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A truck hauls a load at Teck Resources Coal Mountain operation near Sparwood, B.C. in this file photo.The Canadian Press

Moody's Investors Service slashed Teck Resources Ltd.'s credit to junk status, citing weak commodity prices along with the miner's spending on its oil sands joint venture.

The downgrade to speculative or junk status is a blow to the Vancouver-based miner, whose two main businesses – copper and metallurgical coal – have suffered from the steep drop in prices.

The downturn in commodities comes as Teck and its partners, Suncor Energy Inc. and Total SA, continue to build their Fort Hills oil sands project, north of Fort McMurray.

Teck, which holds a 20-per-cent stake in the project, has committed to spending nearly $3-billion to build Fort Hills.

"We expect prolonged commodity price weakness and sizable investment spending will cause Teck's financial leverage to remain well in excess of typical investment grade thresholds through at least 2017," Moody's said in a statement announcing the downgrade.

The company, along with the rest of the mining industry, has taken steps to conserve cash. Teck has already reduced its dividend, halted the re-opening of a coal mine and delayed the start of another oil sands project. This summer, the miner temporarily suspended production at its coal mines in Western Canada for a few weeks.

"We have achieved significant cost reductions and have minimized capital spending, including funding only one growth project in Fort Hills, while consistently delivering on operational targets," Teck said in a statement.

This is the second time this year that Moody's has downgraded Teck's debt.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 4:00pm EDT.

SymbolName% changeLast
SU-N
Suncor Energy Inc
+0.72%36.34
SU-T
Suncor Energy Inc
+0.61%49.16
TECK-N
Teck Resources Ltd
-1.05%44.4

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