Teck Resources Ltd. says profitability at the Trail smelter surged in the third quarter despite a planned reduction in refined zinc output, as the company continued to focus on boosting by-product revenues and cutting costs.
The Vancouver-based mining company reported $54 million in gross profit before depreciation and amortization from Trail, more than double the $26 million posted in the same period last year.
The increase came as Teck leaned into processing higher-value by-products such as silver, germanium and indium, while pulling back on primary zinc output in what it called a “challenging smelter market.”
Refined zinc production at Trail totalled 52,600 tonnes in the quarter, down nearly 20 per cent from a year ago.
The company said the drop aligns with its strategy to maximize margins by processing residues and reducing smelter throughput when market conditions are unfavourable.
Refined lead output also fell modestly to 17,600 tonnes.
Teck said production of by-products rose compared with the same period last year. These by-products are critical inputs for electronics, solar panels and other high-tech applications.
Operating costs at Trail were $144 million in the quarter, six per cent lower than a year earlier, primarily due to reduced labour and energy expenses, according to Teck.
The company said it spent $13 million in sustaining capital at the Trail smelter, part of $85 million in company-wide investments in property, plant and equipment.
According to Teck’s third-quarter report, released Oct. 22, zinc prices averaged US$1.28 per pound during the quarter, up slightly from both the previous quarter and the third quarter of 2024.
The company said demand remained strong, particularly from China, where galvanized steel production climbed 13 per cent year-over-year through August.
Company-wide, Teck reported a profit of $281 million from continuing operations in the third quarter, reversing a $748 million loss in the same quarter last year, which was weighed down by an $828 million impairment charge related to Trail.
Adjusted profit climbed to $372 million, or 76 cents per share, compared with $314 million, or 61 cents per share, a year ago.
Teck said the Trail turnaround played a key role in that recovery.
Teck’s zinc segment — which includes Trail and Alaska’s Red Dog mine — posted gross profit of $305 million in the third quarter, up from $235 million a year ago. The company said improved profitability at Trail contributed significantly to the increase.
Despite lower zinc output at Trail, the company said profitability improvements reflect an ongoing shift in operating strategy, one that prioritizes flexibility and margins over volume.
The results come as the company prepares for a proposed merger with Anglo American plc (public limited company), announced in September, which would create a new global mining heavyweight focused on critical minerals.
Teck Trail Operations, one of the world’s largest fully integrated zinc and lead smelting and refining complexes, has long been a cornerstone of the company’s base metals business and a key supplier of refined metals to North American markets.
2024 Third Quarter
In its third-quarter 2024 results, Teck announced a significant non-cash impairment tied to its Trail operations, resulting in a pre-tax write-down of approximately $1.1 billion and an after-tax impact of roughly $828 million.
The impairment drove the company’s loss from continuing operations before tax to about $759 million, and a loss attributable to shareholders of roughly $748 million, or $1.45 per share.
Teck attributed the charge to deteriorating market conditions at Trail, including a global shortage of zinc concentrate that led to elevated treatment (smelting) charges, and an operating fire at the electrolytic zinc plant that affected expected throughput for the fourth quarter.
The company also flagged sustained operating losses at Trail, making the carrying value of the assets no longer supportable under Canadian accounting standards.
The impairment, Teck said, does not reflect a cash outlay, but rather an accounting recognition that the asset value had to be reduced.
Teck emphasized that, excluding the Trail impairment, the broader business performed well. Adjusted EBITDA reached $986 million for the quarter, driven by strong copper production (114,500 tonnes) and higher zinc volumes.
The loss, the company said, was almost entirely due to the Trail adjustment.
What is EBITDA?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization.
It’s a financial metric used to measure a company’s operational profitability — essentially, how much money it makes from its core business activities before accounting for financing decisions, tax obligations or non-cash expenses like equipment depreciation and asset amortization.
In simpler terms, EBITDA shows how profitable the company’s day-to-day operations are, independent of factors like debt levels, tax structure or past capital investments.
Investors and analysts often use it to compare companies in the same industry because it strips out those external influences and focuses purely on operational performance.