Highland Valley Copper was hit by a downdraft in copper prices this year, with the owner Teck Resources reporting lower profits companywide as a result.
Teck’s third-quarter results released Wednesday showed gross profit at the mine southwest of Kamloops for the first nine months of the year at $249 million, down 25 per cent from the same period last year.
That compares to a 30 per cent drop in gross profit in all its operations, including copper, lead, coal and energy.
The company said results at Highland Valley came despite an 18 per cent increase in sales, primarily from mining higher grades of copper in its pit.
Costs at the mine are also increasing. Teck said while it remains on track to complete its mill modernization by the end of next year, the project is now over budget by 15 per cent. Replacement of its aging mill is now estimated at $515 million, up from $475 million.
Overall, however, Teck has slashed its capital spending for this year and next by a total of $1.5 billion. It will look to cut annual operating costs by at least $200 million amid the sluggish global economy.
The Vancouver-based miner of copper, coal and other metals announced the cuts as it reported sharply lower profits and revenue compared with a year ago due to lower commodity prices and sales volumes for steelmaking coal.
Teck president and chief executive Don Lindsay said the majority of capital spending cuts were the result of permitting and other project delays, but conceded that had they not happened, the company may have faced a similar decision.
Teck reported a profit of $180 million or 31 cents per diluted share in the three months ended Sept. 30, down from $814 million or $1.37 in the same 2011 period. Revenue for the three months ended Sept. 30 was $2.5 billion, down from $3.38 billion.
Adjusted profit was $349 million, or 60 cents per share, down from $742 million, or $1.26 per share.
Analyst estimates compiled by Thomson Reuters had on average called for revenue of $2.56 billion, with adjusted earnings of 61 cents per share.
The deferred capital spending plans included lower spending on the Quebrada Blanca Phase 2 copper project and the Quintette coal project due to permitting delays and a delay in the Relincho copper project.
Teck also said it will not spend as much as planned due to a delay in the development of the Fort Hills oilsands project and would defer construction of a slag fuming furnace at its operations in Trail.
“We’re just being careful with our spending,” Lindsay said.
RBC Capital Markets analyst Fraser Phillips said the results for the quarter were a little below expectations, but highlighted solid operating results at the company.
The average price for copper fell 14 per cent compared with a year ago, while the company’s realized coal price was down by a third. Zinc prices were down 15 per cent.
Teck shares closed up 85 cents at $31.39 on the Toronto Stock Exchange.