Teck Resources Ltd. has struck a deal with Ridley Terminals Inc. to double, and perhaps triple, its shipments of steel-making coal through Prince Rupert, B.C., sending the shares of rival Westshore Terminals Investment Corp. to their lowest levels since 2016.
The deal, announced by Teck on Wednesday, will run from January, 2021, to December, 2021, and will increase its coal shipments through Ridley from a capacity of three million tonnes a year to six million tonnes. Teck has the option to further increase this volume to a capacity of nine million tonnes, effectively tripling the company’s current shipments.
The diversified mining company, based in Vancouver, has overhauled parts of its steel-making coal operations in recent months as it attempts to reduce costs. In December, Canadian National Railway Co. won a five-year contract long held by rival Canadian Pacific Railway Ltd. to haul Teck’s B.C.-mined coal to West Coast ports – boosting CN’s annual revenue by as much as $250-million.
The deal with Ridley follows a new ownership structure for the terminal after the federal government last year sold a 90-per-cent stake to a company owned largely by Riverstone Holdings LLC and AMCI Group.
A spokesperson at Ridley declined to comment on the deal with Teck, saying that “contracts are confidential.”But the announcement of the deal sent the share price of rival Westshore Terminals down 10.6 per cent on Wednesday, reflecting concerns that the company is losing shipping volumes and negotiating leverage with Teck.