The federal government’s plan to privatize Prince Rupert’s Ridley Terminals Inc. is being well-received by its core users.
Doug Smith, chairman of the Ridley Terminals Users Group (RTUG) and general manager for Xstrata Coal Canada, said the coal terminal’s employees have done a “tremendous job” running the operation and he hopes to see little change under a new owner.
But he said privatizing Ridley could better position the facility for expansion beyond its plan to double terminal capacity to 24 million tonnes annually by the end of 2014.
“I would think [privatization] would positively affect their access to capital,” said Smith. “There’s the potential to expand beyond [current expansion plans] and that would require additional capital, and presumably a buyer would assess that based on the market demand.”
Smith said RTUG’s key stipulations in a buyer are:
•a commitment to running the terminal on an open-access basis, which the federal government has promised; and
•mechanisms to protect shipping rates.
“If it’s [run] on a totally for-profit basis, whatever the market will bear, that becomes a problem, because many of the terminals we compete with around the world in the coal chain are owned by users or they’re owned by government entities.”
Smith added that users would want to have mechanisms to arbitrate rates in situations where the terminal and shippers couldn’t come to an agreement.
However, Duncan Wilson, vice-president of corporate social responsibility at Port Metro Vancouver (PMV), argued that, because of competition between West Coast coal terminals, a new owner would likely not hike shipping rates.
“Down here in Vancouver you’ve got Neptune Terminals and you’ve got Westshore and between those terminals and Ridley you should have enough competition that [price hikes at Ridley] shouldn’t be an issue.”
Wilson added that PMV supports the government’s sale of Ridley Terminals for various reasons.
“All of our terminals in Vancouver are privately owned, and we think as a port … from a competitive point of view that ensures a level playing field. So we’re very happy to see that in Prince Rupert.”
Wilson added that it’s a great time to sell a coal terminal, and thus the sale plan is good news for Canada’s public coffers.
“The federal government’s timing is also impeccable, because there’s a lot of pressure for coal expansion and coal export on the West Coast right now,” he said.
“Taxpayers should be getting good return on their investment by divesting of the asset at this time.”
Smith said he expects the terminal sale to attract wide interest from coal shippers and companies that run terminals. He didn’t say whether RTUG might bid on the terminal.