Ottawa’s lump of coal: Search for buyer of Ridley terminal drags on – by Brent Jang (Globe and Mail – February 16, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

VANCOUVER — In late 2012, Ottawa placed a prized coal export terminal up for sale in anticipation of fetching a huge sum for the federal asset in northwestern British Columbia.

While coal prices had softened from record highs in 2011, Ridley Terminals Inc.’s business prospects looked solid, with forecasts for years of rising supplies transported by train from coal producers in northeastern B.C.

But what seemed like a jewel of a Crown corporation valued at more than $1-billion by industry experts 26 months ago looks more like a lump of coal today.

Ridley is struggling through an industry slump that has seen coal prices collapse, hurt by slower-than-expected demand in Asia and a global supply glut. The terminal is expected to suffer a hefty drop in shipments from the West Coast this year.

Ottawa, through Canada Development Investment Corp., is still looking for a buyer. The federal government’s quest to sell comes as coal prices languish at multiyear lows while northeastern B.C. producers have halted production.

Ridley is expected to export as little as 4.6 million tonnes, or roughly one-quarter of capacity, of commodities in 2015 from the Port of Prince Rupert, according to two sources familiar with the northwestern B.C. terminal. Those shipments would include 3.5 million tonnes of coal and 1.1 million tonnes of petroleum coke.

Barring any surprise new contracts, Ridley will be running at roughly one-quarter of its export capacity of 18 million tonnes in 2015.

Benchmark Asian prices for steel-making coking (or metallurgical) coal have declined to a seven-year low of $117 (U.S.) a tonne, down 65 per cent from their 2011 peak. Benchmark Asian prices for thermal coal used to generate electricity are mired at $62 a tonne, a plunge of 70 per cent since 2008.

Ridley’s exports of coal and petroleum coke totalled a record 12.1 million tonnes in 2013, but tumbled to 7.1 million tonnes in 2014.

Coal Valley Resources Inc., owned by Colorado-based Westmoreland Coal Co., runs an Alberta thermal coal mine that will be the largest exporter through Ridley in 2015. If Coal Valley hadn’t made decisions that resulted in the company agreeing to send 2.5 million tonnes this year through Ridley, the 31-year-old B.C. terminal would be facing even bleaker times in 2015.

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