Vancouver's Teck Resources Ltd. (TSX:TCK.B) expects to save $70 million in coal transportation costs after completion of a statutory rail rate arbitration with Canadian Pacific Railway.
Teck estimates that average transportation costs for moving coal from its five coal mines in southwestern B.C. to Westshore Terminals at Roberts Bank and Neptune Terminals in North Vancouver to fall in the range of $33 to $35 per tonne in 2009. That's down from a previous per-tonne estimate of $35 to $37.
For the 2009 coal year beginning April 1, per-tonne costs are expected to be in the range of between $31 and $33. The updated costs for the coal year include the impact of expected coal pricing, which affects port charges at Westshore Terminals, and updated fuel surcharge estimates.
Teck also entered into an agreement with Canadian National Railway to route some of its export coal traffic using CN rail lines from the Kamloops rail exchange and deliver it to Neptune Terminals. Teck will be able to move up to 3.5 million tonnes of coal shipped via CN between now and March 1, 2010.
CP said the routing agreement diverts roughly 15% of Teck's annual coal shipping volume. Overall, CP expects to move between 17.5 million and 19.5 million tonnes of coal between April 8, 2009, and April 7, 2010, which will generate about $360 million in revenue for the railway.
Teck's share price range during the past week: between $18.50 and $19.99; 52-week high: $49.24; 52-week low: $3.35.