July 23 was just a bad day all around for B.C. mining companies and the resource sector in general.
That was the day gold prices slipped below US$1,090 mark, pulling Goldcorp Inc. (TSX:G) stock along with it to a 10-year low of $16.66 per share, and a continued drop in coal prices dragged Teck Resources Ltd. (TSX:TCK.B) stock prices to a six-year low.
The TSX was dragged down for the fifth day in a row, declining by 41.75 points.
Gold sank to US$1,088 per ounce July 23, and gold mining stocks followed suit. At that price, some gold miners are under water. Wood Mackenzie estimates about 10% of the world’s gold is being produced at a loss.
Goldcorp wasn’t alone, as other large gold companies had similar price drops. B2Gold Corp. (TSX:BTO) share prices were at a five-year low of $1.44.
Barrick Gold Corp. (NYSE:ABX) stock hit an all-time low of $7.07 July 23, and Newmont Mining Corp (NYSE:NEM) hit a 14-year low.
But it wasn’t just gold or gold companies that suffered, because other key commodities like coal and copper are also hitting multi-year lows.
B.C.’s largest mining company, Teck Resources Ltd. (TSX:TCK.B), saw its stock sink to a six-year low of $9.93 on July 23. That’s despite second quarter earnings that showed profits up by $7 million – from $72 million in Q2 2014 to $79 million in Q2 2015.
Nearly half of Teck’s business is metallurgical coal. In June, metallurgical coal prices dropped to their lowest in 10 years.
Met coal prices have fallen 70% from their high of US$300 per tonne in 2011 to US$93 per tonne, thanks to a glut and lower demand for steel in China, which has also brought iron ore prices down.
Low steel-making coal prices have pushed Walter Energy Inc. (TSX: WLT) – which has shut down coal mines in B.C. – into bankruptcy in the U.S. Teck has resorted to rotating temporary shutdowns of its B.C. coal mines in an effort to reduce the glut of met coal still flooding the market.
B.C.’s other key mining commodity – copper – is also in the dumpster. Copper prices fell to a six-year low July 23 to $2.38 per pound.
Teck’s main business in steel making coal, which accounts for nearly half of its business. Copper accounts for copper 38% of Teck’s business.
Teck has also been making a move into the oil sands business at a time when crude oil prices are in a prolonged trough. Teck has committed to spending $3 billion over the next three years in the $13 billion Fort Hills oil sands project.
This week crude oil prices fell below the US$50 per barrel.
