Prince Rupert quietly becomes a trade powerhouse
With record tonnage and a big expansion, port appears ripe for Ridley Terminals sale
A consortium led by Exxon Mobil Corp. (NYSE:XOM) has pulled back from a planned liquefied natural gas (LNG) plant at Prince Rupert, and Ottawa is selling the expanding Ridley terminal, but the northwest B.C. city’s bustling port expects an even bigger share of gas exports.
The decision by the LNG Canada consortium to proceed with its $14 billion export terminal at Kitimat will add to the record-breaking tonnage now handled at the Prince Rupert docks, said Brian Friesen, vice-president of trade development and communications at the Port of Prince Rupert.
“The project will create natural gas liquids such as propane that will need market access, which is where it will have a positive effect on Prince Rupert.”
Friesen added that Calgary’s AltaGas (TSX:ALA) and Netherlands-based tank storage company Royal Vopak are nearing completion of a new Ridley Island propane export facility that will be ready this spring as the first of its kind on Canada’s west coast. AltaGas expects the facility will offload 50 to 60 Canadian National Railway Co. (TSX:CNR) railcars of propane per day to export into Asia.
The port’s Ridley Terminals Inc. operation is already undergoing a $280 million expansion as it moves to meet global demand for metallurgical coal used in steelmaking.
Last year, Ridley’s shipments of metallurgical coal increased 40% to 5.6 million tonnes, while exports of thermal coal, used for electrical power generation, were up 6% from 2017 to 2.1 million tonnes.
Thermal coal shipments have been dampened at the Fraser Surrey Docks after the Port of Vancouver cancelled a permit for a $15 million thermal coal terminal this year. The controversial project would have had the capacity for shipments of four million tonnes of U.S. coal annually to markets in Asia. The plan had drawn fire from environmentalists and municipal governments in Metro Vancouver.
Marc Dulude, president and COO of Ridley Terminals Inc., doubted the thermal coal shipments could transition north to Prince Rupert.
“We are not really equipped to serve the U.S. coal market,” he said.
A sale of Ridley Terminals, the only government-owned terminal at Prince Rupert, is in the works – and that could delay any such decisions, Dulude noted.
In November 2018, the Canada Development Investment Corp. (CDEV) announced it was calling for private bids for 90% of Ridley Terminals. The remaining 10% of the shares would be transferred to the Lax Kw’alaams Band and the Metlakatla First Nation at the close of the sale, according to a government release.
Dulude referred all requests for information on the potential sale to CDEV.
“I can’t really comment,” he said.
CDEV referred questions to adviser Macquarie Capital, which also refused comment.
Ridley’s expansion shares in the next phase of growth by the Port of Prince Rupert and Dubai-based DP World that will increase annual throughput capacity at Fairview, Canada’s second-largest container cargo terminal, to 1.8 million 20-foot-equivalent units (TEUs) when complete in 2022.
The expansion comes after the port had back-to-back record years in 2017 and 2018, with 26.7 million tonnes handled last year, up 10% from a year earlier.
Friesen noted that container shipments through Fairview increased 9% year-over-year to a record of 1.03 million TEUs. As a comparison, the Port of Vancouver now handles approximately 3.3 million TEUs annually, and the southern B.C. port has an annual tonnage throughput of around 141 million tonnes.
Still, the Port of Prince Rupert is a thriving concern in an area of B.C. that has seen other major projects stopped or stalled in the past few years.
The port generates 3,100 direct jobs and 5,000 indirect jobs in the Prince Rupert area, according to the Prince Rupert Port Authority.
Friesen said the port, which is aimed at serving Asian markets, has not yet suffered a slowdown in traffic due to the ongoing U.S.-China trade war.
However, he said, “It is something we are keeping a close eye on.” •