Vancouver, British Colombia-based Teck Resources Limited provided an update on Q1 2020 operations, preventative measures taken with respect to COVID-19.
“Notwithstanding the challenges in the month of March related to COVID-19, all of our operations remain in production and our steelmaking coal results significantly exceeded guidance,” said Don Lindsay, President and CEO in a statement. “We remain focused on ensuring we have the necessary measures in place to safeguard the health and safety of our people and communities, while maintaining safe operations.”
The company said that first quarter steelmaking coal sales are estimated at 5.6 million tons, exceeding previous guidance of 4.8 to 5.2 million tons. At the same time, based on preliminary results the company expects to report adjusted site cost of sales of approximately $65 per ton, well below previous expectations.
Finished coal inventories at our mine sites were reduced during the quarter, supporting sales and increasing operational flexibility.
The company said that in spite of a “difficult start” to the year, its steelmaking coal logistics supply chain performed well for the remainder of the quarter, with both CP and CN recovering from early weather-related disruptions and blockades. All three ports also performed well, in particular Westshore Terminals, which had a strong March, the company said.
The company’s Neptune facility upgrade continues to advance and major equipment deliveries are on track, and it expects the new shiploader, stacker/reclaimer, and single dumper replacement to be commissioned around year-end. Completion of construction is still expected in Q1 2021, with the new double dumper expected to be commissioned in Q2 2021.
The shutdown at the company’s Elkview Operations to complete the plant expansion is also progressing well and it expects completion in mid-April. The Elkview plant is being expanded from a capacity of 7 million tons to 9 million tons, which will enable the company to replace higher cost production from its Cardinal River Mine, which produced 1.4 million tons in 2019, with lower cost production from Elkview when Cardinal River closes later this year.
The company said that ongoing impacts of the COVID-19 pandemic have the potential to affect both cost and schedule for these projects, and although impacts to date have not been material, it continues to monitor progress closely given the level of uncertainty.
As part of Teck’s focus on ensuring the health and safety of its employees and communities, the company has also implemented a temporary slowdown of operations and reduction of crews by up to 50 percent of regular levels at its steelmaking coal and Highland Valley Copper operations. These measures commenced on March 25 and will be in place for an initial two-week period, after which the company will re-evaluate in light of the evolving situation. All employees available for work will continue to be paid as normal during the initial two-week period, the company said.
While the reductions at Teck’s steelmaking coal operations will vary by mine, total production is expected to be reduced on average to approximately 80 percent to 85 percent of normal levels during the initial two-week period. During this period historically high mine site clean coal inventories are expected to be drawn down to support sales.