British Columbia Premier Christy Clark on April 2 launched a new transportation strategy that will expand trading opportunities with Asia and help businesses in this Canadian province grow and create jobs.
“We have a once-in-a-generation opportunity to take advantage of the fastest growing economy in history,” said Clark. “Asia is right at our doorstep – our ports are closer than anywhere else in North America. Our government is making sure we can get our goods to market as efficiently and quickly as possible and this strategy is a huge part of that plan.”
British Columbia is a major producer and exporter of coal, particularly metallurgical coal bound for rapidly-expanding economies in countries like China and India. U.S. coal producers in the western U.S. have lately also been using British Columbia terminals to export coal railed from mines in states like Montana, so any transportation infrastructure additions in British Columbia would also be of benefit to them, as well.
The new Pacific Gateway Transportation Strategy 2012-2020 will support the key elements of ‘Canada Starts Here: The BC Jobs Plan’ to expand markets for B.C. products and strengthen infrastructure to get goods to market.
“We are building on our world-class transportation network to support the growth of exports that create new jobs and opportunities in B.C.,” said Transportation and Infrastructure Minister Blair Lekstrom. “Our vision is to make B.C. the preferred choice for Asia-Pacific trade and secure a great economic future for British Columbians.”
Provincial leaders said that British Columbia has great business opportunities through the expanding Asian demand for coal, forest products, potash, grain, minerals, container traffic and the growth in air travel related to agrifoods, tourism and international education.
“Neptune Terminals’ strategic investments have resulted in record terminal exports of potash and steelmaking coal, a 20 per-cent increase in jobs at our terminal, and significant additional growth to come as we complete our expansions,” said James Belsheim, President, Neptune Bulk Terminals (Canada) Ltd. “We are encouraged by the new B.C. transportation plan, which supports our investment strategy and our ability to service our customers.”
“Teck has invested over [C]$1 billion and hired an additional 1,000 people in B.C. over the last two years to maintain and expand our steelmaking coal, copper and zinc operations,” said Don Lindsay, President and CEO of Teck Resources, Canada’s largest producer of met coal. “We’re investing to meet growing demand, particularly in Asia, for the products we produce.”
The strategy targets C$25bn in new public and private-sector investment needed to meet this new market demand – in addition to C$22bn already committed since 2005. The new money will, among other things:
- fund new provincial investment of C$700m over the next five years to increase capacity on key provincial highways to support trade;
- support investment of C$2.8bn by CN (Canadian National) and Canadian Pacific to improve capacity on rail mainlines to meet future growth;
- invest C$300m in the Prince Rupert Road Rail Utility Corridor;
- encourage C$18bn in private sector pipeline and plant investment to support the development of the liquefied natural gas sector, consistent with the BC Liquefied Natural Gas Strategy; and
- support private-sector investment of C$300m to C$1.1bn to expand coal terminal capacity in Vancouver and Prince Rupert and up to C$60m to expand metal and mineral terminal capacity in Northwest B.C. and Vancouver.
Teck plans coal production hike for export market
In 2011, Teck produced 22.8 million tonnes of coal. Estimated production for 2012 is in the range of 24.5 million to 25.5 million tonnes, depending on customer demand, Teck noted in a March 5 annual report.
Teck ships most of the coal produced at the five mines in the Elk Valley Region of British Columbia and at the Cardinal River mine in west-central Alberta to west coast ports in British Columbia.
All of the rail service from the five mines located in the Elk Valley originates with the Canadian Pacific under a 10-year agreement that commenced in April 2011. Canadian Pacific transports a small portion of these westbound shipments via Canadian Pacific and Canadian National. Canadian Pacific transports the coal from the Elk Valley mines to Kamloops, BC, and interchanges the trains with the CN for final moves to the west coast. The proportion of coal shipped via the Kamloops interchange was reduced as compared to prior years following the commencement of the 10-year agreement with the Canadian Pacific.
CN provides rail service from the Cardinal River mine in Alberta under an agreement expiring Dec. 31, 2015.
Over the long-term, about 10% of the coal produced at the five mines in the Elk Valley is transported directly by rail or by rail and ship via Thunder Bay Terminals in Thunder Bay, Ontario, to customers in the Great Lakes region of Canada and the U.S., although actual amounts in any year may vary from that average.
Teck exports its seaborne coal through three west coast terminals (Westshore, Neptune and Ridley). Westshore provides ship-loading services at Roberts Bank, British Columbia, and in 2011 provided services for about 65% of Teck’s steelmaking coal shipments. Teck Coal has agreed to terms with Westshore governing shipments of coal originating from all six Teck coal mines for the period April 1, 2012, to March 31, 2016.
Neptune, in which Teck Coal has a 46% ownership interest, provides ship-loading services for coal shipments loaded on a cost-of-service basis. During 2010 and 2011, Teck entered into three separate agreements with Ridley that allow for up to 1.7 million tonnes to be shipped in 2012 and higher amounts in later years intended to ensure that Teck’s requirements to ship Quintette coal to Ridley will be met through 2024. Quintette is a long-shut mine that Teck is currently reviving.
The Quintette mine ceased production in 2000. In June 2010, Teck initiated a feasibility study to reopen this mine, which is expected to be completed in the second quarter of 2012. The mine will have a design capacity of 3 million tonnes per year or greater. Assuming the results of the study are positive and development proceeds as currently planned, the mine could be in production by 2013.
Teck is the second largest exporter of seaborne steelmaking coal in the world. Its hard coking coal is used primarily for making coke by integrated steel mills in Asia, Europe and the Americas. In 2011, sales to Asia accounted for approximately 60% of its annual coal sales volume. Substantially all of the coal produced by Teck is high quality hard coking coal. Lesser quality PCI and thermal coal products accounted for approximately 15% of its annual sales volume in 2011.