Fourth-quarter adjusted profits were down 73% compared to Q4 2011, to $354 million.
The Vancouver-based miner said the drop was largely attributable to drastically reduced profitability in its coal business, which marked a 69% lower gross annual profit compared to 2011.
Teck’s gross coal profits and revenues for 2012 were $240 million and $1 billion, respectively, due to weaker prices.
The company realized an average price of $193 per tonne in 2012 versus $257/t the previous year.
The drop-off in Teck’s coal performance came despite increased production, sales and efforts to reduce operating costs.
Coal production ticked up about 2 million tonnes to 24.7Mt during 2012 while sales volume improved 8% against 2011 to $24Mt.
Streamlining strategies clipped 17% off unit operating costs over the year. By the fourth quarter Teck was spending only $64 per tonne of coal sold on operating costs before transportation and depreciation charges.
The company’s coal production capacity increased over the year as well with additions to its mining fleet and the 6.5Mt per annum capacity Elkview plant expansion in British Columbia.
Teck’s current coal production capacity is 27Mt and is expected to grow to 28Mt in 2013.
Production in early 2013 is not expected to be materially impacted by the temporary shutdown of a berth at Vancouver’s Westshore Terminals.
Teck has so far contracted sales for 6Mt of coal for delivery this year at an average price of $159/t. The cost of product sold this year is projected to be between $71 and 77/t.
The miner highlighted progress at its 46%-owned Neptune Bulk Terminals facility which is expanding its annual coal throughput capacity from 9Mt to 12.5Mt this year. The Quintette mine in British Columbia is expected to be permitted for reopening and producing 3Mtpa of coal by Q4 2014.
Teck’s work over 2012 to manage its increasing selenium levels at its coal mines in British Columbia’s Elk Valley have led to a plan to spend %600 million on water treatments over the next five years.
The company said it expected to file a draft valley-wide selenium management plan in the first quarter of the year.
