Miners pull back on project amid weak commodity prices Vanessa Lu (Toronto Star – July 25, 2013)

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With prices still weak, Canadian miners like Teck and Goldcorp are looking for ways to tighten the purse strings, or delaying projects altogether.

With commodity prices still weak, major Canadian mining companies are looking for ways to tighten their purse strings, and in some cases are delaying costly projects.

Teck Resources has pushed back production plans at a coal mine in British Columbia until demand for metallurgical coal recovers. It also announced a copper mine in Chile has been slowed by environmental permits so construction won’t begin until 2016 at the earliest.

“Teck is adapting to current market conditions,” president and chief executive Donald Lindsay told analysts during a conference call Thursday. “We are prudently deferring projects and capital expenditures.”

Patricia Mohr, vice-president and commodity market specialist at Scotiabank, said long-planned copper production is starting to come on stream, after years of no growth, so the move is affecting prices.

“You’re beginning to see a much more disciplined approach to capital spending, with some mining companies beginning to defer some new mine projects,” Mohr said.

Also Thursday, Goldcorp Inc., a Vancouver-based mining company, took a whopping $1.96 billion (U.S.) write-down of its assets as it reported second-quarter earnings.

It joins other gold mining companies that have announced at least $13 billion of write-downs in the past two months, as gold prices had their biggest quarterly slide in more than nine decades. Miners are trying to pare down costs and defer mine development as gold prices fall.

Mohr noted gold prices had soared in recent years because of various central bank policies like quantitative easing in the U.S., where the government buys $85 billion (U.S.) each month in long-term bonds and mortgage-backed securities as a way to kick-start the economy.

“In recent weeks, gold has picked up again,” Mohr said, noting U.S. Federal Reserve chairman Ben Bernanke has tried to calm markets about when it will reduce those purchases.

“It could very well move down again, when the Fed does start to taper its bond asset program. I wouldn’t be surprised to see gold move down again,” she said.

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