B.C. coal port sale becomes political hot potato

By Wendy Stueck, Simon Tuck
Globe and Mail
06-Jan-2006

VANCOUVER, OTTAWA

The proposed sale of a money-losing coal terminal in Prince Rupert, B.C., is creating strange bedfellows in the federal election campaign, putting Industry Minister David Emerson at odds with fellow Liberal and Transport Minister Jean Lapierre and on the same side as Conservatives who oppose the deal.

Mr. Emerson, speaking on behalf of the B.C. Liberal caucus, believes the proposed sale to a partnership led by London, Ont.-based Fortune Minerals Ltd. should not go ahead and will take that position in talks with Mr. Lapierre, a spokesman for Mr. Emerson said yesterday.

Mr. Emerson made similar comments over the past week to newspapers in Vancouver and Prince Rupert, which is about 800 kilometres north of Vancouver.

Conservative MP John Cummins has been speaking out against the proposed sale for months, arguing that it would put an important public asset in the hands of a private company that could jack up rates for competing producers and use revenue from the terminal to support its own mine project in the region. Fortune says such concerns are unfounded.

The company is developing the Klappan coal project in northern B.C. and hopes to ship coal from that mine through Ridley Terminal.

Conservative leader Stephen Harper has promised to put the brakes on the sale until it can be reviewed.

John Reynolds, co-chairman of the Conservative campaign, yesterday said his party wants a review of the process because the proposed arrangement is a "bad deal for B.C." and that the facility should remain in public hands.

Mr. Reynolds, who is retiring as an MP after the Jan. 23 election, said Mr. Emerson is contradicting his colleague now the proposed deal has become an election issue.

"Emerson's now trying to keep some votes," Mr. Reynolds said.

Meanwhile, Fortune says it played by the rules in an open bidding process for the terminal and that a booming commodity market has raised the political stakes.

"If [the price of] coal had stayed where it was and nobody cared about coal, nobody would care about this," said Julian Kemp, a spokesman for Fortune.

Ridley Terminals, a federal Crown corporation, is a deep-water port built in the 1980s as part of an ambitious scheme to ship B.C. coal to global markets and to spur economic development in the northeast part of the province.

But hoped-for prices did not materialize and the project was largely a bust. The Quintette mine, near Tumbler Ridge, closed in 2000 and nearby Bullmoose closed in 2003.

Built at a cost of $250-million, Ridley never operated at its capacity and required federal funds to stay in business.

The terminal was on the block in the mid-1990s but no buyer was found. The government tried again in 2003, issuing a formal request for proposals.

Fortune Minerals and Federal White Cement Ltd., a privately-held company with its main office in Woodstock, Ont., formed Northwest Bulk Terminals Inc. and was selected as primary bidder by Transport Canada.

Documents released by Mr. Cummins in October show the partnership proposed in 2003 to pay $20-million for the facility, including $3-million up front and the remainder to be paid out over 40 years.

That raised howls of protest from Mr. Cummins and others who accused the government of sloughing off a prize asset at a fire-sale price.

Coal prices have more than doubled over the past two years, with contracts soaring from $50 (U.S.) a tonne in 2004 to as high as $125 last year on surging demand from steel makers.

The Ridley Shippers Coalition, a group of B.C. coal producers, has banded together to fight the deal, saying a sale to a private operator could lead to uncompetitive shipping rates and threaten an industry that's beginning to r ecover.p

Several new mines opened last year and more are scheduled to come on stream this year. Reasonable shipping rates are critical if B.C. producers hope to compete with Australian companies that have operations closer to ports, said coalition spokesman Pat Devlin.

Leslie Swartman, a spokeswoman for Transport Minister Jean Lapierre, said the Ridley divestiture process has taken almost three years and was waiting for cabinet approval when the election was called. Approval is required before the government can enter negotiations with a preferred bidder.

Prince George Citizen, Page 5, 06-Jan-2006
Liberals flip-flop on coal terminal sale
By Paul Willcocks

VICTORIA -- A Liberal campaign promise to reverse the sale of a major coal terminal at Prince Rupert is winning praise from provincial New Democrats and scorn from federal Conservatives.

Federal Industry Minister David Emerson has promised that a Liberal government would cancel the sale of Ridley Terminals to two Ontario companies.

Emerson's flip-flop puts him in conflict with federal Transportation Minister Jean LaPierre, who has defended the sale.

Emerson said putting the terminal into the hands of a single owner threatens the ability of coal and mineral producers to compete in world markers. He said the terminal should remain a Crown corporation, be incorporated into the Prince Rupert Port Authority or be run by a coalition of terminal users.

The federal Conservatives have campaigned against the sale for the last year, warning of the threat to shippers. The government was also selling the $250-million terminal for about $20 million, the Conservatives complained.

Provincial NDP transport critic Gary Coons said Thursday that Transportation Minister Kevin Falcon should intervene and make sure the sale is blocked.

The federal Liberal ministers can't agree on whether the sale is going ahead, and the province should be fighting to make sure Emerson prevails, he said.

"B.C. companies are worried that having the port sold to a single buyer would limit fair and open access to the port," said Coons.

Coons accused Falcon of failing to deal with the threat to mining in B.C.

The province announced plans to buy the terminal from Ottawa before the provincial election this year, but then abandoned the idea. Falcon is on vacation.

He has said the province is staying out of the issue because it is up to Ottawa to decide what happens to the terminal. B.C. would like to have some regulatory powers to ensure access to the terminal by all shippers and review pricing, he has said.

Coons said the planned sale is already hurting B.C.

The federal cabinet ordered the Crown corporation not to sign contracts with shippers until the deal with the private companies is completed. That's allowing competitors in other countries to grab market share from Canadian producers, he said.

Canadian mining companies have also opposed the sale, saying they fear the owners will set rates too high to allow them to compete with other producers selling into the booming Chinese market for coal.

The sale runs counter to promises to open up B.C. as Canada's Pacific Gateway, they say.