B.C. Premier Christy Clark, who faces re-election in less than two weeks, called for the blockade in a letter to Canadian Prime Minister Justin Trudeau. She said she was ready to go it alone with the ban if it doesn’t get federal support.
“Please be assured that British Columbia will use the tools we have at our disposal to discourage the shipping of thermal coal,” she said in the letter.
Yet it’s far from a done deal. Nick Desmarais, a Westshore spokesman, said by phone that Clark “doesn’t have the power” to carry it out. Cameron Ahmad, a spokesman for Trudeau, said, “we consider carefully and seriously any request from a premier.”
RBC’s Spracklin gave the ban a 50-50 chance of coming into effect, in a note to clients Wednesday after cutting his rating on Westshore. TD Securities analyst Daryl Young said in a note Thursday that the federal government holds ultimate authority for B.C. ports and “implementing a commodity-specific export ban targeted at U.S. companies would likely be contested at an international level.”
Interconnections
Signal Peak Energy LLC’s mine in Roundup, Montana is the biggest U.S. exporter of thermal coal, selling more than 90 percent of its output to Japan, China, South Korea and elsewhere. Gunvor acquired a stake in 2014, attracted in part by its “ secured rail and port access.” That access is comprised of a link interconnecting with Berkshire Hathaway’s transcontinental BNSF Railway, which carries the coal 1,300 miles (2,090 kilometers) on a single-line haul to Westshore for export.
U.S. coal producers could export up to 13 million short tons into the Pacific market via B.C. this year, accounting for potentially half of all U.S. thermal coal exports, according to Lucas Pipes, a coal analyst at FBR Capital Markets. Signal Peak’s mine produced 5.6 million tons in 2016. Its coal is bituminous, not so common in the Powder River Basin, which raises the possibility that the mine could be idled in the event of an export ban, Pipes said in a note Wednesday.
Seth Pietras, a Geneva-based spokesman for Gunvor, declined to comment. Signal Peak and BNSF didn’t respond to requests for comment. Westshore called for Trudeau to reject Clark’s proposal in a letter to the Canadian leader published on its website.
“We recognize that Canada is in a dispute with our most important trading partner, but we hope that our leaders will consider the best interest of all Canadians and not punish Canadian companies and workers by putting one industry ahead of another.”
This article was provided by Bloomberg News.