Westshore Terminals

From Global Energy Monitor

Westshore Terminals is a coal export terminal located at Roberts Bank Superport in Delta British Columbia. It is Canada’s largest coal export facility. Westshore is also the largest single export coal terminal in all of North America.[1]

Location

The port is located 32 kilometres south of downtown Vancouver at Roberts Bank Superport.

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Background

The Westshore Terminals Limited Partnership is owned by Westshore Terminals Investment Corporation, through its wholly-owned subsidiary Westshore Terminals Holdings Ltd. Westar Management Ltd. has a long-term, renewable contract to operate and manage the terminal.[1] As of 2011 Canada was the world’s seventh-biggest coal exporter.[2]

The terminal was built in 1970, and by 2010 had capacity of 29 million tonnes per year. U.S. shipments reached a record 2 million tonnes in 2009.[1]

The terminal's coal export capacity was expanded to 33 million tonnes per annum (mtpa) in 2013. Old equipment is being replaced to add an additional 2 to 3 million tonnes of capacity, for a total of 35 to 36 mtpa when completed. See Infrastructure Reinvestment Project below for more information.[3]

In 2013 the port handled 30.1 million tonnes of coal, of which 9.3 million tonnes was US steam coal. Overall, coking coal accounted for almost 60 percent of total coal exports at Westshore in 2013, while steam coal was at 40 percent.[3]

Coal Mines

Westshore draws its coal from four main sources:[4]

Most of the mines are large, open pit mines. Grande Cache has one surface mine and an underground mine and is seeking to secure permits to open another underground mine in future.

Coal Railways

Three major railways service the terminal:[5]

Ownership

The Westshore Terminals Limited Partnership is owned by the Westshore Terminals Investment Corporation. Westar Management has a long-term, renewable contract to operate and manage the terminal.[6]

In 1993, Canadian billionaire Jim Pattison took over management control of Westar, including Westshore Terminals,[7] and by 1997 had privatized the company.[8]

According to SSA Marine, a private cargo handling company, SSA entered into a joint venture with Westshore Terminals in 1990 to develop the Gateway Pacific Terminal at Cherry Point near Ferndale, Washington.[9]

Coal deals

Agreement with Teck Resources for expanded export

In October 2010, Canada-based Teck Resources Ltd. and Canadian Pacific Railway Ltd. unveiled a new 10-year agreement for moving coal from five Teck mines to the Pacific Coast for export. Financial terms of the deal, which will begin in April 2011, were not announced, but CP said it agreed to enhance capacity on its system to handle increased volume from the mines in southeastern British Columbia. Teck plans to increase coal production at the mines by 50 percent over the next few years, and was looking for an agreement that ensured the higher production could be moved to ports near Vancouver.[10]

In 2020, Teck renogotiated the soon-to-expire coking coal shipping contract, cutting volume significantly. Under the new deal in principle, Westshore will ship 5-7Mtpa at fixed loading rates starting in April 2021, capped at a total contract volume of 32.25Mt, the equivalent to between four to six years of exports.

With its five mines in British Columbia and one in Alberta, Teck is Westshore's largest customer. It is the second-largest supplier of seaborne steelmaking coal in the world. The circa 68% reduction in contracted annual export capacity follows a widening rift between Teck and Westshore, with Teck CEO Don Lindsay accusing the terminal operator in January 2020 of charging too much for its services and contaminating freight. It has been shifting volumes to two other terminals, including an expanded commercial agreement with Ridley Terminals in Prince Rupert, BC, to double, and potentially triple, coking coal shipments from British Columbia to Pacific markets. Under terms of the agreement effective from January 2021-2027, Teck will increase contracted shipping capacity from the Price Rupert terminal from three million tonnes per annum to 6Mtpa, with an option to expand the total up to 9Mtpa.

Teck has also been hard at work expanding its Neptune Terminals in North Vancouver, expected to be completed early next year. The terminal can currently handle about 24Mtpa of bulk products, with the expansion lifting the figure to 30Mtpa.[11]

Cloud Peak Energy

In June 2011 Cloud Peak Energy signed a 10-year deal to ship basin coal to Asia from a port on Canada’s Pacific Coast. Cloud Peak Energy Inc. signed the deal with Westshore Terminals to ship coal through its Westshore Terminal in Vancouver, British Columbia. The company shipped 3.3 million tons of coal through the terminal to Asian customers in 2010.[12]

In 2014 Cloud Peak agreed to pay $37 million to boost its exports by 2 million tons through the Westshore Terminals in British Columbia. The company expects to export between 6 million to 6.5 million tons of coal annually over the next ten years. These exports will be shipped to Asia.[13]

However, in October 2015 Cloud Peak Energy said the company planned to put all coal exports on hiatus from 2016 through 2018. According to a company press release: "Cloud Peak Energy made an upfront payment to Westshore and will make quarterly payments from 2016 through 2018 in lieu of the previous take-or-pay commitments during this three-year period." According to the Sightline Institute: "Asian coal prices fell so low that Cloud Peak was losing more money shipping to Asia than it would from the penalties. So the company simply stopped shipping, coughing up US$11 million in penalty payments to avoid even steeper losses on exports. And it started negotiating a deal with Westshore to put all shipments on hold."[14]

Signal Peak Mine

In October 2011 Pinesdale LLC, a subsidiary of Swiss based Gunvor Group Ltd., paid $400 million for one-third ownership in the Signal Peak Mine. Gunvor announced plans on boosting the underground production from a stated 9 million tons a year to about 15 million tons and ship the coal to Pacific and Asia markets through Westshore Terminals in Vancouver, British Columbia. It was the company's first investment in a U.S. coal mine.[15] The mine is also co-owned by two Ohio companies, FirstEnergy and Boich Companies, as well as Pinesdale LLC. In October 2015 a Montana state agency rejected a 2013 permit issued for a major expansion of the mine.[16] Shortly after Signal Peak said it planned to trim exports through Westshore in 2016, and possibly in 2017 and 2018 as well.[17]

Coal exports exempt from BC coal tax

Although all the CO2 emitted by all B.C. businesses and residents -- for all cars, trucks, natural gas, coal, power plants, ships, and industry -- is subject to a carbon fee (adding up to 47 million tonnes of carbon in 2010), coal exports are not subject to such a tax. Carbon is taxed at $20 a tonne by the B.C. government, and B.C. businesses and residents paid close to a billion dollars in carbon pollution taxes in 2010. In comparison, 2010 coal exports amounted to 50 million tonnes of carbon pollution, all exempted from the B.C. carbon tax. Taxes collected by B.C. on mining also appear to be at the lowest level in many years, despite the price of coal going up: coal has increased $140 per tonne since 2006 - a 350 per cent increase in price in just six years, and jumping another $20 -- to over $200 per tonne -- in the first quarter of 2011.[18]

Infrastructure Reinvestment Project

Westshore Terminals announced that it would begin a major reinvestment program beginning in 2014, originally scheduled to be completed in 2018. The $275 million dollar phased project would ensure the terminal remains efficient and productive for at least another 40 years.

Starting in the first quarter of 2014, the terminal infrastructure reinvestment project brought a major rejuvenation to the site by demolishing the current office, warehouse and shop buildings and combining them into a new more efficient complex at the northern end of the 54 hectare site. This brings the administration, maintenance and operations personnel altogether in one location for the first time.

Westshore also determined that it would be cost efficient to replace four of the oldest machines on site—the original three stacker-reclaimers and the shiploader serving Berth One—with modern and more efficient machines.[19]

The project is expected to bring several benefits including the following:[20]

  • Improved operational productivity
  • An estimated 45% reduction in annual bulldozing time expected as a result of longer stacker/reclaimer booms
  • A more modern and efficient site
  • Additional stockpile space
  • As a result of the reinvestment project the terminal can potentially realize a throughput increase of 3 million tonnes


According to the company, the project was completed in 2019.[21]


Project Details

  • Owner: Westshore Terminals Limited Partnership
  • Location: British Columbia, 32 kilometres south of downtown Vancouver, Canada
  • Existing Capacity (Million tonnes per annum): 33
  • Additional Proposed Capacity (mtpa): 3
  • Status: Operating
  • Start year: 1970
  • Type: Exports
  • Source of Coal: Coal mines in British Columbia
  • Cost of expansion: $270 million
  • Financing for expansion:

Resources

References

  1. 1.0 1.1 1.2 "Westshore Terminals" Westshore Terminals Website, accessed April 2011.
  2. "What Canada stands to gain from the global coal boom" Josh Wingrove, The Globe and Mail, September 23, 2011.
  3. 3.0 3.1 Sylvie Cornot-Gandolphe “US Coal Exports: The Long Road to Asian Markets,” Oxford OIES PAPER: CL 2, March 2015
  4. "Westshore Terminals: The Mines" Westshore Terminals Website, accessed April 2011.
  5. "Westshore Terminals: The Railways" Westshore Terminals Website, accessed April 2011.
  6. "Main," Westshore Terminals, accessed Jan 2018
  7. "History" Jim Pattison Group, accessed April 2011.
  8. "British Columbia Resources Investment Corporation" Blurb Wire, date unknown.
  9. "History" SSA Marine, accessed April 2011.
  10. "Teck, CP ink 10-year coal-hauling deal" The Globe and mail, October 6, 2010.
  11. Henry Lazenby "Teck slashes Westshore coal contract" Mining Journal, August 27, 2020.
  12. "Cloud Peak Energy to send more Powder River Basin coal to Asia" Jeremy Fugleberg, Star-Tribune, June 15, 2011.
  13. "Cloud Peak taking more active role in coal debate: ‘We want it to be a factual discussion" Erik Olson, Billings Gazette, August 31, 2014.
  14. Clark Williams-Derry, "Coal prices now so low that Cloud Peak is paying Westshore NOT to export its coal," Sightline Institute, Oct 29, 2015
  15. "Swiss company with Russian ties buys into Signal Peak coal mine" Jan Falstad, Billings Gazette, October 18, 2011.
  16. "Signal Peak coal mine expansion plan hit by Montana," Platts, Oct 19, 2015
  17. "Two More Lumps of Coal for BC Exports," Sightline, Dec 18, 2015
  18. Barry Saxifrage, "Coal double-standard costs British Columbia's citizens billions" Vancouver Observer, June 3, 2011.
  19. "Project Overview" Westshore Terminals, accessed July 2021.
  20. "Project Advantages" Westshore Terminals, accessed July 2021.
  21. "BRIEF-Westshore Terminals Says Westshore's "$270 Mln Capital Project" Will Be Completed By End Of Q1" Reuters via Stockopedia, March 19, 2019.

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