Teck Cominco tackles Alaska, B.C. challenges

Teck Cominco revised its sales advisory to customers and investors in September, saying ice and poor weather conditions delayed shipments from its Red Dog zinc, lead mine, which is located about 50 miles above the Arctic Circle.

The shipping delays adversely affected the company's third-quarter results, cutting anticipated sales nearly 30 percent, or by 50,000 tonnes, Teck Cominco said Sept. 26. The company said its sales of zinc in concentrate from Red Dog, the world's largest zinc mine, would drop to 125,000 tonnes for the three-month period ended Sept. 30, compared with a previously announced estimate of 175,000 tonnes.

Teck Cominco's fourth-quarter sales, however, were expected to get a boost from the shipping delays, and come in 25,000 tonnes ahead of earlier estimates, the company added.

Due to large quantities of ice in Kotzebue Sound, Red Dog got a late start by two weeks on its annual shipping season, which typically runs for 100 days between July and October. Bad weather also reduced ship availability and further delayed certain shipments, Teck Cominco said.

In addition, a high proportion of early shipments from Red Dog in the third quarter went to Vancouver to supply the Trail metal operations, thereby reducing shipments to third-party customers in Europe and the Far East. Typically, about 25 percent of Red Dog's zinc output is shipped to the Trail smelter.

Assuming satisfactory shipping performance in the fourth quarter, Teck Cominco said its sales tonnage during the final three months of 2006 is expected to be about 225,000 tonnes, up 25,000 tonnes from an earlier estimate.

Another 25,000 tonnes of sales originally expected in the second half of 2006 will be deferred to the first quarter of 2007, the company said.

Teck Cominco still expects to ship about 550,000 tonnes of zinc in concentrate during the 2006 shipping season, representing substantially all concentrate inventory at the mine.

The company also said production at all of its base metal operations was substantially as expected during the third quarter. The company plans to release its third quarter 2006 financial results Oct. 30, after markets close.

No strike at B.C.'s Highland Valley mine

Separately, Teck Cominco announced Oct. 14 ratification of a collective bargaining agreement with Local 7619 of the United Steelworkers at the Highland Valley Copper mine in south-central British Columbia near Kamloops. The parties reached a tentative agreement Sept. 30 with the help of a mediator, narrowly averting a strike set for midnight when the union's former contract expired.

During the ensuing seven to 10 days, 800 workers at the copper, molybdenum mine approved the new five-year contract, which extends from Oct. 1 to Sept. 30, 2011. The union had served Teck Cominco with a strike notice Sept. 26, and Highland Valley operations had been shut down. Full production was expected to be restored by Oct. 17, the company said.

One of the largest copper mining and concentrate operations in the world, Highland Valley is now undergoing a C$40 million expansion which will extend mine life to 2013. The mine's output of copper concentrates is expected to average 400,000 tonnes annually for the remainder of mine life.

Steve Hunt, the union's director in western Canada said late Oct. 13 that worker solidarity and tough bargaining by the union led to a solid collective agreement, with major increases to wages and benefits.

The five-year collective agreement features annual across-the-board wage increases of 4 percent, along with other wage concessions. On Oct. 1, 2010, the top wage will be C$38.91 per hour.

Retiring employees will receive increased defined pension benefits. To help achieve higher future retirement benefits, the workers will steer future copper production bonuses (copper prices have risen by 300 percent in the last three years) into the pension plan. If copper prices remain above C$1.27, the copper bonus will add an additional C$1.50 to C$2 to the pension base in each year of the deal, the union said.

Other improvements include post-retirement medical benefits for members and their families.