Despite the phasing out of coal-fired power plants, railways expect to ship more coal, not less, for the foreseeable future.
The demand is being driven by a rebound in the price of steel-making coal and U.S. president-elect Donald Trump’s promise to revive the industry there. Since most of the coal shipped by Canadian railways is either metallurgical and destined for Asian markets, or thermal and shipped within the U.S., the Liberal government’s intention to shut down this country’s coal-burning energy plants by 2030 will have little impact.
So as Canada phases out its coal-fired power plants, Canadian National Railway Co. and Canadian Pacific Railway Ltd. are seeing their coal volumes bounce off second-quarter lows and should continue to see carloads increase for the foreseeable future.
Coal accounted for 10 per cent of CP’s total freight revenues in 2015. Most of that was metallurgical coal from Teck Resources Ltd.’s mines in B.C. destined for export to Asian markets, while a small portion was thermal coal mined in the U.S. and destined for power plants there.
At CN, coal accounted for five per cent of the railway’s total freight revenues in 2015, with three-quarters of that thermal coal originating in the U.S.
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