Fewer coal trains as U.S. firm halts exports

Cloud Peak stops coal shipments through Westshore Terminals, critic says decision adds doubt for new Fraser Surrey Docks terminal

One less coal train a day will roll through White Rock, South Surrey and Delta next year as a result of a U.S. coal company’s decision to suspend shipments through Westshore Terminals at Deltaport.

Cloud Peak Energy exports four million tonnes a year through that coal port but cited “extremely depressed” international coal prices as it announced a three-year halt to shipments through B.C. – from 2016 through 2018.

It will pay Westshore compensation for the cancelled volume. Westshore’s stock price fell 18 per cent Thursday after the announcement, which included a reduction in its dividend.

Cloud Peak’s agreement with Westshore remains in place for 2019-2024.

“We believe in the long-term opportunity for Asian exports of Powder River Basin coal as oversupplies of seaborne thermal coal are rationalized,” Cloud Peak CEO Colin Marshall said.

Climate change activist Kevin Washbrook said the cancellation raises further doubt about the wisdom of Fraser Surrey Docks’ plan to press ahead with its own new coal terminal on the Fraser River in Surrey.

“There’s no future in exporting U.S. thermal coal and the economics are catching up with that,” Washbrook said.

He said China is serious about cutting its coal use and the carbon emissions that result, and the world remains awash in coal because of the trend of declining use.

“All the boosters at the Surrey Board of Trade and the chambers of commerce have to rethink their support for these kinds of projects, because they’re going to be white elephants.”

Cloud Peak’s suspension cuts Westshore’s expected output next year to 26 million tonnes. Much of that is B.C. metallurgical coal rather than U.S. thermal coal that’s burned as fuel and is a major greenhouse gas contributor.

U.S. thermal coal currently accounts for about two trains a day on the BNSF rail line to Westshore.

Fraser Surrey Docks‘ $15-million terminal would have an initial capacity of four million tonnes per year, adding back one train per day on the line if it is built.

The company has said early 2017 is the soonest it could be operating. It’s awaiting port authority approval of its revised plan and faces at least two court challenges.

Aerial view of Westshore Terminals operation at Deltaport.  Port Metro Vancouver photo.

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