As officials assess the damage caused by heavy rain, flooding and mudslides in Canada’s British Columbia last month, mining companies have started gauging how severe climatic conditions this year have impacted their production.
B.C.’s Public Safety Minister Mike Farnworth on December 6 said the scale of the flood damage in the region was “extraordinary” and that efforts were now being made to remove the debris and rebuild after focusing on emergency response for weeks.
Canpotex, a company responsible for the overseas marketing and delivery of potash produced in Saskatchewan by Nutrien (NYSE: NTR) and the Mosaic Company (NYSE: MOS), told The Northern Miner that its main corridor for exporting potash was hit due to the flooding and the resulting impact on rail infrastructure.
“We are actively pursuing alternate routes to ship our potash overseas — for example to our terminals in Portland, Oregon and Saint John, New Brunswick — but Vancouver is an important, widely-used corridor for exporting potash,” said Natashia Stinka, Canpotex’s director of public affairs.
Teck Resources (TSX: TECK.A/TECK.B; NYSE: TECK) earlier this week said that it reduced its fourth quarter sale estimates of steelmaking coal from 6.4-6.8 million tonnes to 5.2-5.7 million due to rail disruption caused by the extreme weather.
“We have diverted shipments to Ridley Terminals in Prince Rupert to maximize sales during the quarter, which will affect our transportation costs for the quarter,” the company stated in a press release. “We expect that when rail service is fully-restored we will be able to substantially recover delayed fourth quarter sales in the first half of 2022.”
The company also expects a hike in its overall transportation cost for this year — from $42 per tonne to $44-$46 per tonne — because of the disruption caused due to the floods and the region’s severe wildfire season earlier this year.
Following Teck’s update, BMO Capital analyst Jackie Przybylowski maintained the mining company’s Outperform rating but reduced her one-year target to $53 per share from $56. At press time in Toronto TECK.A and TECK.B were trading at $38.50 and $35.37, respectively.
Vancouver-based Copper Mountain Mining (TSX: CMMC; ASX: C6C) on December 6 said the company faced temporary road closures due to heavy rains and flooding, but its production remained unaffected. The company, however, continues to monitor the situation closely.
Environmentalists have linked the extreme rains in B.C. to climate change and analysts believe that problems facing the global mining sector due to climate change will worsen with time.
A Mckinsey report published last year stated that flooding from extreme rains could cause mine closures, a rise in unsafe water levels in tailing dams and affect commodities like iron ore and zinc due to their location. These metals are the most exposed to extremely high flood occurrence at 50% and 40% of global volume, respectively.
The report further stated that flooding will especially affect certain “wet spots” that are likely to experience a 50% to 60% increase in extreme precipitation this century: northern Australia, South America, and southern Africa during Southern Hemisphere summer, and central and western Africa, India and Southeast Asia, and Indonesia during Southern Hemisphere winter.
The global mining industry — which is responsible for 4-7% of greenhouse-gas emissions globally—faces the unique challenge of producing more metals while reducing its carbon emissions, if the world is to cut its climate-changing carbon pollution to net zero by 2050.
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