Investors look to Teck for clues to China’s path

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When Don Lindsay talks about China, he can't help but mention the 200,000 kilometres of power transmission lines the country plans to install over the next five years.

"That's a lot of copper," the president and chief executive of Teck Resources Ltd. told mining aficionados packed into a ballroom in Vancouver last week.

Addressing the Association for Mineral Exploration B.C. conference, Mr. Lindsay also predicted that China will enjoy robust economic growth this year, fuelling demand for the metals his company produces, like copper and zinc.

Teck Resources, Canada's largest diversified miner and a major exporter of coking coal for steel making, reports its fourth quarter and year-end financial results on Thursday.

The results are expected to compare unfavourably against those of the prior year, reflecting one of the most tumultuous periods for the global mining industry since the recession.

As investors drew back from the market on renewed fears about the U.S. economy and as the European economies slipped and staggered, it was a year marked by multi-billion- dollar write-downs, massive cost overruns and high-level firings at leading mining companies.

Teck was no stranger to the turmoil, announcing deferrals in October of some $1.5-billion in capital spending over the next year or so.

Analysts expect the company to report fourth quarter earnings of around 49 cents a share, down by more than half from a year ago, when it was topping off a year of record performances on many levels.

The company earned 55 cents a share in the third quarter.

Royal Bank of Canada analyst Fraser Phillips said in a research note that he expects the Vancouver-based miner to come in at 47 cents a share, as results are affected by lower volume sales of coking coal at slightly lower prices.

"Our Q4 estimate reflects the actual Q4 metal prices, as well as lower coal sales volumes and prices than previously estimated," he wrote last week.

But rather than dwell on the past, investors will be looking for clues about the future, and whether Teck, with its unique insight as a miner of key industrial metals, might provide some reason for cheer.

The company is a major exporter into China, and investors will be alert for clues about the state of the global commodities supercycle that has been powered by the Asian giant for the past decade, but which slowed over the past year.

Teck is exposed to most of the metals China has so voraciously consumed to fuel its industrialization.

It operates mines in the United States, Canada, Peru and Chile and is one of the sector's best capitalized miners.

"With the new leadership now in place in China, the focus is already to ensuring steady economic growth," Mr. Lindsay told his Vancouver audience.

"We are investing because we do have confidence that nothing has changed with the macroeconomics in China and that the long-term growth is still in place."