Westshore Terminals Investment Corp.
Vancouver
Revenue (2021) $340.5 million | Profit (2021) $107.8 million
Three-year share price gain 67% | P/E ratio (trailing) 20.4
Coal has been powering economies for more than 300 years, both as fuel and as a key input in steelmaking. Despite protests from environmentalists, it won’t be phased out soon. To ship it overseas from Canada’s largest coal mines in the West, there are just three terminals to choose from: Ridley Terminals, Neptune Bulk Terminals, and the larger and lone publicly traded alternative, Westshore Terminals Investment Corp., south of Vancouver.
Westshore is one of those glamour-challenged companies that keeps delivering profits year after year, amid cyclical resource markets, a pandemic and occasional criticism from climate activists. One shareholder who takes it all in stride is also Westshore’s largest: 93-year-old billionaire Jim Pattison, whose companies held 37.9% of Westshore as of March and have owned a large stake since the early 1990s. “It’s obviously a unique asset,” says Nick Desmarais, Westshore’s secretary and vice-president of corporate development, and managing director of legal services for Jim Pattison Group. “They don’t build new ports anymore.”
Total coal shipments have been relatively constant for a decade at 25 million to 30 million tonnes a year. But the mix of steelmaking coal and thermal coal burned for heat and power varies widely, from about one-quarter thermal in 2016 to just over half in 2021. The customer mix and needs change, too, and there are seasonal ups and downs. “We’re always adjusting,” says Desmarais.
Westshore’s customers are large coal mines in Canada, and it ships their output to buyers overseas. Desmarais says that, historically, the company has maintained a basic profit margin of 40% to 45%, which allows for reinvestment.
Japan, South Korea and China are the largest buyers, and more than 80% of the thermal coal goes to government utilities in Japan, South Korea and Chile. Desmarais says Westshore understands thermal coal will eventually be replaced, but it’ll take a while. “These countries don’t have the luxury of wind and solar,” Desmarais says—or at least not enough of it yet.
And Westshore is diversifying. It completed $240 million in upgrades from 2014 to 2019. Last July, it reached an agreement with global mining giant BHP Group to provide port services until 2051 for millions of tonnes of annual potash exports from the $7.5-billion first phase of BHP’s giant Jansen mine in Saskatchewan. Pattison Group has been a committed long-term investor in Westshore, and it still looks very satisfied.
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John Daly