Wildfires erupt in Canada crude patch in threat to oil sands
One 7-acre fire is within about 6 miles of MEG Energy Corp.’s Christina Lake site, which produced almost 100,000 barrels a day in May.
Canadian miner Teck Resources Ltd said on Friday it would write down the value of its proposed Frontier oil sands mine by C$1.13 billion ($852.12 million) should Prime Minister Justin Trudeau’s government reject the project.
The fate of the C$20.6 billion mine is expected to be decided by next week in what has become a test of the government’s commitment to reduce Canada’s greenhouse gas emissions and repair relations with the country’s indigenous people.
A protracted tariff war between the United States and China and concerns of slower global growth have weakened prices of copper and other base metals
At full capacity, the mine would be one of the largest in Alberta’s oil sands, producing 260,000 barrels of crude oil per day.
Teck said that a negative decision would result in an impairment in the quarter in which the decision is received.
The miner said it has taken steps to improve the economics of the project but did not provide details.
The warning came as Teck reported a 76% fall in fourth-quarter adjusted profit, hurt by lower prices for steelmaking coal, its biggest business, and warned the coronavirus outbreak would damage future earnings.
The stock was down about 9% in early trading.
A protracted tariff war between the United States and China and concerns of slower global growth have weakened prices of copper and other base metals.
The integrated miner, which mines copper and zinc as well as coking coal, used to make steel, warned the outbreak will have a material effect on the demand and price of its commodities as well as on its suppliers.
Teck said it reduced production and shut down its Neptune Bulk Terminals in British Columbia mainly because the virus had weakened demand in the short term. Weather is also a factor.
The company said production at its steelmaking coal operations fell 8.2% to 6.7 million tonnes. The average realised price for the commodity fell by 31%.
It reduced its steelmaking coal sales outlook to between 4.8 million tonnes and 5.2 million tonnes, down from its previous estimate of between 5.1 million tonnes and 5.4 million tonnes for the first quarter of 2020, citing weather-related rail and terminal disruptions in British Columbia.
The company also said it expects steelmaking coal production for the full-year 2020 to be between 23.0 million tonnes and 25.0 million tonnes.
For an earnings snap-shot:
The company said it took non-cash, impairment charges totalling C$999 million in the quarter, which included C$910 million related to its Fort Hills oil sands mining.
($1 = 1.3249 Canadian dollars)
(By Mekhla Raina, Jeff Lewis and Arundhati Sarkar; Editing by Arun Koyyur, Amy Caren Daniel, Barbara Lewis and Nick Macfie)
Comments