Teck Resources Ltd. says it will cut 500 full-time equivalent jobs as it focuses on trimming $500 million from planned spending through to the end of 2020.
The Vancouver-based miner said Thursday it wants to improve efficiency and productivity after reporting its third-quarter profit attributable to shareholders fell to $369 million, down from earnings of $1.28 billion in the same quarter last year.
“While our financial position remains strong, we have implemented a company-wide cost reduction program with reduced spending,” said Teck CEO Don Lindsay on a conference call.
The company said in a regulatory filing earlier this year it had about 10,000 full-time “regular” employees as of the end of 2018, with about 4,400 in coal operations, 2,500 in copper and 2,200 in its zinc mining sector.
The job cuts will be made through attrition, the expiry of temporary contract positions and current job vacancies, chief financial officer Ron Millos said on the call.
He said the spending reduction target for the balance of 2019 is $170 million, with $120 million in capital reductions and deferrals.
For 2020, the company plans to trim a further $330 million in spending, including $130 million from its capital plans.
“Over the past few years, we have been focused on maximizing production to capture margins during periods of higher commodity prices,” Lindsay said on the call.
“However, current global economic uncertainties are having a significant negative effect on the prices of our products, particularly steelmaking coal.”
Lindsay said Teck’s operations in Chile have not been affected so far by protests sparked by public transportation price hikes which have resulted in several deaths.
He said about 5,000 people are working on construction of its Quebrada Blanca Phase 2 mining project there and funding will continue because it is a key component of future growth.
The company’s Neptune Bulk Terminals expansion in Vancouver is also a “priority project” that will continue to attract funding, he added.
In a report, analyst Walter Spracklin of RC Dominion Securities said Neptune is an “ill-advised project, with questionable returns,” pointing out its price tag has increased to more than $750 million from the original cost of $470 million and questioning whether the company can complete it as envisioned.
Teck shares fell by as much as six per cent to $20.70 on the Toronto Stock Exchange.
It reported its revenue was nearly $3.04 billion for the three months ended Sept. 30, down from nearly $3.21 billion in the year-earlier period.
On an adjusted basis, the company says it earned a profit attributable to shareholders of $403 million or 72 cents per share compared with an adjusted profit of $466 million or 81 cents per share a year ago.
Analysts on average had expected a profit of 66 cents per share for the quarter, according to financial markets data firm Refinitiv.