Teck may delay projects if markets weaken
From Metal Bulletin, June 4:
Teck Resources is willing to delay its growth projects if markets weaken, analysts at Morgan Stanley said in a note on May 31.
“Meetings with management suggest Teck is positive on long-term demand but open to delaying growth projects if markets weaken,” the analysts said.
Morgan Stanley estimates Teck’s break-even point for cash flow is $3.40 per lb for copper and $210 per ton for metallurgical coal in 2012.
Teck thinks that all of its projects except its Fort Hills oil sands project in Alberta could be delayed if market conditions warrant, Morgan Stanley said.
With capital expenditure pressure rising, progress on projects such as the Quebrada Blanca Phase 2 (QB2) and Relincho in Chile depends on demand, according to the research note.
The QB2 project is expected to increase Quebrada Blanca Mine’s annual production capacity to approximately 200,000 tonnes of copper in concentrate and 5,100 tonnes of molybdenum in concentrate, while the Relincho project has indicated resources of 3.2 million tonnes of contained copper, according to the company’s website.
Teck’s leverage to copper is higher than many of its diversified peers, according to Morgan Stanley.
The company plans to increase its annual copper production from about 320,000 tonnes in 2011 to about 360,000 tonnes this year and reach 800,000 tonnes over the long term.