Westshore Terminals Investment Corp., the operator of a B.C. coal-shipping facility that exports to Asia, is urging Ottawa to maintain the flow of imports of thermal coal by train from U.S. mines in an unexpected twist during a week of rising trade tensions between the two neighbouring countries.
Westshore, whose largest shareholder is B.C. billionaire Jim Pattison, is upset that B.C. Premier Christy Clark has asked Prime Minister Justin Trudeau to ban exports of thermal coal from British Columbian ports – a move that would effectively block train deliveries of U.S. coal from crossing the Canada-U.S. border.
Thermal coal is used to fuel plants that generate electricity. That type of coal is "dirty" and bad for the environment, Ms. Clark said Wednesday morning while campaigning for the May 9 provincial election.
Westshore's share price, which fell 12 per cent on Wednesday, climbed 2 per cent on Thursday to close at $23.45 on the Toronto Stock Exchange.
In her letter to Mr. Trudeau, Ms. Clark linked her request to the Trump administration's decision earlier this week to slap countervailing duties on Canadian lumber exports south of the border: "Banning thermal coal from British Columbian ports is in line with the values of Canada and the Cascadia region. And with the decision by the United States Department of Commerce to impose these unfair and unwarranted duties on Canadian softwood lumber exports, now is the time to align our shared values with our environmental policy."
Within North America, there has been weakened demand for thermal coal for power generation amid tighter pollution rules on carbon emissions. U.S. producers, however, have been able to ship some of their coal production to Asia through Westshore's terminal. The coal is transported by train to Westshore's export shipping site at Roberts Bank, located 35 kilometres south of Vancouver.
"We are deeply disappointed to see the Premier of British Columbia's call to close our borders to our long-term U.S. customers," according to Westshore's letter sent late Wednesday to Mr. Trudeau. "On average, one-third of Westshore's business is directly attributable to the coal we handle for our U.S. customers."
Ms. Clark's request covers not only U.S. coal producers, but also asks Ottawa to ban thermal-coal exports that originate from Canadian mines. Coal Valley Resources Inc., owned by Colorado-based Westmoreland Coal Co., runs an Alberta thermal-coal mine 100 kilometres south of Edson. Coal Valley is a major exporter of thermal coal through federally owned Ridley Terminals Inc. in the Port of Prince Rupert in northwestern British Columbia.
Mr. Pattison has been a believer in Westshore, gradually boosting his stake in the B.C. terminal in recent years. In late 2016, companies owned by Mr. Pattison held 27.3 per cent of Westshore's outstanding shares, up from 15.1 per cent in mid-2012. The Vancouver-based terminal company's board of directors includes former B.C. NDP premier Glen Clark, now president at Jim Pattison Group.
Westshore's largest customer is Teck Resources Ltd., which uses the Roberts Bank site to export steel-making metallurgical coal – a commodity that is not being targeted by Ms. Clark's B.C. Liberals.
Low prices for thermal coal in 2015 forced Wyoming-based Cloud Peak Energy Logistics LLC to announce that it would temporarily suspend its exports through Westshore, but the U.S. firm began exporting again as coal prices rebounded in the fall of 2016.
Global Coal Sales Group LLC, which markets thermal coal produced by Montana-based Signal Peak Energy LLC, is another Westshore customer.
Burlington Northern Santa Fe Corp. of Fort Worth, Tex., hauls thermal coal from the Powder River basin's mines in the U.S. to Westshore. Through holding company Berkshire Hathaway Inc., U.S. billionaire Warren Buffett acquired full control of Burlington Northern in 2010.
"Premier Clark's call to ban the shipment of thermal coal from B.C. ports should be rejected," said Westshore's letter to Mr. Trudeau.
Want to interact with other informed Canadians and Globe journalists? Join our exclusive Globe and Mail subscribers Facebook group