Although Teck reduced its global workforce by 1,400 jobs or 13%, the Cdn$85 million in savings will generate will only have a miniscule impact on the Vancouver miner's US$9.8 billion debt.
Teck also said it plans to reduce 2009 coal production to 20 million tonnes due to declining global steel demand.
Nearly 1,000 employee and 400 contractor positions will be eliminated by the end of 2009, with the majority of reductions to be completed in the first quarter. Teck expects to take a charge of $35 million in the first quarter for severance and other related costs associated with the workforce reduction.
Given continued economic uncertainty, a significant reduction in our workforce is needed to further reduce costs and position Teck for both the short and long-term competitiveness, said Don Lindsay, Teck president and CEO. Notwithstanding the substantial decline in commodity prices, this was a difficult decision and I want to thank the affected employees for their contributions to the company.
In an analysis published Wednesday Haywood Securities revised its 2009E commodity price assumptions to US$150 per tonne for coal, $1.75/lb for copper, 50-cents per pound for lead, and 55-cents per pound for zinc.
Haywood had previously adjusted its Teck model to 20 million tonnes of coal and had assumed a 10% savings in operating costs or Cdn$9-10 per tonne. However Haywood has not modeled the Cdn$85 million in annual labor savings.
A Teck spokesman told CBC News that 550 jobs will be eliminated in Canada, including 400 in British Columbia, 105 in Alberta and 45 in the rest of the country. Among the positions to be eliminated are what Teck described as redundancies at the corporate level created by Teck's recent acquisition of Fording Canadian Coal Trust's Assets.
Teck's recent $14.1 billion cash-and-shares acquisition of Fording Canadian Coal Trust's assets was aimed at securing Fording's 60% non-operating interest in the Elk Valley Coal Partnership.