Teck Resources Enters Coal-Shipping Deal With Ridley Terminals
Zacks Investment Research | Jan 12, 2020 09:12PM ET
Teck Resources Limited (NYSE:TECK) recently entered into an expanded commercial agreement with Ridley Terminals Inc. that will double its contracted capacity for the shipment of metallurgical coal from British Columbia operations to six-million tons a year.
The terms of the deal have been kept under wraps. The agreement runs from January 2021 to December 2027. The deal will increase shipment volumes to 6 million ton per annum (Mtpa) from 3 Mtpa, with an option to extend it further up to 9 Mtpa. This deal will provide greater flexibility and improved performance within its overall steelmaking coal supply chain.
Ridley Terminals owns and operates a marine bulk handling terminal on the west coast of British Columbia, which provides continuous high quality and high performance rail car unloading, product storage and vessel loading services. It boasts an overall shipping capacity of 16 million tons.
In December 2019, Teck Resources and CN announced a long-term rail agreement for shipping of steelmaking coal from Teck Resources’ four British Columbia operations between Kamloops and Neptune Terminals, and other west coast ports. This will help lower total transportation costs and improve overall rail and terminal performance. The agreement runs through April 2021 to December 2026, and will enable the company to significantly increase shipment volumes via expanded Neptune Terminals. Per the deal, CN will invest more than $125 million to enhance rail infrastructure and support increased shipment volumes to Neptune.
The company is advancing well with the Neptune Bulk Terminals facility upgrades, which will significantly increase terminal-loading capacity and improve its capability to meet delivery commitments while lowering overall logistics costs. The facility upgrades are anticipated to be completed in first-quarter 2021.
The agreements with Ridley Terminals and CN, and upgrades at its Neptune Terminal, will contribute to improved overall performance throughout the company’s steelmaking coal supply chain.
The company expects production in 2019 to be between 25.5 and 26.0 million tons. For fourth-quarter 2019, sales volumes are expected at 6.2-6.4 million ton. Planned outages at Ridley Terminals and Neptune Bulk Terminals will result in approximately 40 lost train dumping or berthing days, affecting sales volumes in the fourth quarter.
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Teck Resources’ shares are down 30.2% in the past year against the Zacks Investment Research
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