The Globe and Mail published an article on Teck Resources Ltd. (TSX:TCK.A,NYSE:TCK), commenting that the company expects to make a decision on whether to restart its British Columbia-based Quintette coal project in April or May 2014. Poor market conditions prompted Teck to delay capital spending on the project earlier this year.
As quoted in the market news:
Gordon Gormley believes the Quintette coal play has the potential to transform from a money pit into a valuable asset for Teck. Mr. Gormley formerly worked as an open-pit mining manager for Denison Mines Ltd., which oversaw Quintette’s launch in the 1982. He has kept meticulous geological records of the mining property. He sees a motherlode of untapped metallurgical coal, with rich seams of high-grade product that would be attractive to steel makers in China.
‘The key is whether Teck is willing to take a chance,’ said Mr. Gormley, 65, who now works as an independent geological consultant. ‘Teck has lots of data already on the high quality of the coal. They shouldn’t rule out having an underground operation, but that’s not for me to tell them what to do.’
The trouble is that the short-term prospects for the coal market will be challenging. Meredith Bandy, an analyst at BMO Nesbitt Burns Inc., is forecasting benchmark metallurgical coal prices will average $155 (U.S.) a tonne next year, down slightly from this year and off sharply from an average of $300 a tonne in 2011.
Given that Teck is looking for a recovery in coal prices before reopening Quintette, Ms. Bandy said Teck could delay its decision yet again so that production would resume in 2016 instead of 2015.