U.S. inflation knocks NYSE lower last week

The Dow Jones Industrial Average fell 873.83 points or 2.6% to 32,816.92 during the Feb. 21-24 trading period after the U.S. Commerce Department reported higher-than-expected inflation for January of 6.4% a year. The S&P 500 dropped 109.05 points or 2.7% over the week to 3,970.04.

Analysts had predicted 6.2% inflation last month following 6.5% in December. The modest drop prompted concerns the U.S. Federal Reserve would maintain higher interest rates for longer, keeping money more expensive to borrow than in recent years and potentially slow the economy.

First Majestic Silver fell 16.5% to US$5.98 per share after the miner reported Feb. 23 that fourth quarter production dropped 14% to 7.6 million oz. of silver-equivalent compared with a year earlier.

Earnings from the Vancouver-based company’s mine operations plummeted 84% to US$16.8 million last year from US$101.4 million in 2021. The decrease was driven by lower-than-expected output at Jerritt Canyon causing higher production costs per oz., a drop in the silver price, as well as an increase in depreciation and depletion, the company said.  

“Lower than expected production [at Jerritt Canyon was] caused by severe cold weather conditions in northern Nevada which reduced the utilization of the processing plant, limited ore transportation from the West Generator and Saval II mines and created supply chain issues for certain consumables,” Keith Neumeyer, president and CEO of First Majestic, said in a news release.  

“Despite our ongoing efforts, consolidated cash costs per ounce increased by 9% in 2022 due to unforeseen supply chain issues, a slightly stronger Mexican peso and persistent inflation pressures felt across the industry.” 

Still, First Majestic reported record full-year revenue at US$624.2 million, 7% more than 2021, and record total production of 31.3 million silver-equivalent ounces, a 16% jump.  

Teck Resources dropped 12% to US$38.81. Canada’s largest diversified miner said Feb. 21 it was placing its steelmaking-coal business in a separate company — Elk Valley Resources — and would focus on industrial metals such as copper under a new name, Teck Metals.  

The restructuring will see Teck distribute shares in Elk Valley to its shareholders and retain an 88% gross revenue royalty from the four mines in south central British Columbia the Elk Valley unit will hold.  

Teck CEO Jonathan Price said the separation allows simplified and tailored strategies for each business. The coal mines have suffered disruptions form supply chains, bad weather, labour shortages and an outage at the Elkview plant. 

Teck also said it will gradually end the dual-class share structure through which Canada’s Keevil family controls the company. The Class A common shares, which hold 100 votes per share compared with one vote per Class B common share, will be phased out over six years.  

“The sunset on the multiple voting rights will modernize Teck’s governance and provide a simplified and competitive capital structure,” board chairperson Sheila Murray said in a statement. 

Rio Tinto  lost US$5.54 per share to US$68.69. The world’s second-largest miner by market value reported Feb. 22 that profit dropped 41% to US$12.4 billion in 2022 compared to a year earlier because of reduced demand in China.  

The Asian country, which accounts for more than half of the miner’s revenue, adopted strict Covid-19 policies that stymied business and knocked iron ore and copper prices from record highs achieved in 2021. Earnings from the unit fell by a third.  

Rio also slashed its full-year dividend to US$4.92 per share, less than half of the record US$10.40 per share in 2021.