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Teck suspending Coal Mountain Phase Two
In a bid to conserve capital, Teck Resources Limited (Teck) announced today cost cutting measures that will see layoffs and the suspension of the Coal Mountain Phase 2 (CMO Phase 2) project, which will result in the closure of the existing mine by the end of 2017.
Teck announced that it will pay an eligible dividend of $0.05 per share on its outstanding Class A common shares and Class B subordinate voting shares on December 30, to shareholders of record at the close of business on December 14.
In response to persistent low commodity prices, Teck is implementing additional measures to reduce costs and conserve capital, including a reduction in total spending of $650 million in 2016, to be achieved through $350 million of capital spending reductions and deferrals and $300 million of operating cost savings identified as part of the 2016 operating budget.
The company is withdrawing CMO Phase 2 from the Environmental Assessment process and is suspending further work on the project.
Additionally, Teck intends to eliminate an additional 1,000 positions across it’s global offices and operations, through a combination of layoffs and attrition. This will include a reduction in senior management positions and brings total labour force reductions over the past 18 months to approximately 2,000 positions.
The capital reductions and deferrals are in comparison to preliminary 2016 capital spending plans. The 2016 capital budget is still under review and Teck will announce forecast 2016 capital spending in February 2016, the company stated in a press release.
“We are implementing these additional measures to conserve capital, lower our operating costs and maintain financial flexibility in light of very difficult market conditions,” said Don Lindsay, President and CEO. “These steps build on our ongoing cost reduction program and I want to thank all employees for their efforts to improve efficiency and productivity, while remaining keenly focused on safety and sustainability.”
The suspension of CMO Phase 2 means that mining will conclude at the existing Coal Mountain Operations in the fourth quarter of 2017. Teck will identify options between now and the end of 2017 to potentially replace the 2.25 million tonnes of annual coal production that were planned from CMO Phase 2 by optimizing production from its five other steelmaking coal mines.
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