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3/15/2011



Rail News: Rail Industry Trends

Canadian coal miner Teck Resources projects lower 1Q sales


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Yesterday, Canadian mining company Teck Resources Ltd. announced it lowered first-quarter metallurgical coal sales guidance because severe winter weather conditions, including avalanches and cold temperatures, have caused more rail delays and locomotive failures than usual, and restricted train lengths.

“Weather-related delays, together with two recent non-weather related derailments, and other mechanical issues have affected rail transport,” Teck officials said in a prepared statement. “In addition, operations at Neptune Terminals and Westshore Terminals have been affected by issues, including high winds and mechanical failures. These issues have cumulatively affected coal transportation, restricting sales.”

The coal miner now expects first-quarter sales to range from 4.6 million to 4.9 million tons compared with an average of 5.3 million tons in the first quarter of each of the past six years.

However, it’s too early to assess any potential impacts on coal sales from the recent earthquakes and tsunamis in Japan, Teck officials said. Actual sales volumes will depend more on rail and port performance for the remainder of the quarter. The company is working closely with railroads (including Canadian Pacific) and port service providers to address issues and implement measures designed to enhance performance, such as by increasing trainsets and slots, adding more cars per train and adding crews, Teck officials said.

The coal miner expects rail and port performance to improve in the second quarter as a result of the measures if weather conditions are normal.


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