Teck to lift coking coal deliveries with CN agreement

Canadian mining firm Teck Resources has entered a long-term rail agreement with rail operator Canadian National (CN) to increase coking coal transportation from its mines to the Neptune terminals and other west coast ports.

The agreement spanning April 2021 to December 2026 will allow Teck to transport its coking coal through the Kamloops interchange to harness expanded capacity at Neptune terminals, the firm said. CN will invest more than CN$125mn ($94.2mn) under the agreement to "enhance rail infrastructure and support increased shipment volumes to Neptune", it said.

This new agreement follows on from Teck's 10-year transportation agreement with CN, which run outs at the end of March 2021.

CN on 27 November ended a week-long strike by 3,200 employees that are members of workers union Teamsters Canada Rail Conference (TCRC). But clearing out the backlog of shipments may take a number of weeks.

Many Canadian mining companies "incurred significant impacts over the past seven days, including lost sales and customers", the Mining Association of Canada said. Teck last year blamed lower sales on preparations for a similar strike at Canadian Pacific that lasted only one day.

Teck expects to produce 25.5mn-26mn t of coking coal in 2019 as facility upgrades at the Neptune Bulk Terminals are expected to be completed in the first quarter of 2021.

Total coking coal shipments from Canada reached 26.03mn t in the first nine months of this year, up from 24.18mn t in the same period last year, on the back of increased shipments to key Asian buyers such as China, India, Japan and South Korea. Despite the expectation of higher freight costs next year with the new IMO 2020 regulations in place, Asian mills are keen to continue to diversify their import sources particularly in light of regular port disruptions in Australia and the continuing trade tensions between the US and China.