Demand for Met Coal Slows, Teck Slashes Jobs

Teck plans to reduce coal production in 2009 to 20 million mt.
After acquiring all of the Fording assets last fall, which primarily consisted of its 60% interest in Teck Coal (formerly Elk Valley Coal Partnership) for $11.8 billion, Teck’s share of operating costs soared to $486 million compared with $30 million in 2007, despite the acquisition inventory adjustment. Coal sales for the fourth quarter of 4.7 million mt, however, were 22% lower than a year ago as customers significantly reduced their coal deliveries in late 2008 in response to lower steel production.

Coal production in the fourth quarter of 2008 decreased by 5% to 5.2 million mt compared with the same period last year. In addition, production at the Elkview and Cardinal River mines was disrupted by unexpected mechanical breakdowns, which were resolved before year end.

In January, the company announced it would reduce its global workforce by about 1,400 positions, or 13%. The workforce reductions, according to the company, will eliminate redundancies at the corporate level created by the Fording acquisition. The layoffs are expected to save the company approximately $85 million. Teck also said it plans to reduce coal production in 2009 to 20 million mt.

As featured in Womp 2009 Vol 02 -