VANCOUVER — Teck Resources Ltd. says it is less exposed to uncertainties on Chinese coal imports after shifting more sales to India.
Last year was the first time that India surpassed China as a market for the company's steelmaking coal, Real Foley, vice-president of coal marketing at Teck, told a conference call with financial analysts Tuesday.
The reduced reliance means the company is less exposed to potential disruptions to imports, as has been reported to be happening with Australian shipments to China.
"If you go back to the peak in 2013 we were selling close to eight million tonnes of our production into China," Foley told the conference call to discuss Teck's latest quarterly results.
"Last year we sold less than three million tonnes, and actually, India became a bigger market for Teck, with our sales exceeding four million tonnes."
Foley said the company doesn't know of any official policy, but is aware of reports that coal shipments from Australia have seen longer delays at ports and the issue has spread across the coast of China.
It's unclear what the cause is of the increased scrutiny and import delays, which contributed to a 25 per cent reduction in coal imports from Australia in February, but some have speculated on political motives as tensions increase between the two countries.
Canadian exporters have also faced increased scrutiny from China, which has suspended the licences of at least two major Canadian canola seed exporters to the country. China has maintained that quality control issues are the reason for the suspensions, but Canadian industry groups have pointed to political motivations.
On the steelmaking coal front, Foley said there have been fluctuations in Chinese imports but that ultimately the country needs the product.
"The bottom line is China actually needs some higher-grade hard coking coal from the seaborne market."
China's stimulus efforts will help to boost demand for steel-grade coal as part of continued global growth, Teck chief executive Don Lindsay said on the call.
"The effect of boosting monetary policy and stimulus is only getting traction now, so we see a very good outlook for the next six to 12 months from that part of the market. India remains very strong, the numbers last year were quite extraordinary."
The optimistic outlook had Teck maintain its full-year guidance of producing between 26 and 26.5 million tonnes of coal in its latest earnings results.
The Vancouver-based miner said it earned $630 million or $1.10 per diluted share for the quarter ended March 31, compared with a profit of $759 million or $1.30 per diluted share a year ago.
Revenue in the quarter totalled nearly $3.11 billion, up from $3.09 billion.
On an adjusted basis, Teck earned $568 million or 99 cents per diluted share, down from an adjusted profit of $753 million or $1.29 per diluted share in the same quarter last year.
Analysts on average had expected a profit of 95 cents per share, according to Thomson Reuters Eikon.
RBC analyst Sam Crittenden said in a note that the results fell below his expectation of $1.01 per share but it was still a respectable quarter.
"Teck had a solid Q1 despite some challenging weather conditions, which were offset by rising commodity prices."
— By Ian Bickis in Toronto.
Companies in this story: (TSX:TECK.B)