Teck said its profits and cash flows continue to be negatively affected by lower steelmaking coal prices. Coal prices in U.S. dollar terms were similar to the second quarter of this year, but US$29 per metric ton lower than the same period a year ago. While demand from its customers remains robust, Teck said increased production from Australia, coupled with lower imports into China, has put pressure on prices in 2014.

Teck said coal prices for the fourth quarter of 2014 have been agreed with the majority of its customers based on US$119 per metric ton for the highest quality products.

The company expects its 2014 annual cost of product sold, before transportation and depreciation charges, to be in the range of C$52 to C$55 per metric ton (US$46 to US$49) based on current exchange rates and production plans and our 2014 annual transportation costs are expected to be in the range of C$37 to C$39 per metric.

Teck anticipates its 2014 coal production to be in the range of 26.5 million to 27 million metric tons.

The profitability of Teck’s copper business unit decreased by C$26 million during the third quarter compared to the same period of 2013. The company attributes this drop primarily to reduced volumes from the Antamina Mine in Peru.

LME copper prices averaged US$3.17 per pound in the third quarter of 2014, up 3 percent compared with US$3.08 per pound in the second quarter of this year, but down 1 percent compared with US$3.21 in the same period a year ago.

Teck says consumption in China continues to grow based on infrastructure investment and state power grid spending plans. In the U.S., consumption continues to grow based on increased automotive production with spot metal premiums remaining above annual contract levels.

The lower copper results were more than offset by favorable results from Teck’s zinc business unit, which benefited from a 25 percent increase in zinc prices compared with a year ago, reflecting improved zinc market fundamentals.

Zinc production at Red Dog during the third quarter increased 4 percent due to an increase in tonnage milled in the quarter, while lead production rose by 24 percent primarily due to significantly higher ore grades. Operating costs in the third quarter remained similar to a year ago while royalty costs increased significantly due to higher revenues linked to rising zinc prices.

The 2014 Red Dog shipping season was completed on Oct. 20, following the shipment of 1.025 million metric tons of zinc concentrate and 205,000 metric tons of lead concentrate compared with 1.017 million metric tons and 183,000 metric tons respectively, for the 2013 season. This represents all of Red Dog’s concentrates available to be shipped from the operation. Sales volumes of contained zinc are estimated at about 183,000 metric tons in the fourth quarter of 2014.

The U.S dollar continued to strengthen against the Canadian dollar in the third quarter, which had a favorable effect on Teck’s results. Sales of the company’s products are denominated in U.S dollars, while the majority of our operating and capital costs are incurred in Canadian dollars. The stronger U.S. dollar will, to a lesser extent, put upward pressure on a portion of our operating costs and capital spending.

Teck says its primary development focus is on the oil sands business with the development of the Fort Hills oil sands project. The construction phase of Fort Hills will require a substantial investment of capital through 2017, but is expected to provide significant cash flows, diversify the company’s commodity mix and provide a long-life asset located in a stable jurisdiction.

Teck also is in the process of restarting our Pend Oreille zinc mine in December 2014 to benefit from improving zinc market fundamentals and the synergy it provides to our Trail Operation. In addition, Teck is continuing to plan, design, and permit the Quebrada Blanca Phase 2 copper project with a disciplined approach to creating shareholder value