An American coal company will no longer ship coal through Delta’s Westshore Terminals starting in 2016.
In an October 28 press release, Cloud Peak Energy announced it had entered into an amended agreement with Westshore to cease shipping coal starting in 2016 and through to 2018. Cloud Peak will make a series of payments to Westshore in lieu of its take-or-pay commitments — worth $454 million for 2016 to 2018 — to ship coal through the terminal.
Cloud Peak Energy, a large producer of thermal coal used in coal-fired electricity plants, says coal prices are currently too low to continue shipments. The company is also negotiating with Burlington Northern Santa Fe (BNSF) to change its current take-or-pay shipping contract with the railway.
Coal producers have been hit hard by plunging coal prices largely due to a glut of coal and slower global economic growth. Thermal coal producers are also facing slowing demand as countries try to switch power generation to lower-emission options like natural gas or renewables.
In Metro Vancouver, residents, activists and municipal politicians have voiced concerns about planned increases in rail shipments of thermal coal from the United States through the region, citing health concerns about coal dust and the downstream effects of high emissions levels from coal-fired electricity plants.
Despite the low prices, Cloud Peak Energy said it still believes there is “long-term opportunity for Asian exports of … coal as oversupplies of seaborne thermal coal are rationalized.” Its long-term contract with Westshore remains in place and the company may resume shipments if prices improve.