEO.
“However, prices for these commodities were weak, particularly coal, compared to the first quarter of 2013 resulting in lower profits and cash flows than last year. As a result, we are increasing our efforts to reduce our costs and capital spending.”
The company also reported a decline in revenue, which dropped to $2.084 billion from $2.33 billion.
Due to weak commodity prices, Teck’s three main business units- coal, copper and zinc- took a hard hit. According to the company, its coal business was mostly affected due to increased supply from Australia.
As a result, the miner announced it will suspend all equipment purchases and reduce spending on development projects until the market conditions pick up a bit.
One of the measures includes a 5% reduction of its global workforce, namely through attrition, hiring freezes and reductions in contractors and employees.
“Our cost reduction program has exceeded our initial goals, with $345 million of annualized reductions realized to date. We are targeting a further $200 million of annualized cost reductions and $150 million of capital expenditure reductions,” it says in the company’s report.
On a brighter note, Teck Resources announced that it plans to restart the Pend Oreille zinc mine in Washington State, which is expected to produce 44,000 tonnes of zinc in concentrate per year for at least five years.
To read the full report, go to Q1 2014 Report