Coal export is not a terminal illness

By Les Leyne
Times Colonist (Victoria)
12-Jan-2006

The Ridley Island shipping terminal at Prince Rupert is one of the key parts of the "Pacific Gateway strategy," a grand vision to enhance B.C.'s position at the crossroads of Asian-North American trade.

Federal and provincial politicians have been waxing eloquent about the concept for the past while. So it's a shame that, despite the undeniable importance of the link, they are on the verge of screwing it all up.

Picture this: After years in the doldrums, the coal business is making money again, based on China's insatiable need for more fuel. B.C. still has big-time northern coal properties, and they're all gearing up to supply China. Ridley is the main coal port for the north.

In short, we've got what they need, and we've got the system in place to deliver it. So what does Ottawa do? It imposes by way of cabinet order an edict prohibiting the management of the Crown-owned terminal from signing any long-term contracts.

B.C. is perfectly positioned and equipped to capitalize on a seismic change in the world economy, and Ottawa deliberately paralyses the key part of the system. God forbid anyone should make a success of this venture.

Australian competitors must laugh themselves sick watching this play out.

The bizarre move arises out of the game plan the federal government has come up with to unload the Crown operation. That's an even bigger affront to common sense, and it's got players on all teams in both the federal and provincial arenas scratching their heads.

The coal terminal was the federal contribution to the northeast coal mega-project of the 1980s. That overall project never really lived up to the hype that accompanied its development, as Japanese demand tanked right as Ridley terminal opened for business in January 1984.

So it has limped along well below capacity, losing money for years. After Bullmoose -- the last of the original northeast coal plays -- closed in April 2003, Ottawa became determined to unload the operation. That made sense at the time. (I wrote an obituary for northeast coal when the last shift finished at Bullmoose, predicated on it being the end of an era.)

But the words were barely on the page when the price started jumping because Chinese demand started escalating. Now there are new mines opening, long-term demand seems assured and it looks to be -- not the end of an era -- but the start of a whole new one.

Federal officials insist they want to unload the terminal, which isn't necessarily a bad idea. But the way they are going about it doesn't inspire a lot of confidence in government's ability to capitalize on a situation that oozes potential.

They've signed a preliminary agreement with an obscure Ontario firm that is also planning a coal play in B.C. Of all the ways to divest itself of an unwanted operation, this is probably the worst. A company planning to compete with others in what could become a crowded field will have the advantage of controlling the main shipping point in northern B.C. for the product. So much for open and equal access.

The government could sell it to a consortium of shippers. But it didn't like the looks of that bid, even though it was reportedly worth more. Or it could off-load it to the ready and willing Prince Rupert Port Corporation.

Or the provincial government could take a deeper interest. B.C. officials took a hard look at acquiring Ridley early last year, but opted against. Consultants were very negative about the prospects of a taxpayer-owned terminal. B.C. Liberals were probably philosophically opposed, as well. After off-loading the provincially owned railway, they are ideologically precluded from turning around and doing the exact opposite with the coal terminal.

After the Vancouver Sun's Peter O'Neil laid out this whole curious story, the election campaign erupted. Now the Conservatives are promising to re-think the sale. The federal transport minister is standing pat.

But Industry Minister David Emerson has realized how it all looks and has broken ranks to agree that it all needs to be re-thought. There's not a word about this in the "made in B.C. agenda" the Liberals released last week. But it could be the most significant stand the B.C. caucus takes.

Oddly enough, Emerson is now in the same camp as the provincial New Democrats. Twice they have badgered Transportation Minister Kevin Falcon about the wrong-headed nature of this plan, just as Emerson plans to pursue the federal minister with the same questions.

Falcon's reply? Don't worry about it.

He says B.C. has pushed for fair and open access and has every assurance that's just what the new owners will provide, even though he said Wednesday the arrangement as it stands doesn't provide either. But if he is so sure the feds will fix the deal, why is Emerson now opposing the deal and demanding a second look?

If provincial Liberals believe their own rhetoric about the importance of the Pacific Gateway vision, they'll get mixed up in this in a much bigger way than just sitting and hoping the federal government fixes the problems it's created.

leyne@island.net