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Moody’s Investors Service has slashed Teck Resources Ltd.’s credit rating to junk status as the miner struggles with low coal prices and huge capital spending requirements.

Moody’s announced on Monday that it cut its rating on Teck to Ba1 from Baa3, which is the lowest investment-grade level. It cited the Vancouver-based company’s “significant” financial leverage and “material” free cash flow consumption. Teck had US$8.65 billion of debt at the end of June.

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“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 senior credit officer Darren Kirk said in a statement.

The downgrade could have a significant impact on the company’s future borrowing costs, especially if the other rating agencies follow suit. Fortunately for Teck, it has strong liquidity and no immediate need to borrow more money.