Teck Resources (TSX:TCK.B)(NYSE:TCK) reported Tuesday better-than- expected first quarter results, as Canada's largest diversified miner cut costs to offset the impact of weak steelmaking coal, copper and zinc prices.
The Vancouver-based company, the No.1 producer of steel-making coal in North America, said overall profit increased 38% to Cdn$94 million (about $74 million), or 16 cents a share, in the first three months of the year. This compares to Cdn$68 million a year earlier.
Teck's series of drastic cost-cutting measures are paying off.Lower prices for Teck's key commodities were partly offset by a stronger U.S. dollar, the company said. This, as the miner sells its output in U.S. dollars, but most of its expenses are incurred in local currencies, particularly the Canadian dollar.
"Our operations performed well by reducing our costs while maintaining production volumes," Chief Executive Officer Don Lindsay said in the statement. "Notwithstanding that the commodity cycle continues to be challenging, we are encouraged by the change in direction in steelmaking coal and zinc prices."
Coal
When it comes to coal, Teck said it has reached agreements with most of its customers for the second quarter, based on a quarterly benchmark of $84 per ton of the steelmaking variety.
The company, which expects sales to be at least 6.5 million tons, noted it received, in average, $75 per ton in the firs quarter, down from $106 a year earlier.
As most miners, Teck has implemented a series of drastic cost-cutting measures in the past year, including cutting over 1,000 jobs and reducing its semi-annual dividend rate to 5 cents a share in December.
Also last year, Teck decided to partner with Vancouver-based Goldcorp (TSX:G), (NYSE:GG) and combine their Relincho and El Morro copper-and-gold projects in Chile. And in October it agreed to sell future silver production on its Antamina mine in Peru to Franco-Nevada (NYSE:FNV).