Canadian mining firm Teck Resources has announced its financial and production results for the first quarter of 2022.
Notwithstanding a decline in production and sales volumes, in the first quarter of the current year the company achieved an increase in gross profit from its steelmaking coking coal business unit to a record $1.78 billion, compared to a gross profit of $196 million in the same period last year. That was driven by record high steelmaking coal prices, but was partly offset by higher unit operating costs and logistics issues which curtailed sales volumes in the quarter.
Specifically, in the January-March period, the company produced 5.6 million mt of coking coal, down 300,000 mt year on year. The decline was attributed chiefly to processing challenges and curtailments early in the quarter, associated with high mine inventories from weather disruptions in late 2021. Nevertheless, the lower first quarter production is not expected to impact annual sales volumes as by the middle of the year the company is targeting to reduce high clean coal inventories, and is expecting higher production rates in the second half of the year. "We continue to evaluate and implement opportunities and mitigations to increase production and offset the effects of Covid-19-related absenteeism and a tighter labour market," the company stated in its official announcement.
Meanwhile, the company's sales volumes of coking coal amounted to six million mt in the given period, down 200,000 mt year on year due to the CP Rail work stoppage in late March, which resulted in a temporary logistics chain disorder. In the second quarter of 2022, the company is expected to increase its sales of coking coal to 6.7 million mt.
On balance, Teck Resources has managed to achieve its record financial results in the coking coal segment in the first quarter mainly amid high buying activity, supported by strong global steel production and low coal inventories. Besides, panic demand seen in the world following the beginning of Russia’s war in Ukraine and the consequent imposition of sanctions against Russia has added support for prices.