Add Warren Buffett and one of Canada’s richest men to the list of those at risk of collateral damage in a widening trade spat between Canada and the U.S.
A day after U.S. President Donald Trump slapped duties on Canadian softwood lumber imports, British Columbia took aim at Trump’s coveted coal industry by calling for a ban on U.S. thermal coal exports through its Pacific Coast ports. The surprise move added to growing tensions between the two nations over the North American Free Trade Agreement and the dairy industry.
Among the first casualties was billionaire Jim Pattison, owner of Guinness World Records and the biggest investor in Westshore Terminals Investment Corp. -- the largest coal-export facility on the west coast of the Americas, located just south of Vancouver. Westshore tumbled 12 percent on Wednesday, reducing the value of Pattison’s stake by about C$64 million ($47 million). The stock recovered 2.4 percent by 11:25 a.m. Thursday in Toronto.
Pattison, 88, with interests in car dealerships, advertising and seafood, is one of Canada’s wealthiest people, with a net worth of $6.2 billion, according to data compiled by Bloomberg. He declined to comment.
“Too many investors in this country -- and the federal government, for that matter -- assumed Canada would get an easy pass,” said James Thorne, chief capital market strategist at Caldwell Investment Management Ltd. “Canada and the U.S. are in the early innings of what looks like to be a trade war. What will be the next shoe to drop?”
Gunvor Group
If enacted, a blockade would also hit the interests of oil trader Gunvor Group Ltd., which owns a stake in an underground mine in Montana. That mine exports more thermal coal than any other in the U.S., according to Global Coal Sales Group LLC, which markets coal from the site. The coal is taken to Westshore along the BNSF Railway owned by Buffett’s Berkshire Hathaway Inc., which could lose its largest export customer if it can’t be shipped by that route, according to Global Coal.
British Columbia’s proposed ban would only apply to thermal coal, the kind burned in power plants, not steelmaking coal. U.S. thermal coal producers, facing a fast shrinking domestic market, have sought to get their product to Asia, and port congestion and environmental opposition has helped push those shipments to Canadian terminals. About 6.2 million metric tons of U.S. thermal coal passed through Vancouver’s sea port last year, according to the B.C. government.
Westshore has been the biggest beneficiary -- it shipped about 5.9 million of that, based on estimates by RBC Capital Markets analyst Walter Spracklin. U.S. thermal coal accounted for about 23 percent of Westshore’s total volumes and was expected to grow to 30 percent this year, Spracklin said.
Facing Re-Election