Higher copper and zinc prices may have saved Canadian miner Teck Resources Ltd. this quarter, even though its flagship copper mine in Chile is still struggling.
The Vancouver-based company posted its Q3 profits on Wednesday.
The price jump in copper and zinc in the third quarter added more than $100 million to Teck’s bottom line compared with the prior period according to Craig Hutchison, base-metals analyst at TD Securities.
“We’re quite positive on the macro for copper,” said Hutchison in an interview with BNN Bloomberg. Copper is trading at nearly US$5 per pound while zinc is trading around US$1.50 per pound.
Company earnings show profits attributable to shareholders amounted to $281 million or 57 cents per diluted share, compared to last year’s loss of $748 million or $1.48 per diluted share in the same time last year.
The company’s Quebrada Blanca (QB) mine in Chile, which is one of its largest copper assets, has struggled to ramp up after an expansion project kicked off in 2023.
While it aimed to double copper production, it was forced to restrict production after slow water drainage, from the mining waste, limited the facility’s storage capacity.
Hutchison explained that crews have been working on site to address the issue by raising the height of the tailings dam and bringing in extra rock to stabilize it. He said that process is driving up costs and delaying the production further.
“They took a pretty substantial cut to their production guidance at QB about two weeks back,” said Hutchison.
“They’ve cut it to the point that we have more comfort in the guidance they’re providing next year.”
Teck Resources is still a buy, analyst
Hutchison still rates Teck as a buy, saying that once the Chile mine is running smoothly, the company will be in a strong position to benefit from rising copper prices.
“We’re constructive on copper,” said Hutchinson.
“We just need to get through some of these issues around QB, and think they’ll set the stage for a much better company going forward.”
Teck even sold its coal business in 2023 to focus more on copper, which is in high demand for electric vehicles and clean energy projects.
Hutchison pointed out that five to six per cent of global copper supply has been disrupted this year, affecting key mines like Grassberg, MOCA, Kula, and QB.
“QB, which is one of Teck’s assets, has had a disappointing ramp up this year, and it’s going to continue to be slower than expected next year,” said Hutchison.
“So this creates a very tight supply dynamic for the macro environment for copper.”
The company also plans to merge with Anglo American later this year, though that deal still needs shareholder approval and could face competition from other mining giants.
