The head of Westshore Terminals Income Fund says the company is benefiting from soaring coal prices but still needs to work through the challenge of improving productivity amid rising costs.
Westshore runs a coal export facility and the largest dry bulk terminal on the west coast of the Americas.
It's working on expanding and updating its facilities to increase capacity by up to 38 per cent by 2009.
William Stinson, chairman and chief executive of the fund, said the company, which nearly doubled its first-quarter dividend because of the near-tripling of coal prices, is not taking the recent windfall from high energy prices for granted.
"We want to complete this expansion program at the terminal, get our capacity up to 29 million tonnes and we want to develop new business," Mr. Stinson said in an interview following the company's annual meeting Tuesday.
"We'll have contract negotiations coming up in a few years with major customers, so that is going to be a challenge. And trying to predict where the price of coal is going. Nobody predicted $300 ... It's very volatile."
Late Monday, the income fund said it was hiking its quarterly cash distribution to 47 cents per quarter, or $34.9 million, compared to 25 cents for the same quarter last year, thanks to higher throughput rates.
The fund said the payment would be on or before July 15 to unitholders of record on June 30.
For the second quarter of 2008, the fund said it expects tonnage throughput will be approximately 5.4 million tonnes as compared to 5.7 million tonnes for the same period in 2007.
Tonnage throughput for the first six months of 2008 is expected to be approximately 10.6 million tonnes compared to 10.2 million tonnes for 2007.
Westshore expects that total throughput for 2008 will be between 21 and 22 million tonnes. It is working on expanding and updating its facilities to increase that capacity to 29 million tonnes by 2009.
In April, the B.C. Court of Appeal ruled in favour of Westshore regarding a bid to renegotiate its coal shipping contact with the Elk Valley Coal Partnership, its largest customer, which is a venture between Teck Comincoand Fording Canadian Coal Trust.
The ruling means the formula for determining the loading rate from the Elkview Mine, which has been in force under the contract since 2000, continues for the remaining term of the contract to 2010.
The company's largest shareholder is Jim Pattison, who has roughly a 17 per cent stake, followed by Goodman & Co. Investment Counsel with 12 per cent and Copper River Management with about 10 per cent.
The company was rumoured to be a takeover target last year, but with coal prices so high, some analysts suggest the timing is bad for a bid.
Mr. Stinson had no comment on the possibility Tuesday, only that he was not entertaining offers at this time.
The fund's units were trading up five cents at $18.85 on the Toronto Stock Exchange Tuesday.