第４回石炭投資促進セミナー

Western North America’s
Export Coal Industry
A Review of the Exporting Regions and the Industry’s Rail and PortOptions
12 November 2014

Content• Introduction• Review of Coal Regions• Overview of Port Options and Capacities• Review of Transportation Options and Cost
• Conclusions

2

Introduction

3

Introduction•
6,800 km7,900 km•••

11,000 km

Source: InfoMine Inc.

Regions:• NE BC• Central Alberta• SE BC & Southern Alberta• Northern and Southern PRBDistinct coal qualities
Rail distance to terminal options
Distance to Japan

Typical Rail Distances (Kilometers)
Coal Region
PortDistance988
Northeast BC
RidleyCentral Alberta
Westshore
1,082
Ridley1,374Southeast BC
Westshore
1,190
Neptune
1,200
Ridley1,790Southern Alberta Gateway
1,100
Westshore
1,170
Ridley2,000
Northern PRB
Millennium
2,287
Gateway2,414Westshore
2,560
Ridley3,046Southern PRB
Mexport
1,515
Millennium
1,656
Westshore
2,939
Ridley3,4254

Western Export Coal Shipment Summary••••48Mt total export forecast for 2014
Westshore estimates 31 to 32Mt for 2014
Neptune assumed constant
9Mt estimated for RTI in 2014. Assumes:

0.7Mt PCI from Walter in Q4 to total 2.5Mt for year1.6Mt from Anglo, slightly less than 2013
RTI ships 1.5Mt of “recycled material”•••

Annual Coal Export Shipments from Western Canada (Millions of Tonnes) 1
Terminal

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014 (est)

Westshore (2)

21.2

21.9

19

21.2

21.1

20.1

24.7

27.3

26.1

30.1

31.5

Neptune

3.5

3.4

5

3.7

4.8

4.3

5.5

5.2

6.4

7.5

7.5 (4)

Ridley (2) (3)

01

2.8

5.1

4.8

4

8.1

9.6

11.5

11.8

9 (5)

24.7

26.3

26.8

30.0

30.7

28.4

38.3

42.1

44.0

49.4

48Total
1.
2.
3.
4.
5.

Source, Historic Figures: Westshore Terminals AIF March 18, 2014
Includes Petroleum CokeSource: RTI 2013 Annual Report
Calculated from Teck’s Q3 2014 production projections
Based on estimates of individual shippers’ annual 2014 sales
5

NE BC

6

NE BCSOURCE: Figure 5, British Columbia coal industry
overview 2013, Ministry of Energy and Mines, British
Columbia Geological Survey, Information Circular
2014-05

7

Walter Energy’s NE BC Mines• Mines Idled due to market conditions:• Willow Creek H1 2013
• Wolverine April 2014
• Brule June 2014

• 2014 sales estimated at 2.3Mt• No production Q3, only Low Vol PCI
sales• Average realized prices needed inexcess of $US 150

Walter Energy Canadian 2014 Results (000t and US $)2013 Q1 2014 Q2 2014 Q3 2014
Total MetallurgicalSales
Production
Average Net Selling Price pt
Average Cash Cost of Sales pt
Average Cash Cost of Production pt
Mid Vol Hard Coking
Sales
Production
Average Net Selling Price
Average Cash Cost of Sales pt
Average Cash Cost of Production pt
Low Vol PCI
Sales
Production
Average Net Selling Price
Average Cash Cost of Sales pt
Average Cash Cost of Production pt

YTD1,612
598
669
345
1,579
1060
519
0
$135.93 $123.60 $115.96 $102.85 $115.99$143.06 $149.45 $126.78 $104.17 $130.35
3,796
3,600

$82.07$103.00 $81.76 $82.71
1,840
278
315
1,739
491
73
$144.45 $130.91 $123.35$155.38 $150.08 $128.18$115.46 $85.92 $133.69

00

593
564
$126.89$138.45$92.10

1,019
1,955
320
354
345
1,015
1,861
569
446
0
$127.91 $117.26 $109.37 $102.85 $109.64$133.34 $147.28 $124.76 $96.74 $122.35$76.03$91.36 $78.16 $73.31

8

NE BC Licenses and Applications9

West Central Alberta

10Alberta Coal Leases and Application

11

Rail to Port Routes Western Canada

12

13

Coal Valley Resources, Inc.

14

Coal Valley Resources, Inc.
Sherritt Consolidated Operating Statistics (Coal Valley & Obed Mines)
2011

2012

2013

Q1 2014

Revenue ($M)$444.8$352.6$288.2$82.2

Cost of Sales ($M)$349.0$312.1$325.2

$76.1

$6.3

$7.8

$8.3

$89.5

$32.7

-$45.3

$55.3

$72.7

$46.9

$34.2

-$40.0-$92.2Administrative Expenses ($M)
EBITDA ($M)
Depletion, Depreciation, Amortization ($M)
Earnings from Operations ($M)

$6.1
$6.1

Production (Mt)

4.4

3.7

3.3

0.8

Sales (Mt)

4.4

3.5

3.3

0.9

Average Realized Prices ($/t$101.61$101.65$87.84$87.95

Unit Operating Cost ($/t)$79.61$86.48$82.81$75.69

Mountain Operations Consolidated Operating Cost Breakdown, FOB Terminals ($/t)
Commissions, Royalties, Freight, Port Fees

$25.4832%$24.2128%$22.3627%40%$30.28

Labour

$16.7221%$19.8923%$20.7025%

21%$15.89

Fuel

$8.76

11%

$10.3812%$11.5914%

14%$10.60

Repairs & maintenance$11.1514%$11.2413%

$9.94

12%

10%

$7.57

Rental & Contractors$11.9415%$11.24

13%

$7.45

9%

7%

$5.30

Other$5.57

7%

$9.51

11%

$10.77

13%

8%

$6.06

$79.61100%$86.48100%$82.81

100%

100%$75.69Unit Operating Cost

15

SE BC16

SE BCSOURCE: British Columbia coal industry overview
2013, Ministry of Energy and Mines, British Columbia
Geological Survey, Information Circular 2014-05

17

SE BC18

Teck Coal
• 2014 forecast• 26 to 27Mt sales• $79 to $84pt - average cost of sales before D&A• Total Capacity Clean Coal 34Mtpa• Coal price >> $150pt
Teck's Annual Production Capacities (Mtpa)
Operation (100% Basis)
MinePlant(ROM) (Clean)
1 Fording River
9.0
9.5
2 Greenhills
5.2
5.2
3 Line Creek
3.5
3.5
4 Elkview
6.5
6.8
5 Coal Mountain
2.7
3.5
6 Cardinal River, Alberta
1.7
3.0
7 Quintette Project, NE BC
3.5
3.0
Total 32.1
34.5

Teck Coal (100%) Results 2013 and Q1 – Q3 2014
2013
2014
Q1Q2
Q3
25,622
6,730
6,400
6,800
Production (000t)
Sales (000t)
26,911
6,168
6,800
6,700
Average sale price
$149
$131
$111
$110US$/t
Cdn/U.S. exch rate
1.03
1.09
1.10
1.08
C$/t
$153
$143
$122
$119
Cost of Sales (C$/t)
$51
$52
$53
$50
OperatingTransportation
$38
$38
$37
$38
Inventory Write-Down$5$2$3
D and A
$27
$29
$26
$27
Total
$116
$124
$118
$118
Gross Profit C$pt Sales
$37
$19
$4
$1
Gross Profit (C$M)$1,007
$114
$23
$8

YTD
19,93019,668
$117
1.09
$127
$52
$38
$3
$27
$120
$7
$145

19

Northern Power River Basin

20

Powder River Basin Mines

Source: BNSF Railway

21

Northern PRB Rail to Port Options

Spring Creek to:• Ridley: 4,340km• Westshore: 2,560km• Gateway: 2,414km• Millennium: 2,287km• Southern PRB: 378km

Source: BNSF Railway
22

Cloud Peak Energy’s Spring Creek Mine
Cloud Peak Energy Inc.
Owned and Operated Mines
Tons sold (M)Realized price per ton soldAverage cost per ton sold
Export and Purchased Coal
Total tons delivered (M tons)
Asian export tons (M tons)
Revenue (US$M)
Cost of product sold (US$M)
Operating Income (US$M)

2007
0.1

2013
Q1-3 2014
86
62.6$13.08$13.07$10.23$10.525.5
4.7$265.9$261.2
$68.4

4.0
3.2
$178.8$188.4$3.7

Annual Spring Creek Mine Coal Shipments to Asia (Mt)
ActualProjected2008 2009 2010 2011 2012 2013 2015 2019
0.7
1.6
3.3
4.7
4.4
4.7
6.0
7.0

• Owned and Operated Mines profitable• Export and Purchased Coal ? Yes, with derivatives• Projected Asian market growth to 7Mtpa

23

Montana: Signal Peak Mine

• As a private company, little information is available• Produced 8.7Mt in 2013, underground longwall
24Southern PRB – Arch CoalArch Coal PRB Operating Statistics
2013 Q1-3 2014
Tons sold (Millions)
111.7
91.9Coal sales realization per ton sold$12.44$12.86
Cost per ton sold$12.16$11.14
Operating margin per ton sold
$0.28
$0.20

• Pulled back from the western export market starting in 2012
• Agreement for 2.5Mtpa with Ridley but little or no productshipped• Owns 38% of Millennium Bulk Terminals-Longview LLC

25

Western Coal Ports

26

Westshore Terminals, Roberts Bank
Westshore Q1- Q3 2014 Results
Total (Millions) $ Per Tonne
Tonnes Loaded
Revenue Coal Loading
OtherTotalExpenses Operating
Administrative
TotalProfit*

23.9$236.82

$9.91

$5.28

$0.22

$242.10$10.13$99.06$4.15$10.92$0.46$109.98$4.60$92.88$3.89* Profit after Net Financing Cost and Income Tax. Excludes proceeds frominsurance claim re Dec 2012 vessel incident.

Source: National Transportation Safety Board at http://www.tsb.gc.ca/eng/rapportsreports/marine/2012/m12w0207/m12w0207.asp••••

Loaded 23.9Mt in Q1 - Q3 2014 (59% Met; 40% thermal)
31 to 32MT forecast for 2014 (30.1Mt in 2013)
Estimated 2014 annual average throughput rate is $10.00pt
36mtpa committed capacity by 2018 with efficiency improvement
program27

Westshore Terminals: Contracts
Westshore's 2013 Shipment Breakdown (Mt and %)Total 30.1Mt
ShipperProductDestinationMet
18.1 60% Teck
16.9 56% Korea
11.9 40%
Thermal 11.7 39% US thermal 9.3 31% China
6.5 22%Pet Coke 0.3 1% Coal Valley 2.1 7% Japan
6.3 21%30.1 100% GCCC
1.8 6% Europe
1.7 6%
30.1 100% Taiwan
1.7 6%
S. America 1.3 4%
Other
0.7 2%
30.1 100%• Teck Coal

• Expires March 31, 2021:• Fixed rate
• 19Mtpa minimum starting April 2014

• Cloud Peak Energy• Amended, expires December 31, 2024

• Purchased Coal Valley’s capacity (3Mtpa toMarch 31, 2022) for $37M, January 1, 2015
• Existing contract - variable rates based on U.S.
dollar product prices, subject to floor rate

• Grande Cache Coal Corporation – expires
March 31, 2022:• 0.87Mt in H1 2014 at cash costs FOB of about$103pt• Signal Peak Energy• Produced about 8Mt in 2013

• Peabody• No information

28

Neptune Terminals, North Vancouver• Coal, potash and fertilizer• Coal portion (46%) owned by Teck
• Coal expansion completed, capacity now 12.5Mtpa,dedicated to Teck, potential to go to 18.5Mtpa• 2013 shipments about 7.5Mt, assume same for 2014

29

Ridley Terminals Inc.

• Stockyard expansion & Installation of SecondDumper Postponed• New Stacker Reclaimer installed• Two Stacker Reclaimers retrofitted in 2014
Source: RTI 2014 Q2 Quarterly Report30

Ridley Terminals Inc.
Completion of expansion to 25Mtpa in 2014 postponed••••

Stock yard expansion and installation of second rotary dumper postponed until coal markets
improve
New stacker reclaimer Installed and two existing stacker reclaimers being retrofitted in 2014
Resulting capacity possibly 18 to 20Mtpa•

30Mtpa capacity with addition of 4th stacker reclaimer and completion of 2014
program•

60Mtpa capacity possible with doubling of facilities on leased adjacent land•Federal 2014 budget (Bill C-31- June 19, 2014) authorized Finance to sell RTI•

Enabling legislation was expected on September 30, 2014 but no announcement

In H1 2014, RTI shipped 4Mt coal & petroleum coke:••••

3.5Mt of coal, 30% less than the 5Mt shipped in H1 2013
0.5MT of petroleum coke, 37% less than the 0.7Mt shipped in H1 2013
Estimated 2014 annual throughput totals 9Mt based on projections for individual shippers,
down 1.5Mt from last quarter’s update31

Ridley – Estimate of Contracted Capacity
Estimated Annual Contracted Throughput for Ridley Terminal's to 2030 (Millions of Tonnes)

Shippers

12345

678

910111213

14

15

1617Company

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Coal Valley

1.6

3.0

Arch Coal

2.52.5Pet Coke

1.5

Walter Energy3.0

3.0

3.0

3.0

3.0

3.0

3.0

3.0

3.0

3.0

3.0

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

4.0

4.0

4.0

4.0

4.0

4.0

4.0

4.0

4.0

4.0

4.0

4.0

Teck

4.2

3.0

3.0

3.0

3.0

3.0

3.0

2.5

2.5

2.5

2.5

2.5

2.5

Anglo American

1.9

3.0

4.0

4.0

4.0

4.0

4.0

4.0

4.0

4.0

4.0

4.0

4.0

Projects

Sub-total 15.7 17.0 15.5 15.5 15.5 15.5 15.5 15.0 15.0 15.0 15.0 15.0 11.0
Hillsborough

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

Summit Coal

0.8

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

Coalspur

2.5

4.5

7.4

9.9

10.1 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7

0.5

0.9

0.9

0.9

0.9

0.9

Sub-total 0.5

4.9

7.0

9.9

12.4 12.6 13.2 13.2 13.2 13.2 12.5 12.5 12.5 11.6 11.6 11.6 11.6

Cardero

0.9

0.9

0.9

0.9

0.9
0.9

0.9
0.9

0.9
0.9

0.9

0.9

0.9

0.9

Total 16.2 21.9 22.5 25.4 27.9 28.1 28.7 28.2 28.2 28.2 27.5 27.5 23.5 11.6 11.6 11.6 11.6

32

Fraser Surrey Docks• August 21, 2014 Port Metro Vancouver issued a Project Permit to Fraser
Surrey Docks LP for the development of a Direct Transfer Coal Facility tohandle up to 4Mtpa for delivery to vessel terminal at Texada Island .
• Project has potential to increase to 8Mtpa• Any increase over 4Mtpa is subject to a new Port Metro Vancouver
project and environmental review.
• Permit has been challenged in Federal court, project’s timing is unclear• PRB coal is targeted33

Fraser Surrey Docks

Barge route to Texada Island

34

Proposed Coal Ports

35

Source: SNL Energy

Gateway Pacific Terminal

36

Gateway Pacific Terminal• Owned by SSA Marine• 1,092-acre site between areas with existing heavy industry• Served by BNSF
• Capesize vessels• Project now in the slow moving EIS process• 2015 or later before draft EISs are issued, followed by public comment period and public hearings• Final EISs 2016 or later• Coordinated EISs underway by U.S. Army Corps of Engineers, Washington state Department of Ecologyand Whatcom County• EISs are required for both the proposed export terminal and BNSF’s associated rail expansion• Through contractor, Corps will coordinate EIS under National Environmental Policy Act (“NEPA”) andEcology will coordinate EIS under the State Environmental Policy Act (“SEPA”)

37

Millennium Bulk Terminals: Longview, WA• Restricted to Panamax vessels, up Columbia River• Owned by Ambre Energy (62%), Arch Coal ($25M for 38%)
• Expansion to 25Mtpa in Stage 1 and 44Mtpa in Stage 2• Coordinated environmental review underway by U.S. Army Corps of Engineers, Washington
state Department of Ecology and Cowlitz County• Through contractor, Corps will coordinate EIS under National Environmental Policy Act (“NEPA”)
and Ecology will coordinate EIS under the State Environmental Policy Act (“SEPA”)
38Morrow Pacific Project• Owned by Ambre Energy Limited• Coal to be loaded to covered barges at Port of Morrow near
Boardman, Oregon, shipped down the Columbia River to St.
Helens and transferred to vessels at Port Westward• 3.5Mtpa with potential to increase to 8Mtpa• Progressing through permitting• In August, Oregon State lands denied project’s dock permit at
the Port of Morrow site
• Ambre Energy Limited is appealing

39

MEXPORT Coal & Minerals Terminal

2,100+ km: Gillette toMEXPORT40

MEXPORT• Guaymas, Mexico• Current status unknown• Phase 1: Development & Initial Funding - Completion Q2 2015
• Raise $50M development capital• Permitting• Close financing• Complete FEED
• Phase 2: Project Financing - Completion end of 2015
• Raise $650M construction capital• Phase 3: Construction – Completion end of 2017
• Details:• Berths for 2 Capesize vessels• 120 - 150 car unit trains• 30+ Mtpa
• 2.4Mt storage• Expansion to 100Mtpa
41

Transportation Options: FOB Cost

42

Combined Rail and Port Costs
FOB Transportation Costs of Select Coal Operations and Projects (US$/ton)
Rail
1 Northeast BC
2 Southeast BC

3 Central Alberta
4 Southern Alberta

5 Northern PRB

6 Southern PRB

Port

Total

Ridley$20.89$9.18$30.07

Neptune$22.43$4.59$27.03

Westshore$22.25$7.09$29.34

Ridley$33.46$9.18$42.64

Westshore$20.23$8.76$28.99Ridley$25.69$9.18$34.87Gateway$20.57$8.76$29.33

Westshore$21.88$8.76$30.64

Ridley$37.39$9.18$46.57

Millennium$24.58$8.76$33.35Gateway$25.95$8.76$34.71

Westshore$27.53$8.76$36.29MEXPORT$26.21$8.76$34.97

Millennium$28.65$8.76$37.41

43

Conclusions• 48 -49Mtpa exported from all areas• Ridley only existing terminal with available capacity• Westshore fully committed (36Mtpa), Neptune captive• Timing of new terminal projects speculative• Ridley is not an economic alternative for all regions• Existing coal operations not profitable at prevailing prices• Potential to expand exports depends on:• Improved, sustainable coal price• Economic access to Ridley’s available capacity• Start-up of new terminal capacity• Opportunities exist for investment at the exploration anddevelopment level44

Thank you45