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The bulk carrier Unicorn Ocean is seen loading coal at the Ridley terminal, part of the Prince Rupert port system, in 2013. Ridley Terminals Inc., which owns the facility, exports both thermal and metallurgical coal, primarily to energy-hungry markets in Asia.Robin Rowland/The Canadian Press

Ottawa plans to sell Ridley Terminals Inc., a federal Crown corporation that owns a B.C. coal export facility, to buyers that could include Indigenous groups partnering with a private-sector firm.

Transport Minister Marc Garneau said on Thursday the terminal at the Port of Prince Rupert in Northern British Columbia is back on the block and Ottawa is seeking Indigenous input on the sale.

“By consulting early on with Indigenous communities on the future of Ridley, we are reiterating our commitment to advance reconciliation and to renew the relationship between the Crown and Indigenous peoples in Canada,” Mr. Garneau said in a statement.

The previous Conservative government said in late 2012 that it wanted to sell Ridley. Those plans, which were delayed as coal prices declined from 2013 to 2015, went into limbo when the Liberals took office in November, 2015.

Canada Development Investment Corp., a federal Crown corporation that began the process of selling Ridley in December, 2012, has been retained again to oversee the relaunch of the sale process.

Westshore Terminals Investment Corp. would be a logical bidder that could end up in a “partial ownership structure” with First Nations groups, RBC Dominion Securities Inc. analyst Walter Spracklin said in a research note. Companies owned by B.C. billionaire Jim Pattison recently held about one-third of Westshore’s outstanding shares.

“This would be a positive for Westshore as the coal market is just now rebounding and would give it participation in any further turnaround,” Mr. Spracklin said. “We also believe the government would welcome a bid from Westshore, given its proven expertise, existing customer relationships and Canadian ownership.”

Transport Canada said on Thursday the federal government, “in advance of the sale and in the spirit of reconciliation … is engaging with six First Nations in the Prince Rupert area to discuss the potential divestiture.”

Ottawa is consulting the following Indigenous groups, which belong to the Tsimshian First Nations: Lax Kw’alaams, Metlakatla, Gitxaala, Kitsumkalum, Kitselas and Gitga’at.

“By engaging in meaningful discussions with these six First Nations, the Government of Canada is taking into consideration their unique perspectives on Ridley Terminals Inc.,” a Transport Canada spokeswoman said in an e-mail.

A Westshore executive said Ottawa’s announcement came as news to the company but declined further comment. Officials at First Nations groups either declined comment or couldn’t be reached on Thursday.

Industry observers say a winning bidding group will need to agree to keep Ridley open to any coal producer needing to export instead of acquiring it for the use of a limited number of shippers. That would likely exclude Vancouver-based Teck Resources Ltd., Canada’s largest diversified mining company, from bidding.

Teck ships coal through Ridley and the Westshore site, located south of Vancouver, and also exports through Neptune Bulk Terminals (Canada) Ltd. in North Vancouver. Teck owns 46 per cent of Neptune and is the sole shipper of coal through the site.

Ridley exports both thermal and metallurgical (or coking) coal, primarily to energy-hungry markets in Asia. Environmentalists have said they are concerned about carbon dioxide emissions from electricity plants fired by thermal coal, which has a larger impact on the environment than steel-making metallurgical coal.

Industry observers say Ridley went from a coveted possession having several potential bidders in early 2013 to being an economic casualty in the coal industry in 2015, when it was an underperforming terminal running at one-quarter of its capacity.

Clark Williams-Derry, director of energy finance at the Sightline Institute, a Seattle-based environmental think tank, said Ridley’s shipments collapsed from 2014 through mid-2016 as international coal prices tumbled. But coal prices have seen a recovery over the past couple of years owing to increases in global demand and constraints on supply.

“Exporting coal is still a risky business,” he said. “Westshore – or any other buyer – should be wary of overpaying for an asset that’s been so volatile."

Industry experts say Ottawa might have been able to fetch up to $1.3-billion for Ridley in early 2013 had coal prices stayed high.

The Prince Rupert Port Authority, a federal agency, leases land to the terminal located on Ridley Island.

Four months ago, the federal auditor-general’s office said it uncovered major shortcomings at the terminal, citing “significant deficiencies in Ridley Terminals Inc.'s governance, strategic planning, performance management and reporting, risk management, and human-resource systems and practices.”

From January, 2015, through October, 2017, Ridley operated without an approved corporate plan from Ottawa. In the spring of 2017, Calgary-based AltaGas Ltd. began construction on its $500-million propane export terminal on Ridley Island. AltaGas expects to start operations next year.

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