Canadian miner Teck Cominco to slash 1,400 positions
08 Jan 2009
Teck Cominco Ltd., the world's second-largest zinc producer, will eliminate 1,400 jobs, or about 13 per cent of its workforce, to reduce costs amid a decline in metal prices. Each unit of the company will see staff cuts, with major reductions in exploration and research and development, the company said.
The cuts, expected to save C$85 million ($70.9 million) a year, will result in a charge of about C$35 million in the first quarter, Vancouver-based Teck Cominco said today in a statement. The ''majority'' of the dismissals will be completed in the first quarter, the company said. Roughly 1,000 of the cuts will come from inside the company while the remaining 400 will be contractor positions.
The company, the largest diversified miner in Canada, said it also plans to scale back coal production to 20 million tonnes due to declining global steel demand. That would be down from 2008 production of about 23 million tonnes.
In late November, Teck said that it would slash spending, sell assets, suspend dividend payments and withdraw from the Petaquilla copper project in an effort to cut debt from its acquisition of Fording Canadian Coal Trust. Teck took on $9.8 billion in debt for its $13 billion takeover of Fording, which closed in October. (See: Zinc miner Teck Cominco to acquire world's second largest coal producer for $14.1 billion)
Teck joins Alcoa Inc., US Steel Corp. and other metal producers in attempting to lower output as the global economic crisis reduces demand for materials used in construction and automobiles. Zinc for delivery in three months on the London Metal Exchange fell 49 per cent last year.
''Given continued economic uncertainty, a significant reduction in our workforce is needed to further reduce costs and position Teck for both short and long-term competitiveness,'' CEO Donald Lindsay said in the statement.
Teck shares have fallen substantially since last August as commodity prices rapidly depreciated and its massive debt load, which includes a $5.8-billion bridge loan due this year, made investors wary. Teck fell 59 cents, or 7.2 per cent, to C$7.60 yesterday in Toronto Stock Exchange trading. The shares plunged 83 per cent in 2008.
