The existing contract that covers coal from the Elkview mine expires on March 31, 2010. Approximately 3,800,000 tonnes of coal were shipped under that contract in calendar 2009. Teck and Westshore are also parties to a Port Services Agreement (PSA) that covers coal from Teck’s Fording River, Greenhills and Coal Mountain Mines.
The PSA runs to February 29, 2012, and provides that substantially all coal from those three mines shipped through westcoast ports will be shipped through Westshore.
Under the new agreement, Teck has agreed to ship through Westshore 3,000,000 tonnes of coal in each of the next two contract years from the Elkview, Cardinal River and Line Creek Mines in whatever proportions it chooses.
The parties have agreed on a fixed rate for the committed tonnage for two years, with a slightly lower fixed rate for any tonnage that Teck chooses to ship through Westshore from those three mines in excess of its commitments.
In conjunction with this agreement, Teck has agreed not to pursue a rate review under the PSA that was initiated by Teck in 2006, and Westshore has agreed that for the final year of the PSA (the 2011/12 contract year) all the rates under that agreement will be fixed and will not vary with the coal price.
Under the existing Elkview contract, substantially all coal from the Elkview Mine is shipped through Westshore at a rate which varies with the price of coal. For the 2011/12 contract year the throughput to be shipped at variable rates is expected to be less.
As a result of this agreement, and based on higher volumes anticipated to be shipped during the first quarter of 2010 and on other information currently available to Westshore from its customers, it is now anticipated that throughput levels for 2010 should be in excess of 22 million tonnes.
Denis Horgan, general manager of Westshore Terminals, said: “This agreement underscores the importance of the Teck-Westshore relationship, and Westshore’s position as a key link in the coal chain. It marks another important and positive step in the continuing relationship between the two organizations.”
