With coal volumes at capacity and strong growth in container volumes, the Port of Prince Rupert needs to proceed quickly with expansion projects if it’s going to meet demand.
That’s the message coming from all sides after the port announced, almost simultaneously, record 2010 cargo volumes and a large new coal contract with St. Louis, Missouri-based Arch Coal, Inc.
In 2010, the port’s cargo volumes grew 35% to more than 16 million tonnes of cargo,
including more than 340,000 20-foot equivalents (TEUs) of container traffic. Volumes at the port’s Ridley Terminals Inc. (RTI) doubled to 8.3 million tonnes of cargo, the bulk of which is coal.
Don Krusel, Prince Rupert Port Authority president and CEO, said Prince Rupert is the fastest-growing port in North America and the eighth- fastest in the world.
He noted that the port’s strategic location is allowing it to gain market share.
“A container vessel leaving China arrives in Prince Rupert up to three days sooner than it would in [the port of] L.A. Long Beach.”
Krusel added that the port has the most efficient terminal on North America’s West Coast and the best rail connection into the continent’s heartland.
“So the reputation of Prince Rupert is what is really driving that growth.”
American coal producers are increasingly signing deals to ship their product across significant terrain to export through Prince Rupert.
Arch Coal, which signed a five-year agreement in January to ship up to two million tonnes this year and 2.5 million annually from 2012 through 2015 via the port, is shipping its coal from Wyoming’s Powder River Basin.
“Arch believes Ridley is a good choice because they are highly skilled at loading coal in a variety of vessel sizes [and] 80 % of Ridley’s throughput is coal,” company representative Kim Link wrote in an email. “Furthermore, the sailing times to Asia are shorter, the water is ice-free and Ridley has expansion plans to double its terminal capacity by 2015.”
Krusel said deals like the one with Arch drive home both the worldwide demand for coal and the constraints on port capacity up and down North America’s West Coast.
“That’s a long rail haul for coal to go, and it just reflects the demand,” he said.
But Canadian coal producers are voicing concern that RTI’s plans to double its capacity to 24 million tonnes of coal annually by 2015 won’t be done fast enough to accommodate both the new American contracts and Canadian demand.
“While they have the expansion plans in the works, the whole question of financing them and then proceeding with them is the concern,” said Doug Smith, CEO of First Coal Corp. and chairman of the recently formed Ridley Terminals Users Group.
“Port capacity on the West Coast is a finite commodity. So if production coming from northeastern B.C. or Western Canada is unable to get to market because there are contracts in place from U.S. producers, yes, that becomes a concern.”
Marcia Smith, vice-president of corporate affairs for Canadian coal producer Teck Resources Ltd. (TSX: TCK.A, TCK.B), said the company is concerned about the Arch Coal contract and is seeking clarification on port capacity issues from the terminal.
Krusel said that while the new contracts mean RTI is operating at capacity, he’s not aware of any Canadian coal that’s been turned away.
He added that a planned expansion of the container facility, set to start when an environmental review process is complete, will triple the Prince Rupert container facility to two million TEUs within approximately three years of its start date.
And Krusel said expansion plans are a top priority for the port.
RTI did not return calls by press deadline.