Coal and copper stoke Teck profits

Vancouver — Stronger prices for coal, copper and zinc helped generate record net earnings of $510 million for Teck Cominco (TEK.SV.B-T, TCKBF-O) in the fourth quarter of 2005.

The diversified metal and commodity producer reported net earnings of $1.3 billion for 2005, more than double the $617 million earned in 2004.

The company ended the year with its strongest-ever balance sheet, with $3.1 billion in cash, which exceeds debt by $1.4 billion.

The company’s fourth-quarter operating profit was a record $700 million, up from $392 million a year earlier. About half the increase was attributed to the Red Dog mine in Alaska, where robust zinc prices contributed to a $61-million increase in operating profits.

Coal was a star performer as well, with the average sale price rising to US$122 per tonne in the fourth quarter from US$57 per tonne in the last three months of 2004. This boosted the company’s share of operating profit from coal to $159 million, compared with $32 million in the comparable quarter a year earlier.

Operating profits at copper mines increased by $79 million, reflecting both higher sales volumes and prices. Molybdenum sales slid 55% from the fourth quarter of 2004, while revenue fell to $34 million from $110 million a year earlier. A US$8 drop in moly prices to US$20 per lb. was one factor, but another was reduced moly grades (and production) from the Valley pit at the Highland Valley copper mine in British Columbia.

The company’s share of gold production was 50% of the 101,000 oz. produced at the Hemlo gold mines in Ontario, down from 133,000 a year ago. Gold production is projected to increase to 440,000 oz. this year from 245,000 oz. in 2005, as the new US$347-million Pogo gold mine in eastern Alaska begins production. The mill and underground mine complex was substantially complete by year-end, and is on target to achieve commercial production in the second quarter.

Teck Cominco is also venturing into the oil-sands business. Last fall the company secured a 15% partnership in the Fort Hills project in Alberta. Engineering and design work are under way and a preliminary cost estimate of the project should be in hand by the end of 2006.