Teck has cut its sales forecasts for steel-making coal for the quarter, following delays in transporting coal from mine to port due to washouts in the B.C. interior.
According to the company, rail service between export terminals in Vancouver and its mines in the Elk Valley remain disrupted three weeks after the first ‘atmospheric river’ flooded parts of the province and caused mudslides that cut vital infrastructure links.
Both CN Rail and CP Rail lines were affected by the three storms that came through the province between November 14 and December 3.
While coal production wasn’t impacted, the transport disruption has made the company cut its fourth quarter sales forecast to 5.2-5.7 million tonnes, down from a previously forecast 6.4-6.8 million tonnes- a cut of around a million tonnes.
“We have diverted shipments to Ridley Terminals in Prince Rupert to maximize sales during the quarter, which will affect our transportation costs for the quarter,” said a Teck release.
Typically, Teck transports coal to Vancouver via CP Rail infrastructure as the lines through the Elk Valley are owned by the Calgary-based company. The lines to Prince Rupert are owned by CN Rail. In addition to diverting shipments to Prince Rupert, Teck has been sending empty trains through the BNSF network in the USA to go around the disruptions in BC.
Nevertheless, Teck reported that both companies have seen ‘positive progress’ in restoring service to the Lower Mainland, with a ramp-up in the number of trains headed to Vancouver underway.
“We expect that when rail service is fully restored we will be able to substantially recover delayed fourth quarter sales in the first half of 2022.”
According to the company, the disruptions to rail links hadn’t seen any major buildup of a backlog of coal at the mines as almost all of what was mined prior to the storms had been shipped out.
“To date, we have not idled any processing facilities and continue to stockpile clean coal at sites and manage available railing capacity to minimize production impacts.
“As a result, we expect annual steel-making coal production of 24.5 – 25.0 million tonnes, compared to our previous guidance following the wildfires in the third quarter of nearly 25 million tonnes.”
Teck said that increased costs in transportation were ‘more than offset’ by strong coal prices through the second half of 2021, with coal averaging US$371 per tonne for the three months ending Nov. 30.
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