Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.
Teck Cominco incurred huge loans ($10 billion) at the worst possible time (October 2008) for the acquisition of Fording Coal. Hit with the double whammy of plummeting commodity prices and a huge debt load, management in Vancouver is digging in to ensure that the company not only survives, but prospers.
Teck told investors at the recent BMO Capital Markets that it will cut sustaining capital needs by $330 million and capital projects by $400 million this year from 2008 levels. It has slowed the development of the Fort Hills oil sands project and withdrawn from the Petaquilla copper project. Zinc production at the Trail metallurgical complex has been reduced by 20%, and the Pend Oreille zinc mine has been temporarily closed.
Teck is selling its 50% share in the Williams and David Bell gold mines at Hemlo, Ont., to Barrick Gold, its joint venture partner. The deal is worth $US65 million.
The Williams underground and David Bell pit and underground mines were two of the three gold mines opened in the 1980s gold rush to northern Ontario. The David Bell mine is scheduled to close in early 2010, and the Williams mine is to close in 2011. Ore from both mines is treated at the Williams mill.
Teck has raised US$110 million from the sale its 60% interest in the Lobo-Marte gold project to Kinross Gold.
Teck will collect another US$35 million for the sale of its indirect interest in Sociedad Minera El Brocal to Compania de Minas Buenaventura.
Rumour has it that Teck may even sell some of the Elk Valley Coal mines and plants acquired with the Fording merger.
The alternative to unloading a few assets would be for Teck to float an equity offering in the midst of current market uncertainty. And the company denies that move is in the works.
Teck is making the right moves in difficult financial times, and the company is transparent about its plans. That kind of management has always made the company a favourite of mine.