Vancouver mining company, Teck Resources, is increasing the pressure on the Trudeau government to approve its Frontier mine proposal for the Athabasca Tar Sands.
Teck claims it will face a $1.13 billion write down if the feds don't play ball on the Frontier mine.
This comes at the same time as Teck announced a $910 million write down on its 21 per cent stake in the Fort Hills bitumen mine. The company blames the Fort Hills mark down on "lower market expectations for future oil prices."
Okay, let's get this straight. Teck is declaring a $910 million write off on an existing Tar Sands mine because of lousy oil prices. But it's going to declare an even bigger loss if the feds don't approve the Frontier mine that even Teck execs admit might not get off the ground anyway. From BNN Bloomberg:
“I don’t think [Teck will] build it,” said Brian Madden, senior vice president and portfolio manager at Goodreid Investment Counsel, on BNN Bloomberg Friday. “It’s not economic and I don’t think shareholders or the market will sanction them to splash out $10 billion, or whatever it’s going to cost to build this mine in the current oil price environment.”
The impairment tied to Fort Hills dragged Teck into the red for the quarter ending Dec. 31, with a loss of $891 million, compared to a profit of $433 million a year earlier. On an adjusted basis, Teck earned $0.22 per share, down from $0.86 in the fourth quarter of 2018. Analysts, on average, were expecting profit per share of $0.39.
“Ongoing global economic uncertainty negatively impacted commodity prices in the fourth quarter and that has continued into 2020, exacerbated by the effect on markets from the coronavirus and the impact of severe weather conditions in British Columbia, followed by blockades on rail lines,” said Teck CEO Don Lindsay in a release.Sorry but this doesn't add up. Teck which has a total market cap of $10 billion writes off nearly a billion of that value on a Tar Sands mine due to chronically low (inadequate) world oil prices but will take a further $1.13 billion hit if Trudeau doesn't approve a mine that's not economically viable for a company that's getting cold feet about the project anyway.
I think somebody's trying to blow smoke up Justin's backside. I'm just not buying it. What do you think?
photo: the Suncor/Total/Teck Fort Hills mine.