Tag Archives | Teck

Teck Digs in to Prosper – by Marilyn Scales

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 It has slowed the development of the Fort Hills oil sands project and withdrawn from the Petaquilla copper project.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.

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Debt Reduction Begins at Teck – by Marilyn Scales

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 of Vancouver has announced the first steps of its debt reduction plans by suspending the 2009 dividend on its Class A common shares and Class B subordinate voting shares. The move is expected to result in annual savings of $486 million.

“Current global economic and financial market conditions dictate that we take all prudent steps available to us to significantly reduce spending,” said Don Lindsay, president and CEO. “The measures announced today, combined with previously announced tax savings, amount to $2.4 billion and should significantly enhance our ability to address our near-term debt obligations and better position Teck to refinance the bridge loan when conditions improve.”

The large number of cuts Teck is making is a measure of just how deep current global economic woes are. But management has a plan to conserve cash and prepare for better conditions in the future. From its news release dated Nov. 20, 2008, here are the details of its plan.

Sustaining Capital: Company-wide spending will be reduced to approximately $250 million for 2009, down from a forecast of $580 million for 2008. Teck’s operations have been well capitalized in recent years, creating an opportunity to defer sustaining capital costs while ensuring operations are maintained to a high standard.

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