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British Columbia seeks thermal coal export ban

27 Apr 2017 16:54 (+01:00 GMT)
British Columbia seeks thermal coal export ban

Washington, 27 April (Argus) — The premier of British Columbia is asking the Canadian federal government to ban thermal coal shipments through Westshore Terminals, in retaliation for President Donald Trump's proposed tariff on Canadian softwood lumber.

BC premier Christy Clark yesterday sent a letter to Canadian prime minister Justin Trudeau, asking him to work to block the shipments. If the Canadian government does not follow through, British Columbia "will use all the tools we have at our disposal to discourage the shipping of thermal coal" through its ports, Clark said without elaborating.

The action could have significant effects on western US coal producers, who have only a handful of west coast options for exporting coal. Companies moved 6.2mn metric tonnes of US thermal coal — more than a third of total US thermal coal exports — through the Port of Vancouver last year and volumes are expected to rise in 2017 on stronger Asian demand.

Clark's office said her letter "is a measured response to what is an unwarranted and unfair attack on our lumber industry, and will help to reduce global greenhouse gas emissions." British Columbia has 60,000 forestry workers.

Her plea comes as President Donald Trump's administration is seeking to renegotiate the North American Free Trade Agreement (Nafta) with Canada and Mexico. US commerce secretary Wilbur Ross has suggested that the US will seek a trilateral negotiation between the three countries, rather than attempt to enact two separate treaties.

Trump had originally planned to scrap the trade agreement entirely in the coming days, but changed his mind after Trudeau and Mexican President Enrique Peña Nieto urged him to reconsider. "I decided rather than terminating Nafta, which would be a pretty big shock to the system, we will renegotiate," he said today.

Trudeau's office said the prime minister "considers carefully and seriously any request from a premier," but declined to comment further.

BC's Westshore Terminals has become increasingly important to western US coal producers as a number of proposals for export facilities in California, Oregon and Washington have fallen apart or experienced significant setbacks in recent years. Millennium Bulk Terminals in Washington state appears to be the only project left standing, more than six years after originally being announced. Developers hope to break ground in 2018.

If Canada blocks access producers like Cloud Peak Energy, Signal Peak Energy and Lighthouse Resources could be left without a way to get their coal to customers in Asia and Latin America. And it could keep in limbo coal shipments that were stalled in the first quarter as a result of rail service issues from the US to British Columbia.

Cloud Peak said the company "values (its) Canadian trading partners and hopes this matter is resolved to benefit all interests." The company has said it expects to ship 5mn short tons (4.54mn t) of coal to Asia this year.

Clark suggested that eliminating steam coal exports through Canadian ports could be a boon the country's coking coal sector. The ban would "open up additional capacity for metallurgical coal that is used to make long-lasting steel, not burned to produce short-term electricity," she said, citing the high levels of CO2 emissions coming from thermal power generation.