As filed with the Securities and Exchange Commission on March 19, 2004





SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

3⁄43⁄43⁄43⁄4

FORM 40-F

(Check One)

cRegistration Statement pursuant to Section 12 of the Securities Exchange Act of 1934orgAnnual Report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2003




Commission file number 1-15230



FORDING CANADIAN COAL TRUST

(Exact Name of Registrant as Specified in its Charter)



ALBERTA122198-0393766(Province or Other Jurisdiction of Incorporation or Organization)(Primary Standard Industrial Classification Code Number)(I.R.S. Employer Identification Number, if applicable)




Suite 1000, 205
- 9th Avenue SE, Calgary, Alberta T2G 0R4, (403) 260-9800

(Address and Telephone Number of Registrant's Principal Executive Offices)



Brad R. Johnston, General Manager, NYCO Minerals, Inc.
124 Mountain View Drive, Willsboro, New York  12996-0368, (518) 963-4262

(Name, Address and Telephone Number of Agent for Service in the United States)

3⁄43⁄43⁄43⁄43⁄43⁄43⁄43⁄43⁄43⁄43⁄43⁄43⁄43⁄43⁄4

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Units, no par value
Unit Purchase Rights(1)
(Title of Each Class)The New York Stock Exchange
(Name of Each Exchange on which Registered)


(1)

The Unit Purchase Rights initially are attached to and trade with the Units.



Securities registered or to be registered pursuant to Section 12(g) of the Act:  None



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:  None



For annual report, indicate by check mark the information filed with this form:



g

Annual Information Form

g

Audited Annual Financial Statements



Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2003 there were 46,945,455 Units of the issuer's capital stock outstanding



Indicate by check mark whether the registrant by filing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the
"Exchange Act").  If  "Yes" is marked, indicate the file number assigned to the registrant in connection with such rule.



Yes   c

82 - _______

No   g



Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s); and (2) has been subject to such filing requirements for the past 90 days.



Yes   g

No   c





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Information to be Filed on This Form.

|Exhibit | Description                                                                                                                                                                                                                                                                                                                
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|A       | 2003 Annual Information Form.                                                                                                                                                                                                                                                                                              
|B       | Audited Consolidated Financial
    Statements, including consolidated balance sheets as at December 31, 2003 and 2002 and consolidated statements of income, accumulated earnings and cash flows for each of the years in the three-year period ended December 31, 2003 (including a reconciliation to US GAAP at Note 21).
|C       | 2003 Management Discussion and Analysis.                                                                                                                                                                                                                                                                                   
|D       | Consent of Independent Accountants.                                                                                                                                                                                                                                                                                        
|E       | Certifications Required by Rule 13a-14(a) of the Securities Exchange Act of 1934.                                                                                                                                                                                                                                          
|F       | Section 906 certification of James L. Popowich, the President, and Ronald A. Millos, the Chief Financial Officer.                                                                                                                                                                                                          



Disclosure Controls and Procedures

Disclosure controls and procedures are defined by the Securities and Exchange Commission as those controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.  The management of the Trust is responsible for establishing and maintaining adequate internal control over financial reporting for the Trust and this involves ensuring that appropriate disclosure controls and procedures are in place and operating effectively.  As of December 31, 2003, an evaluation was carried out under the supervision of and with the participation of the Trust's management, including the principal executive officer and principal financial officer, of the effectiveness of the Trust's disclosure controls and procedures.  Based on that evaluation, our principal executive officer and principal financial officer have determined that such disclosure controls and procedures are effective and that there are no material weaknesses in the Trust's internal control over financial reporting as of December 31, 2003.

Changes in Internal Control Over Financial Reporting

Subsequent to such evaluation, there were no significant changes in internal control over financial reporting or that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.

Code of Ethics for Principal Executive Officer and Senior Financial Officers

The Trust and Fording Inc. have adopted a Joint Code of Business Conduct that applies to all employees, including the Trust's principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions.  This code is available

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on the Trust's web site at www.fording.ca and in print to any unit holder who requests it.  All amendments to the code, and all waivers of the code with respect to any of the principal executive or financial officers covered by it, will be posted on the Trust's web site and provided in print to any unit holder who requests them.  There were no waivers of the Joint Code of Business Conduct in 2003.

Audit and Pension Committee

Identification of Audit Committee

The Trust has a separately-designated standing audit committee established in accordance with Exchange Act regulations.  The following trustees constitute such Audit Committee: Harry G. Schaefer, F.C.A., committee chairman; Michael S. Parrett, C.A.; and Peter Valentine, F.C.A.  Each of these trustees has been determined by the board to be independent and financially literate as those terms are defined by the New York Stock Exchange for audit committee members.

Audit Committee Financial Expert

The Trust's board of trustees has determined that more than one member of the Audit Committee meets the legal requirements of an audit committee financial expert.  Of that group, Harry G. Schaefer, F.C.A. is an audit committee financial expert.

Principal Accounting Fees and Services

Following is a summary of professional services provided by the Company's principal auditors, PricewaterhouseCoopers LLP, during the years ended December 31, 2002 and 2003, and the related fees:

20022003Audit fees$196,000$258,000Audit related fees145,882236,300Tax fees-57,510All other fees7,5001,625Total$349,382$553,435




Audit fees

Audit fees were for professional services rendered by PricewaterhouseCoopers LLP for the audit of the annual consolidated financial statements, review of the Annual Information Form and Management'' Discussion and Analysis and completion of limited reviews of quarterly financial information.

Audit related fees

Audit related fees include professional services rendered by PricewaterhouseCoopers LLP in the following areas: assistance with the preparation of information required as a result of the Plan of Arrangement completed on February 28, 2003 that resulted in the Trust succeeding to the business of its predecessor, Fording Inc.; accounting consultations; review of documents required for debt refinancing; and audits related to pension plans and compliance with terms of various contractual agreements.



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Tax fees

Tax fees include assistance rendered to the Trust in connection with various tax compliance issues in Canada and the United States.

All other fees

Other fees include advice to the Trust with respect to the requirements of the Sarbanes-Oxley Act of 2002 and to purchase a license to access a financial reporting and assurance information database developed by PricewaterhouseCoopers LLP.

Pre-approval Policies and Procedures

All fees to be paid to PricewaterhouseCoopers LLP were approved by the Audit Committee in advance of the services being performed.  The Audit Committee has considered the compatibility of the non-audit services provided by the Company's principal auditors with auditor independence.

Off-Balance Sheet Arrangements

Reference is made to the section titled
"Off-Balance Sheet Arrangements" in the 2003 Management Discussion and Analysis attached as an exhibit hereto.

Contractual Obligations

Reference is made to the contractual obligations table included in the section titled
"Liquidity" in the 2003 Management Discussion and Analysis attached as an exhibit hereto.

New York Stock Exchange Corporate Governance Disclosures

New York Stock Exchange ("NYSE") corporate governance rules require foreign listed private issuers to disclose any significant ways in which their corporate governance practices differ from those followed by domestic companies under NYSE listing standards.  The corporate governance practices of the Trust in 2003 did not meet the NYSE listing standard that requires a majority of independent directors.  In 2003, the Trust had four independent trustees and four non-independent trustees.  As the Declaration of Trust requires that a majority of trustees be independent, a provision was included in the Declaration of Trust that deemed Mr. Grandin to be independent until the first annual meeting of the Trust in 2004.  However, under the TSX guidelines and NYSE corporate governance rules, Mr. Grandin, as Chief Executive Officer, would be considered
"related" or "non-independent".  A majority of the trustees will be independent after the Trust's annual meeting in 2004 in the event that all of the candidates nominated by the Trust's Governance Committee are elected.  A majority of the directors of Fording Inc. are independent.

Undertaking.

Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to:  the securities registered pursuant to Form 40-F; the
securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

4



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Consent to Service of Process.

The Registrant has previously filed with the Commission a written irrevocable consent and power of attorney on Form F-X.

5



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Signatures

Pursuant to the requirements of the Exchange Act, the registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

|Date: March 19, 2004 | FORDING CANADIAN COAL TRUST

By:
/s/ James Frederick Jones
             James Frederick Jones
                   Trust Secretary
|-------------------- | --------------------------------------------------------------------------------------------------------------------------------
|                     |                                                                                                                                 



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Exhibit A
FORDING CANADIAN COAL TRUST

ANNUAL
INFORMATION FORM

March
19,2004



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FORWARD-LOOKING
INFORMATION ADVISORY

This
annual information form contains forward-looking information within the meaning
of the United States Private Securities Litigation Reform Act of 1995
relating, but not limited to the expectations, intentions, plans and beliefs of
the Fording Canadian Coal Trust (the "Trust"). Forward-looking information
can often be identified by forward-looking words such as "anticipate", "believe",
"expect", "goal", "plan", "intend", "estimate", "may",
and "will" or similar words suggesting future outcomes, or other
expectations, beliefs, plans, objectives, assumptions, intentions or statements
about future events or performance.

Unitholders
and prospective investors are cautioned not to place undue reliance on
forward-looking information. By its nature, forward-looking information involves
numerous assumptions, known and unknown risks and uncertainties, of both a
general and specific nature, that could cause actual results to differ
materially from those suggested by the forward-looking information or contribute
to the possibility that predictions, forecasts or projections will prove to be
inaccurate. These factors include, but are not limited to: changes in commodity
prices; changes in steel making methods and other technological changes; the
strength of various economies; difficulties inherent with operating and selling
in foreign countries; changes in the regulation of metallurgical coal and
wollastonite products; the Trust's distribution entitlement in the
Partnership; the effectiveness of the managing partner of the Partnership in
managing its affairs; the effects of competition and pricing pressures; the
oversupply of, or lack of demand for, metallurgical coal and wollastonite
products; currency and interest rate fluctuations; various events which could
disrupt operations and/or the transportation of products, including labour
stoppages and severe weather conditions; and management's ability to
anticipate and manage the foregoing factors and risks.

Information
relating to the magnitude or quality of mineral deposits is deemed to be
forward-looking information. The reliability of such information is affected by,
among other things, uncertainty involving geology of mineral deposits;
uncertainty of estimates of their size or composition; uncertainty of
projections relating to costs of production or estimates of market prices for
the mineral; the possibility of delays in mining activities; changes in plans
with respect to exploration, development projects or capital expenditures; and
various other risks including those relating to health, safety and environmental
matters.

The
Trust cautions that the list of factors set forth above is not exhaustive. Some
of the risks, uncertainties and other factors which negatively affect the
reliability of forward-looking information are discussed in the Trust's public
filings with the Canadian securities regulatory authorities, including its most
recent annual report, quarterly reports, material change reports and press
releases, and with the United States Securities and Exchange Commission,
including its most recent annual report on Form 40-F as supplemented by its
filings on Form 6-K.  Copies of the Trust's Canadian and U.S. public
filings are available at www.sedar.com
and www.sec.gov, respectively. The
Trust further cautions that information contained on, or accessible through, it's
website is current only as of the date of such information and may be superseded
by subsequent events. The Trust undertakes no obligation to update publicly or
otherwise revise any information, including any forward-looking information,
whether as a result

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of
new information, future events or other such factors which affect this
information.

Conversion
Table and References to Currency

|To
      Convert To | From               | Multiply
      By
|------------------- | ------------------ | -----------------
|Cubic
      Yards   | Cubic
      metres | 1.308            
|Feet                | Metres             | 3.281            
|Miles               | Kilometres         | 0.621            
|Acres               | Hectares           | 2.471            
|Pounds              | Kilograms          | 2.205            
|Short
      Tons    | Tonnes             | 1.102            
|Long tons           | Tonnes             | 0.984            
|BTU/lb              | kJ/kg              | 0.430            



Unless
otherwise noted, all references in this document to monetary amounts are
expressed in Canadian dollars and "$" means Canadian dollars.





TABLE
OF CONTENTS

GLOSSARY
OF TECHNICAL TERMS

1

GENERAL
GLOSSARY

2

CORPORATE
STRUCTURE

6

GENERAL
DEVELOPMENT OF THE BUSINESS

6

DESCRIPTION
OF THE
BUSINESS                                                                                                                                             
8





RESERVES
AND RESOURCES

18

OTHER
INFORMATION REGARDING THE TRUST

27

RISKS
AND OTHER TRENDS

29

DISTRIBUTION
POLICIES

30

MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF
OPERATIONS

31

MARKETS
FOR SECURITIES

31

GOVERNANCE

32

TRANSFER
AGENT AND REGISTRAR

38

LEGAL
PROCEEDINGS

39



INTEREST
OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

39

ADDITIONAL
INFORMATION

39

APPENDIX
A - DEFINITIONS FOR RESERVES AND RESOURCES

41



ii

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GLOSSARY
OF TECHNICAL TERMS

"BCM"
means bank cubic metre, which represents one cubic metre of material measured
prior to disturbance.

"BTU"
means a measure of energy required to raise the temperature of one pound of
water one degree Fahrenheit.

"BTU/lb"
means BTUs per pound, an imperial unit of measure used to describe the amount of
heat released on combustion of one pound of material, such as coal, under
specific conditions.

"calorific
value" represents the heat energy released on combustion of a unit
quantity of fuel under specific conditions.

"coal
year" means the twelve month period commencing on April 1st and
ending on March 31st of the following year.

"coke"
means the substance formed when coking coal is heated in a coking oven to a very
high temperature in the absence of air.

"dragline"
means a large, electrically powered, mobile machine with a large bucket
suspended from the end of a long boom used in the open pit mining process.

"fee
simple" means the most absolute and unqualified interest that can be held
in land and indicates that the owner is free to hold the land in perpetuity and
transfer it without hindrance.

"freehold
lease" means an interest in land granted by an entity which owns the land
in fee simple.

"ISO"
means the International Organization for Standardization, a worldwide federation
of national standards bodies.

"kJ/kg"
means kilojoules per kilogram, a metric unit of measure used to describe the
amount of heat released on combustion of one kilogram of combustible material,
such as coal, under specific conditions.

"metallurgical
coal" means the various grades of coal suitable for making steel, such as
coking coal, which is used to make coke, and PCI coal, which is used in the
steelmaking process for its calorific value.

"overburden"
means materials that overlie a mineral deposit.

"PCI"
means coal that is pulverized and injected into a blast furnace.  Those
grades of coal used in the PCI process are generally non-coking.  However,
since such grades are utilized by the metallurgical industry, they are
considered to be a metallurgical coal.  PCI grade coal is used primarily as
a heat source in the steel making process in partial replacement for high
quality coking coals which are typically more expensive.

"pit"
means an open excavation from which the raw mineral being mined is extracted.

"preparation
plant" means a facility for crushing, sizing and washing coal to prepare
it for sale.

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"raw
coal" means coal that has been removed or exposed for removal from a mine,
but that has not been processed in a preparation plant.

"seaborne
metallurgical coal" means metallurgical coal that is exported by ocean
going ships from the producing country to the consuming country and "seaborne
hard-coking coal"means a type of metallurgical coal used primarily for
making coke in integrated steel mills.

"shovel"
means a large electric or diesel powered machine used in the open pit mining
process to remove and load overburden or coal.

"strip
ratio" means the ratio of the volume of overburden moved to the tonnage of
coal produced, measured in terms of BCM of overburden per tonne of coal
produced.  A lower strip ratio is an operational advantage because less
overburden has to be removed in order to expose the raw coal.

"thermal
coal" means coal that is used primarily for its heating value.
 Thermal coal tends not to have the carbonization properties possessed by
metallurgical coals.  Most thermal coal is used to produce electricity in
thermal power plants.

"tonne"
means a metric tonne, which is approximately 2,205 pounds, as compared to a "short"
ton or "net" ton, which is 2,000 pounds, or a "long" ton or "British"
ton, which is 2,240 pounds.  Unless expressly stated otherwise, the metric
tonne is the unit of measure used in this document.

"tonnes
of coal" means, unless expressly stated otherwise tonnes of clean coal
(coal that has been processed in a preparation plant)..

"tripoli"
is a naturally occurring microcrystalline form of silica used in a variety of
industrial applications.

"truck
and shovel mining" is an open pit mining method that utilizes shovels and
large trucks to remove overburden from above the coal seam.  The coal is
then loaded with shovels or loaders and hauled out of the pit in large trucks.

"wollastonite"
is a naturally occurring calcium silicate used in a variety of industrial
applications.



GENERAL
GLOSSARY



"Arrangement"
means the transaction involving Old Fording, Teck, Westshore, Sherritt, OTPP and
CONSOL, and certain of their affiliates, that was completed on February 28, 2003
and that proceeded by way of plan of arrangement under the CBCA pursuant to
which, among other things, the business of Old Fording was reorganized under an
income trust (being the Trust) and the Partnership was formed.

"CBCA"means the Canada Business Corporations Act.

"CONSOL"
means CONSOL of Canada Inc. and/or CONSOL Energy Canada Ltd., as the context
requires.

"Declaration
of Trust" means the declaration of trust dated February 26, 2003 by which
the Trust was created.  See Appendix B of the Trust's 2003 Annual

2

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Information
Form for a general description of certain of the terms of the Declaration of
Trust.

"Distribution
Entitlement" means a Partner's proportional entitlement, expressed as a
percentage, to share in the profits and losses of the Partnership and to
participate in the distribution of assets on liquidation or dissolution of the
Partnership.

"Effective
Date" means February 28, 2003, the date on which the Arrangement became
effective.

"EVCC"means the Elk Valley Coal Corporation, formerly called the Elk Valley
Operating Corporation, a wholly-owned subsidiary of the Partnership.

"Fording
Common Shares" means the common shares in the capital of Fording Inc.

"Fording
Inc." means the successor, by winding up, to Old FCL and Old Fording.
 Fording Inc. was originally named 4123212 Canada Ltd. following its
continuance under the CBCA but changed its name as part of the Arrangement.

"Fording
Preferred Shares" means the preferred shares in the capital of Fording
Inc.

"Fording
Subordinated Notes" means the unsecured, subordinated notes of Fording
Inc.

"Fording
Royalty"means a right retained by Fording Inc. in connection with the
sale of the Prairie Operations, in respect of the lands forming part of the
Prairie Operations pursuant to which Fording Inc. is entitled to receive a
royalty in respect of new coal or mineral production after February 28, 2003
excluding coal from the Genesee mine permit area (as at February 28, 2003)
utilized in the planned 2005 expansion of the Genesee generating facility.
 The Fording Royalty in respect of any property is not to exceed 5% of
gross revenues from such property.

"Independent
Director" means a director of Fording Inc. who:

(a)

is
not an insider (as such term is defined under applicable securities laws) of any
of the Principal Unitholders or their respective affiliates and, with respect to
a director nominated by Sherritt and OTPP, is also not an insider of Luscar or
its affiliates, so long as Sherritt and OTPP, jointly or severally, control
Luscar;

(b)

would
qualify as an "unrelated director" (as defined in the TSX Guidelines) of
each of the Principal Unitholders, if the director was a director or trustee of
each of the Principal Unitholders; and

(c)

would
qualify as an "unrelated director" (as defined in the TSX Guidelines) of
Fording Inc.

"Independent
Trustee" means a Trustee who:

(d)

is
not an insider (as such term is defined under applicable securities laws) of any
of the Principal Unitholders or their respective affiliates and, with respect to
a Trustee nominated by Sherritt and OTPP, is also not an insider of Luscar or
its

3

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affiliates,
so long as Sherritt and OTPP, jointly or severally, control Luscar;

(e)

would
qualify as an "unrelated director" (as defined in the TSX Guidelines) of
each of the Principal Unitholders, if the Trustee was a director or trustee of
each of the Principal Unitholders; and

(f)

would
qualify as an "unrelated director" (as defined in the TSX Guidelines) of the
Trust.

"Industrial
Minerals Operations" means, collectively, those subsidiaries of Fording
Inc. engaged in the production of industrial minerals such as wollastonite and
tripoli, being NYCO Minerals, Inc. with operations at Willsboro, New York;
Minera NYCO S.A. de C.V. with operations near Hermosillo in the northwestern
state of Sonora, Mexico; and American Tripoli, Inc. with operations near Seneca,
Missouri.

"Luscar"
means Luscar Ltd., a corporation existing under the laws of Alberta
and a wholly-owned subsidiary of the Luscar Partnership.

"Luscar/CONSOL
Joint Ventures" means the joint ventures in which Luscar and CONSOL are
equal participants formed for the purpose of mining and preparing coal from the
Luscar mine, the undeveloped Cheviot project and the Line Creek mine.

"Luscar
Partnership" means the Luscar Energy Partnership, a general partnership
owned indirectly by Sherritt and OTPP as to 50% each.

"Luscar
Royalty" means a royalty interest retained by Luscar and CONSOL (each as
to 50%) of 5% of specified net revenues in respect of any coal mined and
produced at any time after February 28, 2003 from the Cheviot project, Folding
Mountain, Cadomin East and Luscar North properties, as well as any other
reserves at the Luscar mine that are not part of the A-6 pit at the Luscar mine.

"National
Instrument" means National Instrument 43-101 - Standards of Disclosure
for Mineral Projects.

"Neptune"
means Neptune Bulk Terminals (Canada) Ltd., a corporation existing under the
laws of British Columbia.

"Neptune
Terminals" means the terminal operated by Neptune located in Port of
Vancouver's inner harbour.

"NYSE"
means the New York Stock Exchange Inc.

"Old
FCL" means Fording Coal Limited, a corporation existing under the laws of
Canada. Old FCL was the principal operating subsidiary of Old Fording prior to
the Effective Date.  Pursuant to the Arrangement, Old FCL and Old Fording
were wound up into 4123212 Canada Ltd. which then changed its name to "Fording
Inc."

"Old
Fording" means Fording Inc. as it was constituted prior to the Effective
Date.  Pursuant to the Arrangement, Old FCL and Old Fording were wound up
into 4123212 Canada Ltd., which then changed its name to "Fording Inc."
 Prior to the completion of the Arrangement, Old Fording was a public
company in Canada and the United States and its securities were listed on the
TSX and the NYSE.  The Trust is the successor issuer to Old Fording.

4

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"OTPP"
means Ontario Teachers' Pension Plan Board, a non-share capital corporation
existing under the laws of Ontario.

"Partners"
means the partners of the Partnership following completion of the Arrangement,
being Fording Inc., Teck and Teck's affiliates, QCP and TBCI, and "Partner"
means any one of the Partners.

"Partnership"
means the Elk Valley Coal Partnership, previously known as the Fording Coal
Partnership, a general partnership existing under the laws of Alberta formed in
contemplation of the Arrangement.

"Partnership
Agreement"means the partnership agreement between the Partners made as of
February 26, 2003.

"Partnership
Distributable Cash" in respect of any period means without duplication:

(g)

all
cash received by the Partnership in the period from any source including cash
generated by coal sales, cash received from the disposition of assets, decreases
in non-cash working capital, proceeds from debt incurred and proceeds from the
contributions of Partners; plus

(h)

cash
balances on hand at the beginning of the period; less

(i)

all
cash payments of any kind made in the period by the Partnership including
operating and administration expenses, increases in non-cash working capital,
capital expenditures (excluding those financed by capital leases), capital lease
expenses, interest expenses and repayment of debt; less

(j)

allocations
to a reserve for reasonably anticipated cash requirements that are authorized by
a resolution passed by Partners holding, in aggregate, not less than 95% of the
outstanding Distribution Entitlements, either at a duly constituted meeting or
in writing;

provided
that reasonable use will be made of the Partnership's operating lines for
working capital purposes.

"Partnership
Sustaining Capital Expenditures" means expenditures in respect of
additions, replacements or improvements to property, plant and equipment
required to maintain the Partnership's business operations.

"Prairie
Operations" means the thermal coal business
of Old Fording.  These operations were substantially comprised of Old
Fording's joint venture interest at Genesee, its contract mining operations at
the Whitewood and Highvale mines in Alberta, and its holdings of mineral
properties and rights in Alberta, Manitoba and Saskatchewan.  Pursuant to
the Arrangement, the Prairie Operations were sold to an affiliate of OTPP and
Sherritt.

"Principal
Unitholders" means Teck, Westshore, Sherritt and OTPP (and their
respective affiliates that own Units).

"QCP"
means The Quintette Coal Partnership, a general partnership existing under the
laws of British Columbia andan affiliate of
Teck.

5

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"SEC
Guide 7" means United States Securities and Exchange Commission Guide 7 - Description of Property by Issuers Engaged or to be Engaged in Significant
Mining Operations.

"Sherritt"
means Sherritt International Corporation, a corporation existing under the laws
of New Brunswick.

"Sherritt
Coal Partnership II"means the general partnership formed under the laws
of Ontario, the two partners of which are wholly-owned subsidiaries of each of
OTPP and Sherritt.

"TBCI"
means Teck-Bullmoose Coal Inc., a corporation existing under laws of British
Columbia and a wholly-owned subsidiary of Teck.

"Teck"
means Teck Cominco Limited, a corporation existing under the laws of Canada.
 Teck is the managing partner of the Partnership.

"Third
Supplement" means the third supplement, dated January 27, 2003, to Old
Fording's Notice of Special Meeting, Notice of Petition and Information
Circular dated November 20, 2002.  The Third Supplement describes the terms
of the Arrangement.

"Trust"
means Fording Canadian Coal Trust, an open-ended mutual fund trust governed by
the laws of Alberta.  The Trust was created in contemplation of the
Arrangement and is the successor issuer to Old Fording.  The Trust is
governed by the terms of the Declaration of Trust.

"Trust
Distributable Cash" means in respect of each calendar year,

(k)

the
cash received by the Trust from Fording Inc.; plus

(l)

any
other net cash investment income from any other sources, including from the
disposition of Trust assets; plus

(m)

any
net cash remaining from a prior period that has not previously been distributed,
less,

(i)

costs,
expenses and other obligations of the Trust that in the opinion of the Trustees
are accrued and owing or otherwise have been or will be incurred by the Trust,
including any tax liabilities of the Trust; and

(ii)

any
amounts paid in cash by the Trust in connection with the redemption of Units or
other securities of the Trust.

"Trustees"
mean the trustees of the Trust from time to time.

"TSX"
means the Toronto Stock Exchange.

"TSX
Guidelines" means the corporate governance guidelines of the TSX, as
amended from time to time.

"Unit"
means a trust unit of the Trust.

"Unitholder"
means a holder of one or more Units.

"Unitholder
Rights Plan" means the unitholder rights plan implemented by the Trust on
completion of the Arrangement.

6

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"Westshore"
means Westshore Terminals Income Fund, an open-ended trust existing under the
laws of British Columbia.

7

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CORPORATE
STRUCTURE



Name
and Formation

The
Fording Canadian Coal Trust is an open-ended mutual fund trust formed under the
laws of Alberta.  The Trust was established by the Declaration of Trust.
 The Trust's head office is located at Suite 1000, 205-9th
Avenue SE, Calgary, Alberta T2G 0R4.

Intercorporate
Relationships

The
following chart sets forth all material subsidiaries of the Trust as at December
31, 2003 and indicates their respective jurisdictions of incorporation or
organization and the ownership percentage of each such entity beneficially
owned, or over which control or direction is exercised by the Trust.







Notes:

(1)

Fording
Inc. currently has a 65% interest in the Partnership, with Teck and Teck's
affiliates, QCP and TBCI, together holding the remaining 35% interest.  As
managing partner of the Partnership, Teck has the right to earn up to an
additional 5% interest over a four-year period, bringing its interest to 40%, if
the Partnership realizes certain synergies and improves the operating results of
the Elkview mine.  See "The Partnership - Metallurgical Coal Operations - Overview".

(2)

Fording
Inc. holds a single voting share in Minera NYCO S.A. de C.V. in compliance with
Mexican corporate law which requires that corporations have at least two
shareholders.

8

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GENERAL
DEVELOPMENT OF THE BUSINESS

Three-year
History

The
nature and development of the business of the Trust during the three most
recently completed financial years is described in "The Partnership - Metallurgical Coal Operations- The Last Three Years" and "Industrial
Minerals Operations - The Last Three Years".

Reorganization

On
February 28, 2003 Old Fording, Teck, Westshore, Sherritt Coal Partnership II and
CONSOL completed the Arrangement.

Pursuant
to the Arrangement, the business of Old Fording was reorganized under the Trust
and its subsidiary, Fording Inc., and the Partnership was formed.  The
Partnership is a general partnership, the Partners of which are Fording Inc. (as
to 65%), and Teck and its affiliates (as to 35%).  As part of the
Arrangement, Luscar Energy Partnership (the partners of which are affiliates of
each of Sherritt and OTPP) and CONSOL contributed indirectly to the Partnership
their respective interests in the Line Creek mine, the Luscar mine and the
undeveloped Cheviot project as well as their collective 46.4% interest in
Neptune, the corporation that owns Neptune Terminals in Vancouver, British
Columbia. Old Fording contributed to the Partnership its metallurgical coal
business comprised substantially of the Fording River mine, the Coal Mountain
mine and its interest in the Greenhills mine, and Teck contributed to the
Partnership its North American metallurgical coal business comprised
substantially of the Elkview mine. These assets are referred to as the "Metallurgical
Coal Operations".

In
addition, and as part of the Arrangement, and subject to the Fording Royalty,
Old Fording sold its Prairie Operations to Sherritt Coal Partnership I and each
of Teck, Westshore, Sherritt and OTPP subscribed for Units of the Trust.

The
Arrangement is described in detail in the Trust's 2003 annual information
form.

Significant
Acquisitions and Dispositions

The
Trust did not complete any significant acquisitions or dispositions during the
2003 financial year other than those completed as part of the Arrangement.
 The effect of Arrangement is described in the Trust's 2003 Annual
Information Form.

Trends

The
primary product of the Partnership is seaborne hard-coking coal. Demand for
seaborne hard-coking coal was strong in 2003 and is expected to remain strong
throughout 2004 and into 2005. Integrated steel mills and coke producers around
the world are finding it difficult to secure sufficient quantities of
hard-coking coal. Traded coke supplies are not sufficient to meet high demand.
In addition, reports from China indicate steel production in China is forecast
to increase significantly in the next few years which would then result in
increased demand for hard-coking coal in the future.

Management
expects improved operating results in 2004. Coal prices for the 2004 coal year
have increased approximately 20 percent from the average US

9

---

dollar
price realized during the 2003 coal year. Sales and production for the 2004 coal
year are expected to be at or near capacity and production costs are expected to
decline due to declining strip ratios and cost efficiencies resulting from the
combination of the mines in the Partnership.

In view of the
strength of the market conditions for hard-coking coal, the Partnership
announced on March 16, 2004 that it is proceeding with the development of the
Cheviot Creek pit using the infrastructure of the Cardinal River mine.  The
initial production rate will be 1.4 million tonnes of clean coal per year. The
first coal production is anticipated by the end of the fourth quarter of this
year. If market demand remains strong, production may be expanded to 2.8 million
tonnes per year in 2005. The capital cost to develop the Cheviot Creek pit to an
annual production rate of 1.4 million tonnes is estimated at $50 million and is
expected to largely be incurred during the second half of 2004. Additional
capital cost to expand production to 2.8 million tonnes per year is anticipated
to be another $70 million. The Trust's 65% share of the anticipated capital
expenditures will be financed with existing bank credit facilities until
permanent financing is arranged. It is anticipated that financing of this
project will not impact cash available for distribution in 2004.



The
Industrial Minerals Operations are also expected to show some improvement in
earnings in 2004. However, the amount of improvement will depend to a large
degree on the success of sales efforts targeted at new applications for
wollastonite products.

DESCRIPTION
OF THE BUSINESS

The
Trust is one of the largest income trusts in Canada, and its Units are publicly
traded in Canada on the TSX (FDG.UN) and in the United States on the NYSE (FDG).
The Trust has been organized as an income trust and as such its policy is to pay
out to Unitholders its Trust Distributable Cash in each fiscal quarter.
Distributions to Unitholders are facilitated by the Trust's investment in
Fording Inc. which is held through a nominal amount of Fording Common Shares,
$167 million of Fording Preferred Shares and $1.3 billion of Fording
Subordinated Notes maturing February 28, 2008. The Fording Subordinated Notes
may be extended for five successive periods of five years each at the option of
Fording Inc.

Fording's
Inc.'s principal asset is its initial 65% interest in the Partnership. Fording
Inc. also owns 100% of the Industrial Minerals Operations.  The Partnership
accounted for 96% of Fording Inc.'s revenues for the fiscal year ended
December 31, 2003. The Industrial Minerals Operations accounted for the balance
of the revenues.

The
Partnership - Metallurgical Coal Operations (Trust interest = 65%)

Overview

The
Partnership is a general partnership formed under the laws of the Province of
Alberta. The Partners of the Partnership are Fording Inc. and Teck and
Teck's affiliates, QCP and TBCI. The Partnership is operated pursuant to the
terms of the Partnership Agreement.  The following is a summary of certain
material terms of the Partnership Agreement.

Teck
is the managing partner of the Partnership. Asmanaging
partner, Teck supervises management of the
Partnership, provides strategic direction and assists in the realization of
synergies.  However, certain significant matters regarding the Partnership
must be approved by Partners holding not

10

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less
than 95% of the outstanding Distribution Entitlements (a "Special
Resolution of the Partners"). The annual operation of the Partnership,
including budgeting and capital spending, must be set out in a capital and
operating plan and budget for each calendar year.  The operating plan and
budget must be presented to the Partners by no later than November 15 of each
year for the following calendar year and must be approved by a Special
Resolution of the Partners.  In addition to the approval of the operating
plan and budget or any material amendment thereto, a Special Resolution of the
Partners is required in a variety of other circumstances such as any change in
the distribution policy of the Partnership, any proposed merger, arrangement or
reorganization of the Partnership, the admission of new Partners (other than
wholly-owned subsidiaries or affiliates of existing Partners) or the decision to
institute bankruptcy or insolvency proceedings.

Each
Partner is entitled to share in the profits and losses of the Partnership and to
participate in the distribution of assets on liquidation or dissolution of the
Partnership in proportion to its Distribution Entitlement. As at December 31,
2003, the Distribution Entitlements of the Partners were as follows:

Partner
      Distribution
        EntitlementFording
        Inc.
      65.000%Teck
      34.833%QCP
      0.164%TBCI
      0.003%Total
      100.000%




Teck's
Distribution Entitlement can increase by a maximum of 5% (and Fording Inc.'s
Distribution Entitlement will proportionally decrease) to the extent that the
Partnership realizes certain synergies and improves the operating results of the
Elkview mine, without duplication, referred to as "Incremental Returns",
through the combination of metallurgical coal assets in the Partnership
resulting from the Arrangement. The amount of Incremental Returns will be
determined at the end of each of the four coal years commencing April 1, 2003
and ending March 31, 2007.  If Incremental Returns exceeding the initial
sum of $25 million are achieved, then, for every $1 million of additional
Incremental Returns that are achieved during the four coal year period, Teck's
Distribution Entitlement will irrevocably increase at the rate of 0.1%.
 Any increase in Teck's Distribution Entitlement will be effective as at
the end of the coal year in which the Incremental Returns are achieved. In
accordance with the terms of the Partnership Agreement, an
independent mining engineering firm has been retained as an expert to
develop a program to assess, measure and document the attainment of Incremental
Returns in order to determine whether Teck's Distribution Entitlement in the
Partnership is to be increased. The final report of the expert in respect of the
2003 coal year is expected in June of 2004.Should either party
dispute the conclusions of the expert, the dispute will be determined through
binding arbitration.

Management
of the Partnership

Teck
is the managing partner of the Partnership and has extensive management
experience in the metallurgical coal business.  Management responsible for
conducting the day-to-day operations of the Partnership is comprised
substantially of the management team of Old Fording.

11

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Assets
of the Partnership

The
Partnership has six operating mines. It owns Fording River, Coal Mountain,
Elkview, Line Creek and Cardinal River and has an 80% interest in a joint
venture which operates the Greenhills mine. The remaining 20% interest in the
joint venture is owned by Pohang Steel Canada Limited. Five of the six mines are
located in close proximity to each other in the Elk Valley region of southeast
British Columbia. The sixth mine, Cardinal River, is located in west central
Alberta and is scheduled to transition into coal mined from the Cheviot Creek
pit in 2004. The Partnership also owns numerous other properties, including the
coal preparation plant and coal resources at the former Quintette mine, other
coal resources in northeast British Columbia and a 46% interest in Neptune which
owns Neptune Terminals in Vancouver, British Columbia.

All
of the Partnership's mines are open pit mining operations and are designed to
operate year-round, 24 hours per day, seven days per week. However, the
operating schedules can be varied depending on market conditions.  All of
the mines are serviced by two-lane all weather roads. The Partnership's
reserves, facilities and waste dumps are all proximate to its mine locations.

The
following map shows the location of the Partnership's six mines:



Mine
        LocationsCa[aif20048001.jpg]Source:
        Fording Data.




Principal
Product and Markets

The
primary product of the Partnership is seaborne hard-coking coal.  Seaborne
hard-coking coal is a type of metallurgical coal that is used primarily for
making coke in integrated steel mills. When making steel, two

12

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of
the key raw ingredients are iron ore and coke. Coke is used to convert the iron
ore into molten iron. Coke is made by heating coking coal to about 2000oF
(1100oC) in the absence of oxygen in a coke oven. The lack of oxygen prevents
the coal from burning. The coking process drives off various liquids, gases and
volatile matter. The remaining solid matter forms coke, a solid mass of nearly
pure carbon. Approximately 1.5 tonnes of coal are needed to produce 1 tonne of
coke. Only certain types of bituminous coal have the necessary characteristics
required to make coke. These characteristics include caking properties (the
ability to soften and swell when heated and then to re-solidify) and low
impurity levels.

Metallurgical
coal is a term used to describe coal products suitable for making steel in the
integrated steel mill process. There are three main categories of metallurgical
coal. Hard-coking coal forms high-strength coke, semi soft-coking coal produces
coke of lesser quality, and PCI coal is used for its heat value and is not
typically a coking coal. Semi soft and PCI coals have lower sales values
compared to hard-coking coal due to the relative oversupply of these products.
Integrated steel mills will optimize the use of semi-soft and PCI coals in order
to reduce overall costs. However, there are limits to the ability of integrated
steel mills to substitute semi-soft and PCI coals for hard-coking coal. Higher
use of PCI coals reduce overall coking coal requirements but the coking coal
used has to be of higher quality. Hard-coking coal improves coke oven production
yields and during periods of high coke demand the use of semi-soft coking-coals
is generally reduced.

The
following schematic outlines how steel is produced in an integrated steel mill.







The
seaborne hard-coking coal market, the principal market for the Partnership's
products, is defined by the global nature of international steel-making, the
relative concentration of quality metallurgical coal deposits in Australia,
Canada and the United States and the relative low cost of seaborne
transportation. Total worldwide production of higher quality seaborne
hard-coking coal was estimated to be approximately 115 million tonnes in 2003.
Australia is the largest source of seaborne hard-coking coal while Canada is
firmly entrenched as the second largest source, with
the Partnership remaining as the only significant Canadian producer after 2003.
Australia, Canada and the United States account for approximately 80% of global
production.

13

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Trade
in the seaborne hard-coking coal market is influenced by crude steel production
that, in turn, is largely dependent on the overall state of regional and global
economic conditions. The global trade of steel products is very large and
fluctuations in supply and demand in various regions throughout the world are
common. Although there are fluctuations in the total amount of steel produced
worldwide, the amount of steel produced by the integrated steel mill process has
been relatively stable. In turn, the volume of hard-coking coal used in this
process has not experienced the same variability as total steel production. In
2003, Canada's share of the seaborne hard-coking coal market was approximately
21% or about 24 million tonnes. Canadian hard-coking coal is competitive in the
seaborne market due to its high quality, its suitability for blending with
coking coals from other countries and the



14

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desire
of steel producers to diversify their supplier base to create competition and
security of supply.The Partnership's principal markets are Asia and
Europe. SeeThe Partnership - Metallurgical Coal Operations- Coal
Sales By Geographical Area - Last Three Years.

Principal
Competition

The
Partnership competes primarily with coal producers from Australia and the United
States.  The supply of coal in the global markets and the demand for coal
among world steel producers has historically provided for a competitive seaborne
market.  Coal pricing is generally established in U.S. dollars and the
competitive positioning among producers can be significantly affected by
exchange rates. For example, a decline in the U.S. dollar value of the
Australian dollar compared to that of the Canadian dollar has in the past and
may in the future allow Australian producers a price advantage over the
Partnership. In addition, a number of steel producers deal with multiple coal
suppliers in order to ensure a security of supply and promote further
competitiveness in this market, although this dynamic has been off-set somewhat
by consolidation of producers. The competitive position of the Partnership
continues to be determined primarily by its production and transportation costs
compared to those of other producers throughout the world.  Costs are
influenced largely by the location and nature of coal deposits, currency
exchange rates, operating and management skill, and government taxation and
policy.

Geological
Setting and Mineralization

The
coal and rock strata found in the Partnership's Elk Valley operations slope
downward from opposite directions to meet at a common point called a syncline.
This syncline structure is folded and faulted. The coal deposits of this region
occur in the Upper Jurassic to Lower Cretaceous periods. The deposits consist of
medium to high volatile bituminous coal that is primarily of metallurgical
quality, with minor amounts of thermal quality coal along the seam outcrops.
Coal seams vary in thicknesses up to 12 meters and are interbedded with
sandstones, shales, and siltstones.

The
coal fields in the Elk Valley region of British Columbia have supported coal
mining for decades.  The Metallurgical Coal Operations have extensive
proven reserves capable of supporting continued operation for in excess of 30
years - see "Reserves and Resources".

Mining
and Processing

The
Metallurgical Coal Operations employ conventional open pit mining techniques
using truck and shovel methods, although a dragline may be used at the Fording
River and Cardinal River mines in some circumstances. Overburden is drilled and
blasted with explosives and loaded onto large trucks by shovels and loaders and
hauled to waste dumps outside of the pit. Once the overburden is removed, the
coal is loaded onto trucks for transport to the coal preparation plant. Coal
preparation plants employ rotary breakers to break the coal to a predetermined
size and remove rock. The coal is then washed using a variety of conventional
techniques and conveyed to coal or gas fired dryers for drying.

Coal
Transportation

Processed
coal is conveyed to clean coal silos or other storage facilities for storage and
loadout to railcars. The loadout facilities are set up to load and weigh unit
trains (each train carrying up to 13,000 tonnes). A spray

15

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system
coats the top of each railcar with a dust inhibitor to minimize the escape of
coal dust during transportation.

Rail
service to the five mines located in the Elk Valley is provided by the Canadian
Pacific Railway. Service to the Fording River, Greenhills and Coal Mountain
mines is provided pursuant to an evergreen agreement that requires three years
advance notice by either party to terminate. Prices are adjusted periodically
under certain conditions tied to competitive rail rates and coal prices. Service
to the Elkview and Line Creek mines is provided pursuant to agreements expiring
in March of 2004. Canadian National Railway Inc. provides rail service to the
Cardinal River mine.

Westshore
Terminals Ltd. provides ship-loading services at Robert's Bank for
approximately 72% of the Partnership's metallurgical coal pursuant to
long-term contracts. Neptune Terminals, in which the Partnership has an indirect
46% ownership interest, provides ship-loading services for approximately 17% of
the Partnership's metallurgical coal. The remaining 11% of the Partnership's
metallurgical coal products are shipped from the sites to eastern North American
customers either directly by rail or by rail and barge via Thunder Bay Terminals
in Thunder Bay, Ontario. A small amount of product is shipped by truck to
customers in western Canada.

Changes
to Contracts

Through the
negotiations for the 2004 coal year, the Partnership has negotiated several
multi-year evergreen supply agreements. These agreements provide for coal prices
to be set annually but provide more certainty on sales volumes. The Partnership
also simplified its pricing structure to achieve more uniform pricing of
products and eliminated option provisions that had previously allowed customers
to purchase up to 10% more of 10% less than the coal volumes agreed to under
sales contracts.  See Coal Prices in Management's Discussion and Analysis
of Financial Condition and Results of Operations for the year ended December 31,
2003.



Production
and Quality Control

All
exposed coal seams are sampled and analyzed under the supervision of
professional geologists and categorized by quality and coke making potential.
 This data is then used to determine stockpiling and blending strategies.
 As a result, the Partnership has available to it an inventory of coal
sources of varying qualities, which can be combined to form a blended high
quality product after processing.  In addition to sampling at source, coal
is sampled at all stages of coal preparation, at the rail loadout and at the
port, to control quality.  By blending coals of different qualities, the
Partnership is able to create a consistent, high quality product.

The
Last Three Years

Between
1997 and 2000, the price of seaborne hard-coking coal dropped by more than 30%
due to over supply and a general economic downturn in a number of Asian
counties. In 2000, supply and demand returned to balance and supply remained
tight through 2001. Price increases were achieved in most of the Partnership's
markets for the 2001and 2002 coal years. Average pricing for the 2003 coal year
decreased by approximately 3% from the previous year; however, strong demand for
hard-coking coal, particularly in the last half of 2003 resulted in sales
volumes for the fiscal year ended December 31, 2003 that were 24% higher than
sales volumes for the fiscal year ended December 31, 2002.

16

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On
February 28, 2003, pursuant to the Arrangement, the business of Old Fording was
reorganized under the Trust and its subsidiary, Fording Inc., and the
Partnership was formed. As part of the Arrangement, Old Fording contributed to
the Partnership its metallurgical coal business comprised substantially of the
Fording River mine, the Coal Mountain mine and its interest in the Greenhills
mine, and Teck contributed to the Partnership its North American metallurgical
coal business comprised substantially of the Elkview mine. The Partnership also
acquired the Line Creek mine and the Cardinal River mine and its undeveloped
Cheviot project from the Luscar Energy Partnership as well as its 46.4% interest
in Neptune. The Partnership is the second-largest producer of seaborne
hard-coking coal and the only significant Canadian
producer after 2003.  The Arrangement is described in detail in the
Trust's 2003 annual information form.

Capital
expenditures, including Partnership Sustaining Capital Expenditures, of $9
million during 2003 were at levels lower than would be considered normal over a
multi-year period. The combination of the mines in the Partnership allowed for a
significant amount of capital expenditures to be cancelled or deferred. In 2004,
Partnership Sustaining Capital Expenditures are anticipated to be approximately
$42 million. Additional capital spending is anticipated to occur in 2004 related
to increasing capacity for coal production and developing the Cardinal River
mine's Cheviot Creek pit.

Coal
Sales By Geographical Area - Last Three Years

Coal
        Sales By Area (millions of tonnes)(1)2003
      2002
      2001%
        of sales
      Tonnes
      %
        of sales
      Tonnes
      %
        of sales
      TonnesEurope
      31%
      6,923
      34%
      4,151
      37%
      5,494Japan
      27%
      6,079
      28%
      3,443
      27%
      4,069Korea
      13%
      2,984
      20%
      2,453
      15%
      2,192China
      2%
      349
      -
      -
      -
      -Taiwan
      4%
      1,050
      4%
      537
      5%
      795South
        America
      9%
      1,985
      5%
      679
      9%
      1,317North
        America
      14%
      3,214
      9%
      1,067
      7%
      1,100Total
      100%
      22,584
      100%
      12,330
      100%
      14,967




(1)

2003
sales include sales by Old Fording prior to February 28, 2003 and sales by the
Partnership after February 28, 2003; 2002 and 2001 sales are by Old Fording.

Fording
River

The
Fording River mine is located 29 kilometres northeast of Elkford, British
Columbia.  The mine is comprised of 20,304 hectares of coal lands of which
3,592 hectares has been or are being mined or are scheduled for mining. Old FCL
commenced construction of the Fording River mine in 1969 as a 3 million tonne
per year operation.  It has been operated continuously since that time. The
Fording River mine was acquired by the Partnership pursuant to the Arrangement.

Coal
mined at the Fording River mine is primarily metallurgical coal, although a very
small amount of thermal coal is also produced.  The current annual
production capacity of the mine and preparation plant is 10 and 9.5

17

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million
tonnes, respectively. In 2003, the Fording River mine produced 8.9 million
tonnes.

The
majority of current production is derived from the Eagle Mountain pit.
 Known reserves at the Fording River mine are projected to support mining
at 2003 production rates for in excess of 25 years.

The
Fording River mine's quality management system is in compliance with the ISO
9001 quality standard and its environmental management system is in compliance
with the ISO 14001 environmental standard, all as verified by the Quality
Management Institute.

Elkview

The
Elkview mine is located just outside Sparwood, British Columbia. The mine is
comprised of 23,000 hectares of coal lands and fee simple lands that include
coal rights. The mine has been operating on a nearly continuous basis for over
30 years. The Elkview mine constructed in 1969 by Kaiser Resources Ltd.  It
was operated by Kaiser Resources Ltd. until 1980 when it was sold to BC Coal
Limited, a predecessor of Westar Mining Limited ("Westar"). The mine was
purchased by Teck from the trustee in the bankruptcy of Westar in 1992 and has
operated continuously since 1993. The Elkview mine was acquired by the
Partnership pursuant to the Arrangement.

The
metallurgical coal produced at the Elkview mine is a high quality mid-volatile
hard coking coal.  Lesser quantities of lower grade hard coking coal are
also produced and make up roughly 15% of the total production.
   The current annual production capacity of the mine and
preparation plant is 6.0 and 7.0 million tonnes, respectively. In 2003, the
Elkview mine produced 5.4 million tonnes of coal.

The
majority of current production is derived from seams in the area of Baldy and
Natal Ridge pit.  Known reserves at the Elkview mine are projected to
support mining at 2003 production rates for in excess of 40 years.

The
Elkview mine's quality management system is in compliance with the ISO 9001
quality standard, as verified by the Quality Management Institute.

Greenhills

The
Greenhills mine is located eight kilometres northeast of Elkford, British
Columbia.  The mine is comprised of 10,092 hectares of coal lands of which
approximately 2,669 hectares has been or being mined or are scheduled for
mining.  The Greenhills mine holds a forest licence and manages a 7,610
hectare forest located outside the active mining area.

The
Greenhills mine was constructed in the early 1980's by BC Coal Limited, a
predecessor of Westar. Old FCL purchased Westar's 80% interest in the
Greenhills mine from the trustee in the bankruptcy of Westar in December 1992
and the mine has operated continuously since 1993.

Since
1993, the Greenhills mine has been operated under a joint venture agreement (the
"Greenhills Joint Venture Agreement") among Old FCL, Pohang Steel Canada
Limited ("Poscan") and Poscan's parent, Pohang Iron and Steel Company
Limited ("Posco").  Pursuant to the agreement, Old FCL had an 80%
interest in the joint venture while Poscan had a 20% interest.  As part of
the Arrangement, and pursuant to an amending and assignment agreement made in
connection with the Arrangement (the "Amending Agreement"), the 80% interest
held by Old FCL was assigned to the Partnership.

18

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In
2003, following the Arrangement, EVCC became the operator of the Greenhills
joint venture.  The mine equipment and coal preparation plant are owned by
the Partnership and Posco in proportion to their respective joint venture
interests.  The Partnership and Posco bear all costs and expenses incurred
in operating the Greenhills mine in proportion to their respective joint venture
interests.  Poscan, pursuant to a property rights grant, has a right to 20%
of all of the coal mined at the Greenhills mine from certain defined lands until
termination of the Greenhills Joint Venture Agreement, as amended by the
Amending Agreement.

Pursuant
to the terms of the Greenhills Joint Venture Agreement, as amended by the
Amending Agreement, the Greenhills joint venture will be terminated on the
earlier of the date the reserves on the defined lands have been depleted or
March 31, 2012.

Coal
mined at the Greenhills mine is primarily metallurgical coal, although a small
amount of thermal coal is also produced.  The current annual production
capacity of the mine and preparation plant is 4.5 and 5.5 million tonnes,
respectively.  In 2003, the Greenhills mine produced 4.1million tonnes.

Production
is derived from the Cougar reserve which is divided into two distinct pits,
Cougar North and Cougar South.  Cougar North has been fully developed and
currently produces the majority of the coal for the mine.  Development and
pre-stripping of Cougar South are underway and are expected to provide a
long-term source of coal.  Known reserves at the Greenhills mine are
projected to support mining at 2003 production rates for in excess of 25 years.

The
Greenhills mine's quality management system is in compliance with the ISO 9001
quality standard, as verified by the Quality Management Institute.

Coal
Mountain

The
Coal Mountain mine is located 30 kilometres southeast of Sparwood, British
Columbia.  The mine is comprised of 2,521 hectares of coal lands of which
approximately 650 hectares has been or are being mined or are scheduled for
mining.

Old
FCL purchased the mine in 1994 from Corbin Creek Resources Ltd. and it has been
operated continuously since that time.  Corbin Creek Resources Ltd.
acquired the mine in the early 1990's from Esso Resources Canada Ltd. The Coal
Mountain mine was acquired by the Partnership pursuant to the Arrangement.

The
Coal Mountain mine produces both metallurgical and thermal coal.  The
current annual production capacity of the mine and preparation plant is 2.5 and
3.2 million tonnes, respectively. In 2003, the Coal Mountain mine produced 1.7
million tonnes of metallurgical coal and 0.3million
tonnes of thermal coal.

Known
reserves at the Coal Mountain mine are projected to support mining at 2003
production rates for in excess of 13 years.

The
Coal Mountain mine's quality management system is in compliance with the ISO
9001 quality standard, as verified by the Quality Management Institute.

19

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Line
Creek

The
Line Creek mine is located 22 kilometres north of Sparwood, British Columbia.
The mine is comprised of 4020 hectares of coal lands of which approximately 1097
hectares has been or are being mined or are scheduled for mining.
  The mine has operated continuously since its start up by Crowsnest
Resources Limited in 1981. It was subsequently owned by Manalta Coal Ltd. before
being acquired by the Luscar/CONSOL Joint Ventures in 1998.  The Line Creek
mine was acquired by the Partnership pursuant to the Arrangement.

The
Line Creek mine produces both metallurgical and thermal coal.  The current
annual production capacity of the mine and preparation plant is 2.0 and 3.5
million tonnes, respectively. In 2003, the Line Creek mine produced 1.4 million
tonnes of metallurgical coal and 0.3million
tonnes of thermal coal.

Known
reserves at the Line Creek mine are projected to support mining at 2003
production rates for in excess of 6 years.

After
acquiring the Line Creek mine as part of the Arrangement, the Partnership
implemented changes to the mining plan to reduce production costs.  These
changes resulted in a reduction in the annual production from the mine to
approximately 2 million tonnes and, as a consequence, the workforce was reduced
by approximately 40 percent to 290 employees.

Cardinal
River

The
Cardinal River mine is located 42 kilometres south of Hinton, Alberta and is
comprised of the Luscar mine and the Cheviot project. The Luscar mine is
comprised of 4,880 hectares of coal lands of which approximately 2,027 hectares
have been or are being mined. The Cheviot project is comprised of 7,212 hectares
of which 291 hectares are scheduled for mining commencing in 2004.

The
Luscar mine commenced operations in 1970. It has been owned continuously since
its start up by the Luscar/CONSOL Joint Ventures and its predecessors.
  The Luscar mine and Cheviot project were acquired by the Partnership
pursuant to the Arrangement.

In
2003, the Cardinal River mine produced 0.9million
tonnes of metallurgical coal. The Cardinal River mine is scheduled to transition
into coal mined from the Cheviot Creek pit area of the Cheviot project in the
fourth quarter of 2004 due to the depletion of coal reserves at the original
Luscar mine site.

In
December 2000, the Government of Alberta approved and issued the mine permit for
the Cheviot project at a design capacity of 3.2 million tonnes per year. This
approval contemplated the construction of a processing plant, maintenance and
administration facilities, a public access road, railway access and other
infrastructure requirements. In April 2001, the Government of Canada announced
its acceptance of the recommendation by the joint federal and provincial review
panel in favour of the development of Cheviot project, which allows the federal
government to issue the regulatory authorizations required for the project to
proceed.

In 2002, a
revised mining plan was developed that involved mining coal at the Cheviot
project and transporting the coal back to the existing processing facilities at
the Cardinal River mine.  An application was submitted to the provincial
and federal regulators for approval to construct a private haul road to connect
the Cheviot project with the existing Cardinal River mine.  In 2003, the
Government of Alberta approved the haul road. In December 2003, an application
was submitted to provincial regulators to obtain the mine licence to operate the
Cheviot Creek pit as the

20

---

first mining
area at the Cheviot project.  The mine licence and associated environmental
approvals are expected to be received by the end of the second quarter of 2004.



The
Cheviot Creek pit is being developed using the existing infrastructure of the
Cardinal River mine including its coal preparation plant and its rail and
loadout facilities.  The mine will employ the same conventional open pit
truck and shovel mining techniques as were used in the other mining areas of the
Cardinal River mine. Beginning in the fourth quarter of 2004, the plan is to
initially produce 1.4 million tonnes of metallurgical coal annually with the
ability to expand production to 2.8 million tonnes annually.  The estimated
life of the pit is 6 years.  Taxes will be similar to those presently paid
by the Cardinal River mine.

The
capital cost to develop the Cheviot Creek pit to an annual production rate of
1.4 million tonnes is estimated at $50 million and is expected to largely be
incurred during the second half of 2004. It is anticipated the production from
Cheviot Creek pit will be sold to customers on the basis of multi-year volume
contracts with annual price adjustment formulas. Production from the Cheviot
Creek pit is subject to the Luscar Royalty.  Development capital for the
pit is expected to have a three year payback.

Pursuant
to the Arrangement, employee severance costs, and reclamation obligations for
mining activities at the Cardinal River mine prior to March 1, 2003, are the
responsibility of the Luscar/CONSOL Joint Ventures.

Neptune
Terminals

The
Partnership holds a 46.4% interest in Neptune, the corporation that owns Neptune
Terminals. Neptune Terminals is a multi-product bulk handling port facility
located at North Vancouver, British Columbia, which is owned by its users.
 Neptune Terminals has a long-term lease with the Vancouver Port Authority
which expires in 2020.  Shippers can access the Neptune Terminals
facilities from the Canadian National rail system and, through interconnection,
with the Canadian Pacific rail system.  By agreement among the shareholders
of Neptune, rates charged for the handling of coal and other products are based
on the actual costs allocated to the handling of each product.

Neptune's
shareholder agreement requires that its shareholders guarantee the outstanding
bank indebtedness of Neptune. At December 31, 2003, the Partnership's
proportionate interest in this guarantee was approximately $19.3 million and the
Trust's proportionate interest in this guarantee was approximately $12.5
million.



Fording
Inc. - Industrial Minerals Operations (Trust interest = 100%)

Overview

Fording
Inc.'s Industrial Minerals Operations consist of NYCO Minerals, Inc. ("NYCO")
with operations at Willsboro, New York, Minera NYCO S.A. de C.V. operation near
Hermosillo in the northwestern state of Sonora, Mexico ("Minera") and
American Tripoli, Inc. with operations near Seneca, Missouri ("American
Tripoli").

21

---

NYCO
- Willsboro

NYCO
and its predecessors have owned the Willsboro operation since its purchase from
Interpace Corporation in 1979. Willsboro's processing plant is located in
Willsboro, New York, and the mine is located 22 kilometers west of the plant.
The processing facilities include dry processing equipment and a surface
treatment plant, warehouse space and truck and rail loadout facilities. The
mining operation consists of the active Lewis Pit and the Oak Hill deposit
located about 1.6 kilometers from the Lewis Pit. The mine sites are comprised of
289 hectares of wollastonite lands that are held through direct ownership or
controlled through mineral leases. Approximately 43 hectares of these lands are
currently being mined or are scheduled for mining.

Willsboro's
primary product is wollastonite. It is extracted using open pit mining
techniques and trucked to the Willsboro processing plant. In 2003, the Willsboro
operation produced 43,900 tonnes of wollastonite (49,500 tonnes in 2002 and
58,500 tonnes in 2001). The current annual production capacity of the processing
plant is 130,000 tonnes of wollastonite and the current annual production
capacity of the mine is 300,000 tonnes of wollastonite ore. The current mine
plan for the Willsboro operation contemplates the production of wollastonite
from this property for in excess of 20 years at 2003 production rates. Willsboro
products are marketed through a network of distributors, agents and direct sales
personnel.

Willsboro's
quality management system is in compliance with the ISO 9002 quality standard,
as verified by the Quality Management Institute.

Minera

Minera's
processing facilities, truck loadout and mine are located approximately 50
kilometers northwest of Hermosillo, Sonora, Mexico. The processing facilities
include wet and dry processing plants, a surface treatment plant, warehouse
space and truck and railroad loadout facilities. A warehouse and rail loadout
facility are located in Hermosillo. The mine site is comprised of 1,855 hectares
of surface lands and mining concessions of which approximately 100 hectares are
currently being mined or are scheduled for mining.

Minera
has been an indirect subsidiary of Fording Inc. and its predecessors since its
incorporation in 1994. Construction of Minera began in 1996 and commercial
production began in 1998. Minera's primary product is wollastonite. It is
extracted using open pit mining techniques for processing at the on-site
processing facilities. In 2003, the Minera operation produced 31,200 tonnes of
wollastonite (29,200 tonnes in 2002 and 26,500 tonnes in 2001). The current
annual production capacity of the processing facilities is 150,000 tonnes of
wollastonite and the current annual production capacity of the mine is 240,000
tonnes of wollastonite ore. The operation's annual production could be
increased to 240,000 tonnes through wet plant equipment expansion to respond to
an increase in market demand for wollastonite. Reserves at Minera are sufficient
to support annual production of 240,000 tonnes for in excess of 50 years. Minera's
products are marketed through a network of distributors, agents and direct sales
personnel. Minera contracts with an affiliate, Nycomex S.A. de C.V. for the
supply of labor.

Minera's
quality management system is in compliance with the ISO 9001 quality standard
and the ISO 14001 environmental standard, as verified by the Quality Management
Institute.

22

---

American
Tripoli

American
Tripoli's processing facilities are located in Seneca, Missouri. The
processing facilities include a processing plant and drying shed. The mine site
is located approximately 12 kilometers northwest of Seneca in Ottawa County,
Oklahoma. The mine site is comprised of 1,168 hectares of fee simple lands of
which approximately 14 hectares are currently being mined or are scheduled for
mining.

American
Tripoli is a wholly owned subsidiary of NYCO. It was acquired by NYCO from
Interpace Corporation in 1979. American Tripoli's primary product is tripoli.
It is extracted using open pit mining techniques and trucked to the Seneca
processing facilities. In 2003, American Tripoli produced 11,800 tonnes of
tripoli (12,700 tonnes in 2002 and 11,700 tonnes in 2001). The current annual
production capacity of the mine and processing facility is 22,500 tonnes and
31,500 tonnes, respectively. The current mine plan for American Tripoli
contemplates the production of tripoli from this property for at least the next
30 years at 2002 production rates. American Tripoli directly markets a variety
of abrasive products to the construction and manufacturing industries for use in
buffing and polishing applications.

The
Last Three Years

The
principal factor that has affected the Industrial Minerals Operations over the
last three years is the oversupply of its principal product, wollastonite. The
commencement of the Minera operation in 1996, coincident with additional
production from new entrants and established producers, had the effect of
reducing the price of wollastonite, particularly with respect to low-value
wollastonite products. This trend continued in 2001, when sales of wollastonite
decreased 21% from the previous year. In 2002, sales of industrial minerals
across the Industrial Minerals Operations' product categories declined
primarily as a result of exiting lower-priced markets. Lower sales volumes were
partially offset by higher average sales prices. Sales of low-value wollastonite
products in 2003 continued to face intense competition, but sales of high-value
wollastonite products for the automotive and industrial coatings industries
increased as manufacturers continued to convert traditional metal components to
plastic. In 2003, wollastonite sales volumes were 74,700 tonnes, a decrease of
11% from the previous year, while sales volumes of tripoli and other minerals
declined approximately 8% to 14,000 tonnes.

Willsboro
and Minera compete primarily with producers in India, China and Europe, as well
as with producers of substitute industrial minerals.  Since 1996,
aggressive competition from other producers, particularly in China, has resulted
in significant weakening of commodity prices, especially in low value products.

In
2002, analyses of some of the wollastonite product produced and shipped from the
Willsboro facility indicated the presence of small quantities of asbestiform
tremolite at levels giving rise to certain labelling requirements in Canada and
other jurisdictions, not including the United States. The source of asbestiform
tremolite was traced to one of several ore sources supplying the operation and
this ore source was segregated from Willsboro's mining operations. Product
testing conducted by the Willsboro operation since segregation of the ore source
indicates only trace levels of asbestiform tremolite in some product shipped.
Fording Inc. is not aware of any labelling or disclosure requirements relating
to these trace levels. Independent analyses of on-going airborne particle
sampling at the Willsboro operation indicate that the air quality meets the
applicable standards mandated by the

23

---

U.S.
Mine Safety and Health Administration and the U.S. Occupational Safety and
Health Administration. Product testing at Minera indicates no detectable levels
of asbestiform mineral.

Due
to a history of operating losses and uncertainty around future improvement, Old
Fording updated its assessment of the recoverability of its investment in assets
related to the Minera operation following completion of the 2002 fiscal year.
Projections of undiscounted future net cash flows generated by these assets were
less than their carrying values and as a result, Old Fording wrote down these
assets by $140 million in 2002 to their estimated fair market value.

RESERVES
AND RESOURCES

Reserves
and resources of the Partnership and Fording Inc.'s Industrial Minerals
Operations as at December 31, 2003, have been estimated internally by the
Partnership's engineers and geologists in accordance with the National
Instrument 43-101 under the supervision of C. J. McKenny, a professional
geologist and the Partnership's Manager, Energy Resource Planning.  Mr.
McKenny is a "qualified person" for the purposes of the National Instrument.
 Estimates are reviewed and updated periodically to reflect new data from
mining experience, drilling results and analysis.

The
Trust is subject to the provisions of the National Instrument with respect to
the manner in which it reports its reserves and resources, and it is also
subject to United States securities laws.  Accordingly, in this section,
reserves and resources have been presented in tabular form in accordance with
the National Instrument and a paragraph has been included after each reserve
table reporting such information in accordance with SEC Guide 7.

Terminology

With
respect to coal, Part One of Appendix A to this document contains the
definitions ascribed by the Geological Survey of Canada Paper 88-21, "A
Standardized Coal Resource/Reserve Reporting System for Canada" (the "GSC
Standards") to the terms "Reserve", "Resource", "Proven", "Probable", "Measured",
"Indicated" and "Inferred", which are applicable to
reporting coal deposits in accordance with the National Instrument.

With
respect to minerals other than coal, Part Two of Appendix A to this document
contains the definitions ascribed by the Canadian Institute of Mining,
Metallurgy and Petroleum Standards on Mineral Resources and Reserves Definitions
and Guidelines, adopted August 20, 2000 (the "CIM Standards"), to the terms "Reserve",
"Resource", "Proven", "Probable", "Measured", "Indicated"
and "Inferred", which are applicable to reporting mineral deposits (other
than coal) in accordance with the National Instrument.

Part
Three of Appendix A to this document contains the definitions ascribed by SEC
Guide 7 to the terms "Reserve", "Proven Reserves" and "Probable
Reserves", which are applicable to the reporting of the Trust's mineral
reserves, including coal, when being reported on in accordance with SEC Guide 7.
 Unlike the National Instrument, SEC Guide 7 does not recognize the
reporting of mineral deposits which do not meet the definition of "Reserve"
contained in such guide.



24

---

Assumptions

Feasibility
studies assume technological and economic conditions prevailing at the time the
study is prepared. Coal reserves are coal quantities that are anticipated to be
mineable, based on feasibility studies, utilizing existing technology, under
prevailing economic conditions and which have no legal impediments to mining.
The coking coal sales assumed in Reserve determination is approximately US$39
per tonne FOB (free on board) at Westshore Terminals Limited Roberts Bank export
terminal. Coal Reserves are reported in millions of
metric tonnes of clean coal (i.e., tonnage remaining after mining and processing
losses but including coal used in plant operations).

The
Partnership - Reserves and Resources

All
coal Reserves and Resources in the following tables are mineable using
conventional open pit mining methods.

Proven
and Probable Coal Reserves

The
following table sets forth the Partnership's Proven and Probable coal Reserves
at December 31, 2003:

COAL
        RESERVES
        As At December 31, 2003
        (millions of tonnes)(1,3,6)Rank
      Proven(4)
      Probable(4)
      Total(4)
      Type
        of Coal
      Ownership
        (%)(2)
      Calorific
        Value kJ/kg(4)
      Sulphur
        Percent
        (by wt.)(4)Bituminous
        CoalFording
        River
      153
      112
      265
      Metallurgical
      L
        100
      32,600
      0.62%Greenhills
      95
      8
      103
      Metallurgical
      FS
        100
      32,600
      0.62%Coal
        Mountain
      29
      1
      30
      Metallurgical
      L
        100
      29,900
      0.35%Elkview
      194
      65
      259
      Metallurgical
      FS
        100
      32,200
      0.38%Line
        Creek
      12
      -
      12
      Metallurgical
      L
        100
      32,200
      0.46%Cardinal
        River(5)
      36
      26
      62
      Metallurgical
      FS/L
        5/95
      32,700
      0.38%Total
        Metallurgical
      520
      211
      731Bituminous
        CoalLine
        Creek
      1
      -
      1
      Thermal
      L
        100
      26,500
      0.35%Total
        Thermal
      1
      
      1


25

---

Notes:

(1)

Reserves
are reported exclusive of interests of third parties except at Greenhills where
Reserves are reported inclusive of Poscan's interest.  For a description
of Poscan's interest, see "Description of the Business - The Partnership - Metallurgical Coal Operations
- Greenhills".

(2)

Ownership
of the coal Reserves is described as "FS" for fee simple or "L" for
leasehold.  If the Reserves are not entirely fee simple or leasehold, the
ratio of the percentage of fee simple holdings to the total holdings and the
leasehold holdings to the total holding is presented as FS%/L%.

(3)

Fording
River, Greenhills and Coal Mountain were formerly owned by Old Fording. Elkview
was formerly owned by Teck. Line Creek and Cardinal River were formerly owned by
Luscar/CONSOL Joint Ventures.

(4)

Numbers
have been rounded.

(5)

Cardinal
River includes the Cheviot permit area

(6)

See
definitions in Appendix A.

Had
these Proven and Probable coal Reserves been determined in accordance with SEC
Guide 7, they would have been the same as those determined in accordance with
the National Instrument as presented in the above table.

In
2003, the Partnership had thel necessary permits and licenses required to mine
the majority of the Reserves attributed to the above-noted mines other than the
Cheviot Creek pit at the Cardinal River mine where the Partnership has a mine
permit and has applied for a mine license.
For information as to how the Partnership holds its interest in the lands in
which the above-noted Reserves are situate, see
 The Partnership - Reserves and Resources - Real Property.

26

---

Measured
and Indicated Coal Resources

The
following table sets forth the Partnership's coal Resources (consisting of "Measured"
and "Indicated" coal Resources) as at December 31, 2003:

COAL
        RESOURCES
        As At December 31, 2003
        (millions of tonnes)(1,4,7)Rank
      Measured(5)
      Indicated(5)
      Total(5)
      Type
        of Coal
      Ownership(2)
      Calorific
        Value kJ/kg(5)
      Sulphur
        Percent
        (by wt.)(5)Bituminous
        CoalFording
        River
      463
      194
      657
      Metallurgical
      L
      30,200
      0.62%Greenhills
      5
      325
      330
      Metallurgical
      FS
      30,200
      0.62%Coal
        Mountain
      66
      41
      107
      Metallurgical
      L
      28,600
      0.35%Elkview
      1,318
      308
      1,626
      Metallurgical
      FS
      30,200
      0.38%Line
        Creek
      59
      153
      212
      Metallurgical
      L
      30,200
      0.46%Cardinal
        River(6)
      2
      7
      9
      Metallurgical
      FS/L
          5/95
      30,200
      0.38%Elco(3)
      167
      116
      283
      Metallurgical
      L
      30,200
      0.60%Mt.
        Duke(3)
      -
      157
      157
      Metallurgical
      L
      30,200
      0.45%Gregg
        River(3)
      5
      1
      6
      Metallurgical
      L
      30,200
      0.30%Quintette(3)
      41
      
      41
      Metallurgical
      L
      30,200
      0.45%Total
        Metallurgical
      2,126
      1,302
      3,428Bituminous
        CoalLine
        Creek
      5
      24
      29
      Thermal
      L
      25,000
      0.35%Total
        Thermal
      5
      24
      29






Notes:

(1)

Coal
Resources are reported in millions of metric tonnes in the ground before
recovery through mining and without the application of recovery factors.
 Coal Resources are reported exclusive of interests of third parties.
 Reserves are not included in Resources. Resources do not have demonstrated
economic viability.

(2)

Ownership
of the coal Resources is described as "FS" for fee simple holdings or "L"
for leasehold holdings.  If the Resourses are not entirely fee simple or
leasehold, the ratio of the percentage of fee simple holdings to the total
holdings and the leasehold holdings to the total holding is presented as FS%/L%.

(3)

Elco,
Mt. Duke, Gregg River and Quintette are not currently being developed.

(4)

Fording
River, Greenhills, Coal Mountain, Elco and Mt. Duke were formerly owned by Old
Fording. Elkview and Quintette were formerly owned by Teck. Line Creek, Cardinal
River and Gregg River were formerly owned by Luscar/CONSOL Joint Ventures.

(5)

Numbers
have been rounded.

(6)

Cardinal
River includes the Cheviot permit area.

(7)

See
definitions in Appendix A.

27

---

Although
the terms "Measured Resources" and "Indicated Resources" are recognized
by the National Instrument, they are not recognized by the United States
Securities and Exchange Commission.  Investors should not assume that all
or any part of the mineral deposits identified as "Measured" or "Indicated"
will ever be classified as Reserves. SEC Guide 7 only permits the quantification
of coal deposits in public reports that meet the definition of "Reserves".
 However, the National Instrument permits the quantification of Resources
in disclosure documents and the Trust has elected to include such information in
this document.  In previous disclosure documents filed in the United
States, Old Fording has referred to Resources as "non-reserves".

Inferred
Coal Resources

The
following table sets forth the Partnership's Inferred Resources for coal as at
December 31, 2003:

INFERRED
        COAL RESOURCES
        As At December 31, 2003  (millions of tonnes)(1,3,5)Rank
      Inferred
        Resources(4)Bituminous
        Coal - MetallurgicalFording
        River
      2,721Greenhills
      650Coal
        Mountain
      24Elkview
      181Line
        Creek
      110Mt
        Duke(2)
      450Muskiki(2)
      21Gregg
        River(2)
      2Total
        Metallurgical
      4,159Bituminous
        Coal - ThermalLine
        Creek
      10Total
        Thermal
      10






Notes:

(1)

Coal
Resources are reported in millions of metric tonnes in the ground before
recovery through mining and without the application of recovery factors.
 Coal Resources are reported exclusive of interests of third parties.
 Reserves are not included in Resources. Resources do not have demonstrated
economic viability.

(2)

Mt
Duke, Muskiki and Gregg River are currently not being developed.

(3)

Fording
River, Greenhills, Coal Mountain and Mt. Duke were formerly owned by Old
Fording. Elkview was formerly owned by Teck. Line Creek, Cardinal River, Muskiki
and Gregg River were formerly owned by Luscar/CONSOL Joint Ventures.

(4)

Numbers
have been rounded.

(5)
  See definitions in Appendix A.

Although
the term "Inferred Resource" is recognized by the National Instrument, it is
not recognized by the United States Securities and Exchange Commission.  "Inferred
Resources" have a great amount of uncertainty as to their existence and
economic and legal feasibility.  Investors should not assume that all or
any part of an "Inferred Resource" exists or will ever be upgraded to a
higher category or be economically or legally mineable.  SEC Guide 7 only
permits the quantification of coal deposits in public reports that meet the
definition of "Reserves".  However, the National Instrument permits the
quantification of Inferred Resources in disclosure documents and the Trust has
elected to include such information in this document.  In previous
documents filed in the United States, Old Fording has referred to Inferred
Resources as "non-reserves".

28

---

Changes
in Reserves and Resources

The
following tables set forth the changes in the Partnership's Reserves and
Resources during 2003.  The changes are categorized as "production", "additions" or
"deletions" to Reserves and Resources as at December 31,
2003:





Notes:

(1)

Numbers
have been rounded.

(2)  
Coal Reserves are reported in millions of metric tonnes of clean coal (i.e.,
tonnage remaining after mining and processing losses but including coal
used in plant operations).    Reserves are reported exclusive of
interests of third parties except at Greenhills where Reserves are reported
inclusive of Poscan's interest.  For a description of Poscan's
interest, see "Description of the Business - The Partnership - Metallurgical Coal Operations
- Greenhills".

(3)  
Coal Resources are reported in millions of metric tonnes in situ. 
Resources are reported exclusive of interests of third parties.

(4)

Significant
Changes to Reserves include:

Proven:
negative adjustment of 23 million tonnes metallurgical and 2 million tonnes
thermal from Line Creek mine due to a reduction of  the overall strip
ratio; Probable:  transfer of 33 million tonnes of Resources to Proven
Reserves at the Elkview mine.

Significant
Changes to Resources include:

Measured:
negative adjustment of 4 million tonnes at the Coal Mountain mine;
Indicated: transfer of 82.3 million tonnes to Measured Resources at the
Fording River mine; negative adjustment of 0.7 million tonnes at the Line Creek
mine; Inferred: transfer of 1,125 million tonnes to Measured and Indicated
Resources at the Elkview mine; transfer of 18 million tonnes to Measured
Resources and a negative adjustment of 18 million tonnes at the Fording River.



(5)

Tonnages
below 500,000 tonnes is shown as (0) million tonnes.

(6)

See
definitions in Appendix"A.



29

---

Exploration
and Development Activities

In
2003, the Partnership spent approximately $0.9 million on the exploration of
areas outside of its active mining areas.  These activities were directed
at refining mine plans to best exploit reserves scheduled for future
development.  In addition, a substantial amount of routine drilling was
undertaken in active mining areas as part of normal operations and was expensed
as such.  No material exploration was conducted on any of the Partnership's
undeveloped properties in 2003.

Drilling
activity for exploration, development and production planning purposes in 2003
totalled 24,900metres.  All drilling,
logging and sampling activities were conducted under a combination of ISO
quality standards, the material testing standards established by the American
Society for Testing Materials and the Partnership's internal standards.

Of the total metres drilled, 19,000 metres w
 as drilling conducted at all mine sites
 within current pit boundaries for short to medium range planning purposes.

The remaining 5,900 metres was drilled in programs conducted by the Coal
Mountain and Line Creek mines on coal lands

adjacent to those operations
 that were contributed to the Partnership by Teck and Old Fording
.. The drilling provided additional information about the quantity and quality of
coal
 R
esources that may be
 available
 to extend the life of the Coal Mountain and Line Creek mines. Further drilling
programs will be conducted in 2004.



Real
Property

The
following chart lists significant coal rights held by the Partnership as at
December 31, 2003:



Mineral
        Holdings
        (thousand hectares)
      Fee
        Simple
      Crown
        Lease
        and License
      TotalCoal
        British
        Columbia
        Alberta
      38.9
        1.3
      63.9
        65.8
      102.8
        67.1All
        Mines and Minerals except
        Petroleum
        & Natural Gas
        British
        Columbia
      10.2
      -
      10.2Total
        (1)
      50.4
      129.7
      180.1




Notes:

(1)

Numbers
have been rounded.

In
British Columbia, coal licenses are issued for one-year terms and have an
initial cost of $7 per hectare, increasing by $5 per hectare every five years to
a maximum of $30 per hectare. EVCC currently pays license fees ranging from $7
to $30 per hectare.  Coal leases are granted for periods of 30 years and
have an annual cost of $10 per hectare. In
Alberta, crown leases are granted by the provincial government and are generally
issued for 15 years.  Annual lease rentals are $3.50 per hectare.  In
the past, renewals of these licences and leases have generally been granted
although there can be no assurance that this will continue in the future.

Taxes
are levied on the mining industry by the British Columbia provincial government
under the Mineral Tax Act in two stages.  In the initial stages of
production and in situations where the producer has not recovered its initial
investment and return based on long term interest rates, the operating cash flow
from production is taxed at a 2% rate.  If and when the producer recovers
its capital investment and the applicable return, the tax increases

30

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to
13% of the annual operating cash flow after deducting capital expenditures. A
discussion of mineral taxes is contained in Management's Discussion and
Analysis of Financial Condition and Results of Operations for the year ended
December 31, 2003 which forms part of the Trust's 2003 Annual Report.



31

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Fording
Inc. Industrial Minerals Operations - Reserves and Resources

Proven
and Probable Industrial Mineral Reserves

The
following table sets forth Fording Inc.'s Proven and Probable Reserves of
wollastonite and tripoli as at December 31, 2003:

-INDUSTRIAL
        MINERAL RESERVES
        As At December 31, 2003 (millions of tonnes)(1,4)Minerals
      
      Grade(2)Proven(3)
      Probable(3)
      Total(3)WollastoniteNYCO
      5
      1
      6
      54.5%Minera
      20
      85
      105
      54.8%Total
        Wollastonite
      25
      86
      111Tripoli
      2
      -
      2
      94-98%




Notes:

(1)

Wollastonite
and tripoli Reserves are reported in millions of metric tonnes in the ground
before recovery through mining and without application of recovery factors.
 Reserves are reported exclusive of interests of third parties.

(2)

All
grades are reported as a percentage (by weight) of material.  For
wollastonite, it is percentage of CaSi03 (wollastonite).  For
tripoli, it is reported as a percentage SiO2 (silicon dioxide).

(3)

Numbers
have been rounded.

(4)

See
definitions in Appendix A.

Had
the above industrial mineral Reserves been determined in accordance with SEC
Guide 7, they would have been the same as those determined in accordance with
the National Instrument.

In
2003, Fording Inc. had all necessary permits which are required to mine the
tonnes attributed to the above-noted mines.

32

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Measured
and Indicated Industrial Mineral Resources

The
following table sets forth Fording Inc.'s industrial mineral Resources
(consisting of "Measured Resources" and "Indicated Resources" of
wollastonite and tripoli) as at December 31, 2003:

-INDUSTRIAL
          MINERAL RESOURCES
          As At December 31, 2003
          (millions of tonnes)(1,4)Minerals
        Measured(3)
        Indicated(3)
        Total(3)
        Grade(2)WollastoniteNYCO
        1
        2
        3
        54.5%Minera
        -
        -
        -
        -Total
          Wollastonite
        1
        2
        3Tripoli
        -
        -
        -
        -




Notes:

(1)

Wollastonite
  and tripoli Resources are reported in millions of metric tonnes in the ground
  before recovery through mining and without application of recovery factors.
   Resources are reported exclusive of interests of third parties. Reserves
  are not included in Resources. Resources do not have demonstrated economic
  viability.

(2)

All
  grades are reported as a percentage (by weight) of material.  For
  wollastonite, it is percentage of CaSi03 (wollastonite).  For
  tripoli, it is percentage SiO2 (silicon dioxide).

(3)

Numbers
  have been rounded.

(4)

See
  definitions in Appendix A



Although
  the terms "Measured Resources" and "Indicated Resources" are
  recognized by the National Instrument, they are not recognized by the United
  States Securities and Exchange Commission.  Investors should not assume
  that all or any part of the mineral deposits identified as "Measured" or "Indicated" will ever be classified as Reserves.SEC Guide 7 only
  permits the quantification of mineral deposits in public reports that meet the
  definition of "Reserves".  However, the National Instrument permits
  the quantification of Resources in disclosure documents and the Trust has
  elected to include such information in this document.  In previous
  disclosure documents filed in the United States, Old Fording has referred to
  Resources as "non-reserves".

33

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Changes
  in Reserves and Resources

The
  following tables set forth the changes in Fording Inc.'s Reserves and
  Resources during 2003.  The changes are categorized as "production", "additions" or
"deletions" to Reserves and Resources as at December
  31, 2003:







Notes:

(1)

Numbers
  have been rounded.

(2)

Wollastonite
  and tripoli Reserves are reported in millions of metric tonnes in the ground
  before mining without application of recovery factors.  Reserves are
  reported exclusive of interests of third parties.  Reserves are not
  included in Resources.

(3)

Production
  below 500,000 tonnes is shown as (0) million tonnes.

(4)

See
  definitions in Appendix A.

Exploration
  and Development Activities

In
  2003, Fording Inc. did not conduct any exploration of areas outside of its
  active mining areas.



Exploration
  and Development Activities

In
  2003, Fording Inc. did not conduct any exploration of areas outside of its
  active mining areas.

Real
  Property

34

---



The
  following chart lists significant mineral rights held by Fording Inc.'s
  Industrial Minerals Operations as at December 31, 2003:



Mineral
          Holdings
          (thousand hectares)
        Fee
          Simple
        Crown
          Lease
          and License
        TotalAll
          Mines and Minerals
          New
          York
          Oklahoma
          Mexico
        1.7
          1.2
          -
        -
          -
          9.4
        1.7
          1.2
          9.4Total
          (1)
        2.9
        9.4
        12.3




Notes:

(1)

Numbers
  have been rounded.

Properties
  in the U.S. are fee simple lands or freehold leases under which royalties are
  paid to third parties.  Mineral rights in Mexico are granted by the
  government through the issuance of exploration and exploitation permits.
   Exploration permits have annual fees of approximately $2.00 per hectare
  and are issued for six years.  At the end of six years, they must be
  converted into exploitation permits or else they revert to the government. Exploitation
  permits are issued for 50 years.  Annual fees for exploitation permits
  escalate based upon the number of years that the exploitation permit has been
  granted and the amounts are adjusted annually by the Mexican government.
   These fees for the Minera operation currently range from US4.50 - $16.00
  per hectare at current exchange rates.  The Minera operations do not have
  any exploration permits and are conducted entirely on exploitation permits.

OTHER
  INFORMATION REGARDING THE TRUST

Environmental
  Protection

In
  2003, to the knowledge of the Trust, neither the Partnership nor Fording Inc.
  incurred any material remediation expenses or any material fines relating to
  non-compliance with applicable environmental laws.  Further, to the
  knowledge of the Trust, neither the Partnership nor Fording Inc., or any of
  their respective subsidiaries, is presently a party to any governmental or
  regulatory investigations or proceedings where it is alleged that it is in
  material violation of any environmental laws.  In the past, a small
  number of minor accidental discharges, releases, leaks and other environmental
  incidents have occurred in the course of operations.  Such occurrences
  have been reported to the relevant government agencies and remediated as
  required, but such occurrences have not had a material adverse effect on the
  Trust.

Reclamation
  Activities

The
  Partnership has significant long-term liabilities relating to mine reclamation
  and end-of-mine closure costs which will be liabilities of the partners. In
  addition, Fording Inc. has liabilities relating to mine reclamation and
  end-of-mine closure in respect of its Industrial Minerals Operations.



As mining
  activities release the reserves included in the long-range mine plans,
  liabilities are recorded for the estimated costs to reclaim disturbed sites to
  meet existing regulatory standards. Reclamation liabilities are not funded.
  The liability is determined on a mine-by-mine basis and various assumptions
  are used in the engineering studies. Spending incurred under the reclamation
  programs is charged against the associated liability.



Reclamation
  costs are estimated based on known or estimated costs to reclaim all disturbed
  sites to meet existing regulatory standards.  These costs are then
  accrued on an undiscounted unit of production basis as mining activities
  release the reserves included in the long-range mine plan.  The costs
  include allowances for the reclamation of all pits, spoils, tailings ponds and
  mine

35

---



infrastructure,
  and are based on the existing cost structure for these activities at each of
  the operations.  Reclamation is normally carried out continuously over
  the life of each mining operation and is largely controlled by the rate that
  mining progresses over specific areas and those areas become available for
  reclamation.  Reclamation plans and scheduling are predicated on
  completing a large proportion of the outstanding reclamation prior to
  depleting the reserves contained in the long-range mine plan.  Accrued
  reclamation costs are periodically reviewed and revised for changes in future
  estimated costs and regulatory requirements.



The amount
  accrued for reclamation costs was $2.8 million in 2003, $2.2 million in 2002
  and $2.5 million in 2001.  The actual amount spent on reclamation
  activities in 2003 was $0.9 million in 2003 and 2002 and $1 million in 2001.
   At December 31, 2003, the estimated undiscounted future costs related to
  disruption to date was $128 million, of which $46 million has been accrued.



Due to the
  uncertainties concerning environmental remediation, the ultimate cost of
  future reclamation activities could differ materially from the estimated
  amounts provided.  The estimate of the total liability is subject to
  change based on amendments to laws and regulations and as new information
  concerning the Partnership's and Fording Inc.'s operations becomes
  available.  Future changes, if any, to the estimated total liability may
  be material and would be recognized on a prospective basis as a change in an
  accounting estimate, when applicable. Environmental laws and regulations are
  continually evolving in all jurisdictions in which operations are conducted.
   The Trust is not able to determine the impact, if any, of environmental
  laws and regulation that may be enacted in the future on its financial
  position due to the uncertainty surrounding the ultimate form that such future
  laws and regulations may take.



Various
  regulatory agencies require security to be posted for reclamation obligations
  based on the forecasted costs to reclaim mined sites.  These security
  requirements are satisfied by posting letters of credit issued by Canadian
  chartered banks.



Health
  & Safety

The
  Trust, the Partnership and Fording Inc. are committed to working with all
  employees to maintain a safe and productive work environment.  All
  Partnership and Fording Inc. operations have comprehensive safety and loss
  control programs that incorporate the prevention of accidents, injuries and
  illnesses into normal work activities.  Effective use of personal
  protective equipment and employee training on safe work practices and
  procedures are also part of these programs.

Community
  Relations

The
  Trust, the Partnership and Fording Inc. are committed to the long term future
  and success of the communities in which their employees work and live.
   The Trust, the Partnership and Fording Inc. participate in initiatives
  which enhance the quality of life and the delivery of services in those
  communities, encourage employee volunteerism and foster good relationships
  with stakeholders.

36

---



Human
  Resources

Employment
  Arrangements

The
  Trust and Fording Inc. do not employ any employees directly. Agreements made
  at the time of the Arrangement require the Partnership to make available
  members of its executive personnel to serve as officers (other than as the
  Chief Executive Officer) of the Trust and Fording Inc.  The employment
  costs of these executives are paid by the Partnership.  However, if any
  of the executives spend a significant amount of his or her time in a year on
  the business of the Trust and/or Fording Inc., then the employment costs for
  that executive will be allocated between the Trust, Fording Inc. and the
  Partnership based on the time spent on the business and affairs of the Trust
  and Fording Inc. during the year. In addition, the agreements provide that
  employees who provide services to Fording Inc.'s Industrial Minerals
  Operations (other than employees employed by NYCO, Minera, American Tripoli
  and other subsidiaries of Fording Inc.) to be employees of the Partnership and
  made available to Fording Inc. on a full time basis to provide services to the
  Industrial Minerals Operations on a cost recovery basis.

As
  an interim step in effecting the Arrangement, as of February 28, 2003 all of
  the employees previously employed by Old FCL, the Line Creek mine and the
  Cardinal River mine became employees of Fording Inc. and, other than 12
  employees (the "Excluded Employees"), were seconded to the Partnership.
   Although not seconded to the Partnership, the Excluded Employees
  provided services to the Partnership. Subject to the cost recovery
  arrangements in respect of employees providing services to the Industrial
  Minerals Operations, Fording Inc. was reimbursed by the Partnership for all of
  the employment costs of the seconded employees and the employment
  costs of the Excluded Employees. As of January 1, 2004, all of the seconded
  employees and the Excluded Employees became employees of EVCC.

In
  connection with the Arrangement, the Partnership also acquired from Teck all
  of the issued and outstanding shares of Elkview Coal Corporation which employs
  the Elkview mine employees. As of January 1, 2004, Elkview Coal Corporation
  was amalgamated with EVCC.

Compensation
  Covenant

The
  Arrangement provides that Old Fording employees, while employed by Fording
  Inc. or the Partnership, will be provided with compensation arrangements until
  the third anniversary of the Effective Date which are, in the opinion of the
  Trustees and directors of Fording Inc. who were directors of Old Fording, no
  less favourable, in the aggregate, than the compensation policies and
  arrangements that were in place prior to the Arrangement.

Change
  in Control Agreements

Old
  Fording entered into Change in Control Agreements with certain members of its
  senior management in connection with becoming a public company in 2001. Seven
  of the Change in Control Agreements were assumed by the Partnership (the "C/C
  Agreements") under the Arrangement. The Arrangement also constituted a
  change in control for the purposes the C/C Agreements. If an executive who is
  a party to a C/C Agreement resigns or is terminated without cause prior to
  March 1, 2006, such executive will be entitled to the severance benefits
  provided for by the C/C Agreement. The severance benefits generally provide
  for two years salary, benefits and bonuses except that the former President
  and Chief Executive Officer of Old Fording, is entitled to three years salary,
  benefits and bonuses.

37

---



As
  of December 31, 2003, three of the C/C Agreements had been exercised.  No
  provision has been accrued for the contingent liability related to C/C
  Agreements that were outstanding on December 31, 2003. The liability is
  charged to earnings in the period in which the resignation, retirement or
  termination occurs. The Trust's 65 percent share of the contingent
  liability, which is dependent on the achievement of certain future financial
  results, ranges between $7 million and $14 million. The announced retirement
  of the of the former President and Chief Executive Officer of Old Fording in
  the first quarter of 2004 will reduce this contingent liability by $4 million
  to $7 million.



Other
  Information

All
  of the Partnership's mines are unionized except for the Greenhills mine.
   The expiry dates for the current collective agreements at the unionized
  mines are as follows:

- Fording
      River:           
      April 30, 2006
- Elkview                       
      October 31, 2005
- Coal
      Mountain:          December
      31, 2004
- Line
      Creek                  
      May 31, 2005
- Cardinal
      River           
      June 30, 2007



As
  at December 31, 2003, the Partnership's workforce was approximately 2,600
  employees, all of which reside in Canada. In addition, Fording Inc., through
  its subsidiaries, employs approximately 100_employees at operations in the
  United States and 75 employees at its operation in Mexico.  The Willsboro
  and American Tripoli mines are unionized and the current collective agreements
  expire June 30, 2006 and June 30, 2008, respectively.  The Minera mine is
  not unionized.

RISKS
  AND OTHER TRENDS

An
  investment in the Units involves a number of risks. The financial performance
  of the Trust will be entirely dependent upon the operations and assets of
  Fording Inc. and, in particular, Fording Inc.'s interest in the Partnership.
  Accordingly, an investment in the Units will expose the holder to all of the
  risks to which the Trust is exposed, as well as to the risks to which Fording
  Inc. and the Partnership are exposed. The discussion of certain relevant risk
  factors is contained in Management's Discussion and Analysis of Financial
  Condition and Results of Operations for the year ended December 31, 2003 which
  forms part of the Trust's 2003 Annual Report.



DISTRIBUTION
  POLICIES

The
  Trust

It
  is the policy of the Trust to distribute its Trust Distributable Cash
  quarterly to Unitholders of record on the last business day of each calendar
  quarter (March, June, September and December) with actual payment to be made
  to such Unitholders on or about the 15th day of the following month. To the
  extent that distributions do not exceed the taxable income of the Trust, a
  distribution equal to the excess of taxable income over prior distributions in
  the year will be payable to Unitholders of record on December 31st of each
  year. In the event that the Trustees determine that the Trust does not have
  sufficient available cash to make the full amount of any distribution, the
  payment of such distribution may be made in Units.

38

---



Fording
  Inc.

Fording
  Inc. distributes its available cash to the Trust, plus an amount equal to the
  expenses payable by the Trust, on a quarterly basis, subject to compliance
  with legal and contractual obligations. Fording Inc. distributes its available
  cash to the Trust by way of interest on the Fording Subordinated Notes,
  redemptions of Fording Preferred Shares, dividends or other distributions on
  the Fording Common shares and principal repayments on the Fording Subordinated
  Notes. The amount of such distributions will be determined primarily on
  Fording Inc.'s anticipated results for that quarter, and subject to other
  considerations such as expected future performance. Distributions of available
  cash also take into account any amounts paid in prior periods that were
  greater or less than the actual available cash for those prior periods.
  Available cash is determined after provision for cash reserves which includes
  the proportionate share of cash reserves at the Partnership level.

The
  Partnership

The
  Partnership makes monthly distributions of Partnership Distributable Cash to
  the Partners in proportion to their respective Distribution Entitlements.
   The Partnership's distribution policy cannot be changed unless approved
  by Special Resolution of the Partners.

Distribution/Dividend
  History

The
  following quarterly distributions were paid by the Trust on a per unit basis
  for 2003 inclusive of the two special distributions totalling $1.50 per unit
  paid on April 15 and July 15:

April
          15, 2003
        $1.00July
          15, 2003
        $1.49October
          15, 2003
        $1.00January
          15, 2004
        $1.00




The
  following dividends were paid by Old Fording on a per share basis in 2001 and
  2002:

December
          17, 2001
        $0.125March
          15, 2002
        $0.125June
          17, 2002
        $0.125September
          16, 2002
        $0.150December
          16, 2002
        $0.150




MANAGEMENT'S
  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Management's
  Discussion and Analysis of Financial Condition and Results of Operations for
  the year ended

39

---

December
  31, 2003 is included in the Trust's 2003 Annual Report and is incorporated
  by reference into this Annual Information Form.

MARKETS
  FOR SECURITIES

Exchange
  Listings

The
  Units are listed and posted for trading on the TSX under the symbol "FDG.UN"
  and on the NYSE under the symbol "FDG".



Trading
  Price and Volume

TSX
        NYSEDate
        High
        Low
        Average
          Daily
          Trading Volume
        High
        Low
        Average
          Daily Trading VolumeFebruary*
        $
            31.44
        $
            30.25
        226,296
        $
              0.00
        $
              0.00
        -March
        $
            30.90
        $
            28.05
        465,375
        $
            20.35
        $
            18.90
        20,769April
        $
            29.24
        $
            25.06
        125,343
        $
            19.54
        $
            17.37
        17,048May
        $
            25.49
        $
            23.16
        218,030
        $
            18.40
        $
            16.55
        29,933June
        $
            25.90
        $
            23.61
        100,414
        $
            19.25
        $
            17.25
        42,919July
        $
            27.17
        $
            24.40
        126,148
        $
            19.60
        $
            17.85
        27,886August
        $
            28.00
        $
            26.70
        96,712
        $
            20.50
        $
            19.01
        14,000September
        $
            31.00
        $
            27.80
        216,165
        $
            23.00
        $
            20.00
        32,157October
        $
            34.25
        $
            28.51
        156,947
        $
            26.03
        $
            21.30
        68,300November
        $
            37.50
        $
            32.50
        194,434
        $
            28.25
        $
            24.98
        120,489December
        $
            49.93
        $
            34.40
        367,408
        $
            38.80
        $
            26.54
        140,973*Data
          represents February 28, 2003 only being the first day that the units
          began trading; NYSE data not available from February 28 to March 9,
          2003.






Constraints
  on Ownership

Pursuant
  to the Declaration of Trust, at no time may more than 49% of the Units then
  outstanding be held by or for the benefit of a person who is a not a resident
  or deemed not to be a resident of Canada for the purposes of the Income Tax
  Act(Canada). If the Trustees determine that more that 49% of the units
  are held by non-residents, the Trustees may sell the Units on behalf of
  non-resident holders in inverse order of acquisition or registration.

Unitholder
  Rights Plan

As
  part of the Arrangement, the Trust adopted the Unitholder Rights Plan.
   The purpose of the Unitholder Rights Plan is to provide Unitholders with
  sufficient time to assess a take-over bid for the Trust, if such bid were to
  be made, and to provide the Trustees with the opportunity to explore and
  develop alternatives that are in the best interest of the Trust and the
  Unitholders.

The
  Unitholder Rights Plan is intended to encourage a potential acquiror to
  proceed either by way of a "Permitted Bid" (defined below) or with the
  concurrence of the Trustees.

40

---

A
"Permitted Bid" is a bid which: (i) has been made by way of a take-over
  bid circular; (ii) has been made to all Unitholders; (iii) is outstanding for
  a minimum of 50 days; (iv) provides that no Units deposited to such bid will
  be taken up and paid for (1) prior to the day which is 50 days following the
  date of the take-over bid, and (2) unless on that date, more than 50% of the
  outstanding Units held by "Independent Unitholders" (generally,
  Unitholders who are unrelated to the bidder) have been deposited and not
  withdrawn; and (v) provides that if more than 50% of the Units held by
  Independent Unitholders are tendered to the bid and not withdrawn within the
  50-day period, the bidder must make a public announcement to that effect and
  allow for the tendering of outstanding Units for an additional ten-day period.

Under
  the Unitholder Rights Plan, on the Effective Date, one right was issued in
  respect of each Unit issued under the Arrangement (a "Right").  The
  Rights will separate from the Units after a person has acquired, or commenced
  a take-over bid to acquire, beneficial ownership of 20% or more of the Units
  (a "Flip-in Event").  Ten trading days after the occurrence of a
  Flip-in Event, each Right, other than a Right held by the person that
  initiated the Flip-in Event or any other person acting jointly or in concert
  with such person, will permit the holders of Rights to purchase Units at a 50%
  discount to their market price.  The Rights are not exercisable if an
  acquisition of Units is made pursuant to a Permitted Bid.  The Rights are
  also not exercisable if such acquisition is made pursuant to a prospectus
  offering, a private placement or a securities exchange take-over bid involving
  the issuance of Units that have not been previously distributed.

The
  Trustees may, prior to a Flip-in Event, waive the application of the
  Unitholder Rights Plan if the take-over bid is made by way of a take-over bid
  circular to all holders of Units. Certain exemptions are also provided for
  investment advisors, trust companies and certain other investment and pension
  fund managers who acquire 20% or more of the Units, provided that they are not
  making a take-over bid.

OTPP,
  as well as any other person who, for purposes of the Unitholder Rights Plan,
  was deemed to beneficially own 20% or more of the Units outstanding as at the
  first moment in time after the Arrangement became effective, has been
  grandfathered under the Unitholder Rights Plan so long as it does not
  subsequently increase its beneficial ownership of Units by more than 1% of the
  number of Units outstanding at such time, other than by way of certain
  permitted transactions specified in the Unitholder Rights Plan.

The
  Unitholder Rights Plan must be reconfirmed at every third annual meeting of
  Unitholders following the Arrangement.  In any event, the Unitholder
  Rights Plan will expire on the tenth anniversary of the Arrangement unless it
  terminates prior to that time due to its failure to be reconfirmed by
  Unitholders.

GOVERNANCE

Governance
  Arrangements

As
  part of the Arrangement, each of the Principal Unitholders subscribed for
  Units and entered into a governance agreement with the Trust and Fording Inc.
   The governance agreements provide each of Teck, Westshore and  OTPP
  and Sherritt (acting together) with the right to nominate one Trustee and one
  director of Fording Inc. as part of the slate of Trustees and directors to be
  put forward by each of the Trust and Fording Inc. for election by Unitholders.
   The right of a Principal Unitholder to put forward a nominee to the
  Trust and Fording Inc. terminates unless the Principal Unitholder retains

41

---

a
  certain minimum ownership interest in the Trust and Westshore's right has
  terminated for this reason.  The nominee of OTPP and Sherritt must be an
  Independent Director or an Independent Trustee, as the case may be.  The
  balance of the Trustees will be nominated for election by the Governance
  Committee of the Trustees or the Governance Committee of the board of
  directors of Fording Inc., as applicable.

Each
  governance agreement contains the agreement of the Trust to nominate the
  nominees of the Principal Unitholders and the agreement of the Principal
  Unitholders to vote for the Trustees and directors nominated by the Trust and
  Fording Inc.  The right of any Principal Unitholder to nominate a person
  as a Trustee or director is lost if the Principal Unitholder fails to vote for
  the slate so nominated.

Mr.
  Michael Grandin has been appointed as the Chairman and Chief Executive Officer
  of the Trust.  Thereafter, the Chairman and Chief Executive Officer will
  be selected by the Trustees from among the Independent Trustees. Any proposed
  officer of the Trust who is also a director, officer or employee of Teck or
  any of its affiliates, or the Partnership, must be approved by the Independent
  Trustees.

The
  powers of the Trustees are subject to specific limitations contained in the
  Declaration of Trust (including restrictions on investments by the Trust in
  order to comply with applicable income tax rules, the ability to vote the
  Fording Common Shares held by the Trust and the ability to terminate the
  Trust), and otherwise the Trustees have full, absolute and exclusive, power,
  control and authority over the assets and affairs of the Trust.

Biographies
  of Trustees and Directors

The
  following is a brief biography of each of the Trustees and the directors of
  Fording Inc., including their municipality of residence and a description of
  their principal occupation during the last five years.  As a group, the
  individuals listed below owned directly or indirectly, or exercised control or
  direction over 50,724 Units as at March 18, 2004 representing less than 1% of
  the outstanding Units. Additional information about the Trustees and directors
  is contained in Information Regarding Nominees for Election As Trustees
  and Information Regarding Nominees for Election As Directors in the
  Trust's 2004 Management Information Circular incorporated by reference into
  this Annual Information Form.

Trustees

Dr. Lloyd I. Barber,
  C.C., S.O.M.

Residence:  Regina
  Beach, Saskatchewan

Age:  72

Trustee:  Fording
  Canadian Coal Trust

Became a Trustee:  2003



Dr. Barber
  is President Emeritus of the University of Regina, a position he has held
  since 1990.  Dr. Barber was President of the University of Regina.
   Dr. Barber serves as a director of Teck Cominco Limited, CanWest Global
  Communications Corp., Molson Inc. and Greystone Capital Management.  Dr.
  Barber is a Companion of the Order of Canada.

______________________________________________________________________________________

42

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Michael A. Grandin

Residence:  Calgary,
  Alberta

Age:  59

Trustee - Fording Canadian
  Coal Trust

Director - Fording Inc.

Became a Trustee and
  Director:  2003



Michael
  Grandin is currently Chairman and Chief Executive Officer of Fording Canadian
  Coal Trust, a position he has held since February 2003. Mr. Grandin was
  director of the predecessor corporation to the Fording Canadian Coal Trust
  from 2001 to 2003.  In February, 2004 Mr. Grandin was appointed Dean of
  the Haskayne School of Business.  Mr. Grandin was President of
  PanCanadian Energy Corporation from October 2001 to April 2002.
    From 1998 to 2001, Mr. Grandin was Executive Vice President and
  Chief Financial Officer of Canadian Pacific Limited, a diversified operating
  company active in transportation, energy and hotels.  He was Vice
  Chairman and Director of Midland Walwyn Capital Inc. from 1996 to 1998.
   He is also a director of Pengrowth Corporation, Enerflex Systems Ltd.,
   IPSCO Inc., BNS Split Corp., the Investment Dealers Association of
  Canada and EnCana Corporation.



Mr.
  Grandin was a director of Pegasus Gold Inc. in 1998 when that company filed
  voluntarily to reorganize under Chapter 11 of the United States Bankruptcy
  Code. A liquidation plan for that company received court confirmation later
  that year.

______________________________________________________________________________________



Michael S. Parrett

Residence:  Aurora,
  Ontario

Age:  52

Trustee - Fording Canadian
  Coal Trust

Director - Fording Inc.

Became a Trustee and
  Director:  2003



Mr. Parrett
  is an independent consultant with over 20 years experience in the mining
  industry.  Mr. Parrett was the President of Rio Algom Limited from 2000
  to 2001.  From 1991 to 2000, Mr. Parrett was Vice President and Chief
  Financial Officer of Rio Algom Limited.  From 1999 to 2000, he was also
  Vice President, Strategic Development & Joint Ventures of Rio Algom
  Limited.  Prior to 1990, Mr. Parrett held various positions with
  Falconbridge Limited, serving as Vice President, Controller and Chief
  Financial Officer.  He also serves as a director at Gabriel Resources
  Ltd.  Mr. Parrett is a chartered accountant.



______________________________________________________________________________________



Harry G. Schaefer,
  F.C.A.

Residence:  Calgary,
  Alberta

Age:  67

Trustee - Fording Canadian
  Coal Trust

Director - Fording Inc.

Became a Trustee and
  Director:  2003



Mr. Schaefer
  was director of the predecessor corporation to the Fording Canadian Coal Trust
  from 2001 to 2003. He is the President of Schaefer and Associates, a business
  advisory firm and he is also a Corporate Director. Mr. Schaefer was Chairman
  of TransAlta Corporation from 1991 to 1996 and Chief Financial Officer from
  1975 to 1993. He is the Vice Chairman and a director of TransCanada
  Corporation and TransCanada PipeLines Limited, and the Chairman of the Mount
  Royal College Foundation. Mr. Schaefer has held these

43

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positions
  since 2003, 1998 and 1993, respectively. He is also a director of Agrium Inc.,
  a former director of Gulf Canada Resources Limited and was Chairman of Crestar
  Energy from 1996 to 2000.  Mr. Schaefer is a member of the Workers'
  Compensation Board of Alberta, Investment Advisory Group. Mr. Schaefer is also
  chair of the Alberta Chapter of the Institute of Corporate Directors.



______________________________________________________________________________________



William W. Stinson

Residence:  Toronto,
  Ontario

Age:  70

Trustee - Fording Canadian
  Coal Trust

Director - Fording Inc.

Became a Trustee and
  Director:  2003



Mr. Stinson
  is Chairman of Westshore Terminals Income Fund, the Chairman of Sun Life
  Financial, Lead Director of CHC Helicopter Corporation and a director of Grant
  Forest Products Ltd. From 1981 to 1985, Mr. Stinson was President of Canadian
  Pacific Limited; from 1985 to 1991, he was the President and Chief Executive
  Officer of Canadian Pacific Limited; and from 1991 to 1996, he was
  Chairman and Chief Executive Officer of Canadian Pacific Limited. 
  From 1997 to 2001, Mr. Stinson was the Chairman of the Executive Committee of
  United Dominion Industries Inc.



______________________________________________________________________________________



Robert J. Wright, C.M.,
  Q.C.

Residence:  Toronto,
  Ontario

Age:  71

Trustee - Fording Canadian
  Coal Trust

Became a Trustee:  2003



Mr. Wright is Deputy
  Chairman of Teck Cominco Limited, a position he has held since June 2000. He
  was Chairman of Teck Corporation from 1994 to June 2000. From 1989 to 1993, he
  was Chairman of the Ontario Securities Commission. Prior to 1989, he was a
  senior partner in the law firm of Lang Michener. Mr. Wright is a director of
  the Mutual Fund Dealers Association and the AARC Foundation.  He is a
  member of the Investment Committee of the Ontario Workplace Safety &
  Insurance Board, and the Pension Fund Committee of Air Liquide Canada Inc. Mr.
  Wright is also a Member of the Order of Canada.

______________________________________________________________________________________





Peter Valentine,
  F.C.A.

Residence:  Calgary,
  Alberta

Age:  67

Trustee - Fording Canadian
  Coal Trust

Became a Trustee:  2003



Mr.
  Valentine holds a joint appointment as Senior Advisor to the President and CEO
  of the Calgary Health Region and to the Dean of Medicine, University of
  Calgary.  Prior to his present appointment, Mr. Valentine served for
  seven years as the Auditor General of Alberta.  From 1958 to 1995, Mr.
  Valentine enjoyed a career with KPMG, serving as Partner-in-Charge of
  Professional Practice of the Calgary office, Chairman of the KPMG
  International Energy Practice Group and Senior Audit Partner responsible for a
  variety of medium

44

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to large
  sized organizations, with expertise in the petroleum industry and Canadian
  securities practice.  He is also a director of Superior Plus Inc. He is
  currently the Chair of the Board of Governors of CCAF-FCVI Inc. and has
  previously served as Chair of the Financial Advisory Committee of the Alberta
  Securities Commission and as a member of the Accounting Standards Board and
  the Public Sector Accounting Board of the Canadian Institute of Chartered
  Accountants.





______________________________________________________________________________________



John B. Zaozirny, Q.C.

Residence:  Calgary,
  Alberta

Age: 56

Trustee - Fording Canadian
  Coal Trust

Became a Trustee:  2003



Mr. Zaozirny
  was a director of the predecessor corporations to the Fording Canadian Coal
  Trust from 1986 to 2003.  He is counsel to McCarthy Tetrault LLP,
  Barristers and Solicitors.  Mr. Zaozirny has been with McCarthy
  Tetrault LLP since 1987. He has served as Vice Chairman of Canaccord Capital
  Corporation since 1996 and is also a director of Acetex Corporation, Alberta
  Newsprint Company, Canadian Oil Sands Investments Inc., Computer Modelling
  Group, IPSCO Inc., Matrikon Inc., Middlefield Resource Funds, Pengrowth
  Corporation, Provident Energy Ltd.  and UMA Group Ltd.  He is a
  Governor of the Business Council of British Columbia, and a member of the
  Law Societies of Alberta and British Columbia.  Mr. Zaozirny was Minister
  of Energy and Natural Resources for the Province of Alberta from 1982 to 1986.

______________________________________________________________________________________



Directors
  of Fording Inc.

Michael A. Grandin

Michael S.  Parrett

Harry G. Schaefer, F.C.A.

William W. Stinson

See the biographies of these
  individuals set forth above under Biographies of Trustees and Directors - Trustees.

______________________________________________________________________________________



Dr. Norman B. Keevil

Residence:  Vancouver,
  B.C.

Age:  66

Director - Fording Inc.

Became a Director :
   2003



Dr. Keevil
  is Chairman of the Board of Teck Cominco Limited, a position he has held since
  2001. From 1981 to 2001, he was President and Chief Executive Officer of Teck
  Corporation, also serving as Chairman from 1989 to 1994. Dr. Keevil is a
  director of Aur Resources Inc. and the Mining Association of Canada. He holds
  an honorary Doctor of Laws from the University of British Columbia, and was
  The Northern Miner Mining Man of the Year in 1979. Among other honours, Dr.
  Keevil received a Distinguished Service Award from the Prospectors &
  Developers Association in 1990, and he received the Selwyn G. Blaylock Medal
  for 1991 from the Canadian Institute of Mining and Metallurgy. In January 2004
  Dr. Keevil was inducted into the Mining Hall of Fame.

45

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______________________________________________________________________________________



Richard
  T. Mahler

Residence:
   Vancouver, B.C.

Age:
   60

Director - Fording Inc.

Became a
  Director :  2003



Mr.
  Mahler was Executive Vice President and Chief Financial Officer of
  Finning International Inc., the world's largest Caterpillar dealer from
  1990 until his retirement in 2003.  From 1981 to 1990, Mr. Mahler served
  as Vice President Finance of Amdahl Canada, a provider of enterprise-scale
  computing, networking, and storage systems and services. Prior to that, he
  held various senior financial management positions with Ford Motor Company of
  Canada from 1968 to 1980. Mr. Mahler is Chair, Partnerships BC (a provincial
  crown corporation formed to deliver public services through public/private
  partnerships), a director of Selkirk Financial Technologies and a trustee of
  Swiss Water Income Fund.  He is also a director of the Vancouver Board of
  Trade, the National Ballet School and a director and Treasurer of the VGH/UBC
  Hospital Foundation. He was awarded the 2002 Queen's Golden Jubilee Medal
  for Distinguished Service by the Governor General of Canada and the 2002
  Chancellor's Award for Distinguished Service by Simon Fraser University.



_______________________________________________________________________________



Dr.
  Thomas J. O'Neil

Residence:
   Prescott, Arizona

Age:
   64

Director - Fording Inc.

Became a
  Director:  2003

Dr.
  O'Neil was President and Chief Operating Officer for iron ore miner,
  Cleveland-Cliffs Inc., until July 2003 and remains a consultant to that
  company on international projects. He holds three degrees in mining
  engineering, with a Ph.D. from the University of Arizona where he served on
  the faculty from 1968-1981, becoming Professor and Head of the Department of
  Mining and Geological Engineering. Dr. O'Neil served in various capacities for
  Amoco Minerals, and its successor, Cyprus Minerals from 1981-1991, including
  Vice President of Engineering and Vice President of South Pacific Operations
  stationed in Sydney, Australia. He is a director of the Minerals Information
  Institute and a past director of Hecla Mining Company and of Homestake Mining
  Company. He is the 2003 President of the Society for Mining, Metallurgy and
  Exploration (SME) where he is also a Distinguished Member. Dr. O'Neil was
  elected to the U.S. National Academy of Engineering in 1999 and the American
  Southwest Mining Hall of Fame in 2003.

_______________________________________________________________________________

Roger
  Phillips

Residence:
   Regina, Saskatchewan

Age:
   64

Director - Fording Inc.

Became a
  Director:  2003



Mr. Phillips was a director
  of the predecessor corporation of the Fording Canadian Coal Trust
  from 2001 to 2003.  He is past President and Chief Executive Officer
  of IPSCO Inc., a steel manufacturing company. He held that position from 1982
  until his retirement at the end of 2001. He is a director of Canadian Pacific
  Railway Limited, Imperial Oil Limited, Cleveland-Cliffs Inc., the
  Toronto-Dominion Bank, the C.D. Howe Institute and Inco Limited. Mr. Phillips
  is a Senior Member of the Conference Board, Inc., a Fellow of

46

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the Institute of Physics and
  a Member of the Canadian Association of Physicists. He is also President of La
  Sauciere Investments Inc., a private company. Mr. Phillips was appointed an
  Officer of the Order of Canada in 1999.

_______________________________________________________________________________

47

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David A.
  Thompson

Residence:
   Vancouver, B.C.

Age:
   64

Director - Fording Inc.

Became a
  Director:  2003



Mr. Thompson
  is Chief Executive Officer and Deputy Chairman of Teck Cominco Limited, a
  position he has held since July 2001. From 1994 to 2001, he was President and
  Chief Executive Officer of Cominco Ltd.  From 1980 to 1994, he was Senior
  Vice President and Chief Financial Officer of Teck Corporation.  Mr.
  Thompson is a director of the St. Paul's Hospital Foundation.  He is a
  graduate of the London School of Economics and the Harvard Business School
  (Advanced Management Program).





Officers of the Trust



The
  following is a brief biography of each of the officers of the Trust, including
  their municipality of residence and a description of their principal
  occupation during the last five years.  As a group, the individuals
  listed below, other than Mr. Grandin who was included in the information on
  Trustees and directors (see Biographies of Trustees and Directors), owned
  directly or indirectly, or exercised control or direction over 28,676 Units as
  at March 18, 2004 representing less than 1% of the outstanding Units.

_______________________________________________________________________________

Michael A. Grandin



Chairman and Chief Executive
  Officer



Mr. Grandin's biography is
  set forth above under Biographies of Trustees and Directors - Trustees.

_______________________________________________________________________________



James L. Popowich

Residence:  Calgary,
  Alberta

Age:  59

Executive Vice President



Mr. Popowich
  was appointed President and Chief Executive of Elk Valley Coal Corporation
  effective March 1, 2004. He is also Executive Vice President of the Trust and
  Fording Inc., positions he has held since the formation of the Trust in
  2003. He was Executive Vice President of Old Fording from 2001 to 2003.
  Prior to that, he was Vice President, Operations from 1997 to 2001, and Vice
  President, Development and Alberta Operations from 1990 to 1997 of the
  predecessors to Old Fording.  Mr. Popowich is past Chairman of the Coal
  Association of Canada and Past Chairman of the Alberta Chamber of
  Resources.  He is a member of the Association of Professional Engineers,
  Geologists and Geophysicists of Alberta and the Canadian Institute of Mining,
  Metallurgy and Petroleum.

________________________________________________________________________________



Ronald A. Millos

Residence: Calgary, Alberta

Age:  46

Chief Financial Officer

48

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Mr. Millos
  is currently the Chief Financial Officer of the Trust, Fording Inc.
  and Elk Valley Coal Corporation. He has held these positions since June
  1, 2003. Prior to joining the Trust, Mr. Millos had been Vice President,
  Corporate Finance of Teck Cominco Limited since September of 2001. Between
  1998 and 2001, Mr. Millos was Comptroller and Vice President, Finance and
  Chief Financial Officer for Cominco Ltd.  Mr. Millos is a member of the
  Canadian Institute of Chartered Accountants and the Institute of Chartered
  Accountants of British Columbia.

_______________________________________________________________________________



James F. Jones

Residence: Calgary, Alberta

Age:  50

Corporate Secretary



Mr. Jones is
  currently the Corporate Secretary of the Trust and Fording Inc., positions he
  has held since the formation of the Trust in 2003. He was also appointed Vice
  President, Employee Relations and Corporate Secretary of Elk Valley Coal
  Corporation in March of 2004.  Mr. Jones was Corporate Secretary of Old
  Fording from 2001 to 2003 and Manager, Employee Relations and Regulatory
  Affairs of the predecessors to Old Fording from 1993 to 2001.  Mr.
  Jones is a member of the Law Society of British Columbia and the Canadian
  Bar Association.  He is also a Director of the Calgary Society of
  Christian Education.

______________________________________________________________________________



Kenneth E. Myers

Residence:  Calgary,
  Alberta

Age: 54

Treasurer



Mr. Myers is
  currently Treasurer of the Trust, Fording Inc. and Elk Valley Coal
  Corporation, positions he has held since the formation of the Trust in 2003.
  Mr. Myers was Treasurer of Old Fording from 2001 to 2003 and Treasurer of
  the predecessors to Old Fording from 1994 to 2003.  He is Chairman of the
  Economic and Taxation Committee of The Coal Association of Canada and a past
  Director of the Financial Executives Institute, Calgary
  Chapter.  Mr. Myers is also a member of the Canadian Institute
  of Chartered Accountants.

_______________________________________________________________________________



Thomas E. Pierce

Residence: Calgary, Alberta

Age: 38

Controller  (until
  March 24, 2004)



Tom
  Pierce is currently the Controller of  the Trust, Fording Inc. and Elk
  Valley Coal Corporation, positions he has held since the formation of the
  Trust in 2003.  Mr. Pierce was Controller of Old Fording from 2002 to
  2003 and Manager, Accounting of the predecessors to Old Fording from 1998 to
  2002.  From 1996 to 1998, he was Controller of Minera NYCO S.A. de C.V.
  and from 1993 to 1996, Chief Accountant, Greenhills Operations.  Mr.
  Pierce graduated from Simon Fraser University with a Bachelor of Business
  Administration and is a member of both the Alberta Institute of Chartered
  Accountants and the Canadian Institute of Chartered Accountants.  Mr.
  Pierce has announced that he will be resigning as Controller of each of the
  Trust, Fording Inc. and Elk Valley Coal Corporation effective March 24, 2004.

49

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_______________________________________________________________________________



Mark D. Gow

Residence: Calgary, Alberta

Age: 44

Controller 
  (commencing March 24, 2004)



Mark
  Gow is currently Director, Investor Relations of the Trust, a position he has
  held since the formation of the Trust in 2003. Mr. Gow was Director, Investor
  Relations of Old Fording from 2001 to 2003.  From 1998 to 2001, Mr. Gow
  was Controller of Minera NYCO S.A. de C.V. and from 1997 to 1998, he was
  Manager, Accounting of the predecessors to Old Fording.  Mr. Gow
  graduated from University of Calgary with a Bachelor of Commerce and is a
  member of both the Alberta Institute of Chartered Accountants and the Canadian
  Institute of Chartered Accountants.

_______________________________________________________________________________



TRANSFER
  AGENT AND REGISTRAR



Computershare
  Trust Company of Canada is the transfer agent and registrar for the Units at
  its principal offices in Calgary, Alberta, Toronto, Ontario, Montreal, Quebec,
  Vancouver, British Columbia and New York, New York.







LEGAL
  PROCEEDINGS



The Trust is
  not aware of any material legal proceedings to which the Trust, or its
  subsidiaries, is a party and to which their property is subject.





INTEREST
  OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Dr. Norman
  Keevil is a director of Fording Inc. and is also the Chairman of Teck and one
  of its significant shareholders. Mr. Keevil reports his holdings in Teck as
  follows: 209,440 Class A shares, and 510,101 Class B subordinate voting
  shares. Teck had a material interest in the Arrangement in that, among other
  things, it contributed cash and its metallurgical coal assets to the
  Partnership in exchange for an initial 35% Partnership interest (with the
  ability to increase its interest to 40% in certain circumstances) and was
  appointed managing partner. Teck incurred costs in participating in the
  Arrangement which were paid by Fording Inc.  A more detailed discussion
  regarding Teck's role in the Arrangement can be found the Trust's 2003 Annual
  Information Form under the heading "Subsequent Events - The
  Arrangement" starting on page 31 of that document.



ADDITIONAL
  INFORMATION

Additional
  information in respect of the Trust, including remuneration,of its Trustees,
  directors and officers, the principal holders of its securities, options to
  purchase its securities, and the interests of insiders in material
  transactions, is contained in the Trust's 2004 Management Information
  Circular and Proxy Statement which is being  prepared for the annual
  meeting of Unitholders to be held on May 6, 2004.  Additional financial
  information in respect of the Trust is provided in its audited financial
  statements for the year ended December 31, 2003 and Management's Discussion
  and Analysis of

50

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Financial
  Condition and Results of Operations for the year ended December 31, 2003 in
  the Trust's 2003 Annual Report

The
  Trust will provide to any person, upon written request to the Secretary of the
  Trust:

(1)

when
  the securities of the Trust are in the course of a distribution pursuant to a
  short form prospectus or a preliminary short form prospectus has been filed in
  respect of a distribution of its securities:

(a)

one
  copy of the current Annual Information Form of the Trust, together with one
  copy of any document, or the pertinent pages of any document, incorporated by
  reference in the Annual Information Form;

(b)

one
  copy of the comparative consolidated financial statements of the Trust for its
  most recently completed financial year together with the accompanying report
  of the auditors and one copy of quarterly interim consolidated financial
  statements of the Trust issued subsequent to the issuance of the consolidated
  financial statements for its most recently completed financial year;

(c)

one
  copy of the Trust's Management Information Circular and proxy statement in
  respect of its most recent annual meeting of Unitholders; and

(d)

one
  copy of any other documents that are incorporated by reference into the
  preliminary short form prospectus or the short form prospectus not required to
  be provided under (a) to (c) above; or

(2)

at
  any other time, one copy of any other documents referred to in (1) (a), (b)
  and (c) above, provided the Trust may require the payment of a reasonable
  charge if the request is made by a person who is not a Unitholder of the
  Trust.

51

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Additional
  information regarding the Trust, Fording Inc. and the Partnership is available
  on SEDAR at www.sedar.com and on
  EDGAR at www.sec.gov. and on the
  Trust's website at www.fording.ca.

Requests
  for additional information should be directed to:

Secretary
  Fording Canadian Coal Trust
  Suite 1000, 205 - 9th Avenue SE

Calgary, Alberta
  T2G 0R4

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APPENDIX
  A
  DEFINITIONS FOR RESERVES AND RESOURCES

Introduction

Fording
  Canadian Coal Trust is a reporting issuer in Canada and is subject to Canadian
  securities laws.  These laws require that mineral deposits be reported in
  accordance with the National Instrument.  The National Instrument
  specifies the terms to be used in describing certain types of mineral deposits
  and the work required to be undertaken before certain of such terms may be
  used. Units of the Trust are listed on the New York Stock Exchange and
  therefore the Trust is also subject to the jurisdiction of the Securities and
  Exchange Commission.  The terms and standards required by the National
  Instrument are in some respects different from the reporting requirements of
  SEC Guide 7, and as a result, the Trust has endeavoured to comply with both
  standards.

The
  National Instrument specifies different standards for coal as opposed to other
  types of minerals.  When calculating and reporting coal deposits, the
  National Instrument requires the use of relevant Canadian standards and
  definitions (the Geological Survey of Canada Paper 88-21, "A Standardized
  Coal Resource/Reserve Reporting System for Canada" (the "GSC Standards")
  and the Canadian Institute of Mining, Metallurgy and Petroleum Standards on
  Mineral Resources and Reserves Definitions and Guidelines, adopted August 20,
  2000 (the "CIM Standards")).  When calculating and reporting other
  mineral deposits, the National Instrument requires that the standards and
  definitions of the CIM Standards be used.  SEC Guide 7 does not
  distinguish between coal and other types of minerals but does specify that
  only reserves may be reported.

Part
  One - Canadian Standards for Coal - the GSC Standards

Coal
  deposits are estimated in accordance with the GSC Standards and the CIM
  Standards and reported as either a "Reserve" or a "Resource".

The
  distinction between a Reserve and a Resource is that Reserves have been
  demonstrated by a feasibility study to be economically recoverable whereas
  Resources have not.

In
  accordance with the National Instrument, Coal Reserves are further classified
  as "Proven" or "Probable" and Coal Resources are further classified as "Measured",
"Indicated" or "Inferred".  These further
  classifications reflect varying degrees of certainty that the coal being
  described exists in the quantities reported.  A geologist determines the
  certainty of existence by conducting geologic sampling.  Generally, as
  more sampling is conducted, the degree of certainty improves.  However, a
  more complex geologic formation requires more sampling than a less complex
  formation for the same level of certainty to be achieved.  The additional
  sampling may result in increases or decreases in the quantity of coal.

53

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Coal
  Reserve versus a Coal Resource

A
  Coal Resource is a quantity of coal which has reasonable prospects for
  economic extraction but which has not been economically evaluated by a
  feasibility study or which does not meet current economic or technical
  criteria for mining.  Accordingly, a Coal Resource (unlike a Coal
  Reserve) does not have demonstrated economic viability and may not be
  currently economically viable.  Coal Resources are upgraded to Coal
  Reserves after a feasibility study shows that the Coal Resource is
  economically mineable and there are no known legal impediments to mining the
  coal.  Feasibility studies are conducted assuming current technological
  and economic conditions.  The Trust reports the Partnership's Coal
  Resources exclusive of Coal Reserves.

Proven
  and Probable

Proven
  Coal Reserves are coal quantities which are geologically established to the
  highest degree of confidence.  Estimations of Proven Coal Reserves are
  equivalent to the GSC Standards' term for "Measured Reserves".

Probable
  Coal Reserves are coal quantities which are geologically established to a
  moderate to high degree of confidence.  There is some need for further
  planning before the economics of Probable Coal Reserve extraction can be
  confirmed.  Estimations of Probable Coal Reserves are equivalent to the
  GSC Standards' term for "Indicated Reserves".

A
  Proven Coal Reserve is the economically mineable part of the Measured Coal
  Resource.  A Probable Coal Reserve is the economically mineable part of
  the Indicated Coal Resource and, in some cases, the Measured Coal Resource.
   Economic recovery is demonstrated by a feasibility study.  A
  feasibility study must include information on mining, processing,
  metallurgical, economic and other relevant factors that demonstrate, at the
  time of reporting, that economic extraction can be justified.  A Probable
  Coal Reserve has a lower level of confidence than a Proven Coal Reserve.

Measured
  and Indicated

Measured
  Coal Resources consist of coal quantities based on a high level of geological
  certainty.  Indicated Coal Resources consist of coal quantities with a
  moderate degree of geological certainty, based on less abundant information.

The
  estimates of Measured and Indicated Coal Resources are based on detailed and
  reliable exploration and testing information gathered through appropriate
  techniques from locations such as outcrops, trenches, pits, workings and drill
  holes that are spaced closely enough to confirm geological and grade
  continuity.

A
  Measured Coal Resource is that part of a Coal Resource for which quantity,
  grade or quality, densities, shape and physical characteristics are so well
  established that they can be estimated with a high level of confidence.

54

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An
  Indicated Coal Resource is that part of a Coal Resource for which quantity,
  grade or quality, densities, shape and physical characteristics can be
  estimated with confidence.

An
  Indicated Coal Resource has a higher level of confidence than an Inferred Coal
  Resource but has a lower level of confidence than a Measured Coal Resource.

Inferred

Inferred
  Coal Resources consist of coal quantities that have a relatively low level of
  geological certainty and for which there is insufficient information to allow
  detailed examination of long-term mining limits and which are therefore not
  included in estimates of total Resources.  Due to the uncertainty
  attached to Inferred Coal Resources, it cannot be assumed that all or any part
  of an Inferred Coal Resource will be upgraded to a Measured or Indicated Coal
  Resource or that it is economically or legally mineable.  Accordingly,
  Inferred Coal Resources are excluded from estimates forming the basis of
  feasibility or other economic studies and cannot become part of a Reserve
  without first being upgraded to a Measured or Indicated Resource.

Part
  Two - CIM Standards for Industrial Minerals

All
  mineral Reserves and Resources, other than Coal Reserves and Resources, are
  estimated and reported as outlined in the CIM Standards.

Under
  the CIM Standards, the distinction between a "Reserve" and a "Resource"
  is that Reserves have been demonstrated by a feasibility study to be
  economically recoverable whereas Resources have not.  Accordingly, a
  Mineral Resource (unlike a Mineral Reserve) does not have demonstrated
  economic viability and may not currently be economically viable.  For the
  purposes of calculating Reserves for such other minerals, economic viability
  is determined by reference to current economic conditions in the same way that
  it is for coal.

Like
  coal, classifications of Reserves and Resources are classified further
  according to the degree of certainty of existence.  Reserves are
  classified as Proven and Probable.  Resources are categorized as
  Measured, Indicated and Inferred.

Reserves
  versus Resources

A
  Mineral Resource is the occurrence of a mineral in a form, amount and quality
  that it has a reasonable prospect for economic extraction but which has not
  been economically evaluated by a feasibility study or which does not meet
  current economic or technical criteria for mining.  Mineral Resources are
  upgraded to Mineral Reserves after a preliminary feasibility study shows that
  the Mineral Resource is anticipated to be economically mineable and there are
  no known legal impediments to mining the mineral.



55

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Proven
  and Probable

A
  Proven Mineral Reserve is the economically mineable part of the Measured
  Mineral Resource demonstrated by at least a preliminary feasibility study.
   A Probable Mineral Reserve is the economically mineable part of the
  Indicated Mineral Resource and, in some cases, the Measured Mineral Resource,
  demonstrated by at least a preliminary feasibility study.  A preliminary
  feasibility study must include information on mining, processing,
  metallurgical, economic and other relevant factors that demonstrate, at the
  time of reporting, that economic extraction can be justified.  A Probable
  Mineral Reserve has a lower level of confidence than a Proven Mineral Reserve.

Measured
  and Indicated

A
  Measured Mineral Resource is that part of a Mineral Resource for which
  quantity, grade or quality, densities, shape and physical characteristics are
  so well established that they can be estimated with a high level of
  confidence.

An
  Indicated Mineral Resource is that part of a Mineral Resource for which
  quantity, grade or quality, densities, shape and physical characteristics can
  be estimated with confidence.

An
  Indicated Mineral Resource has a higher level of confidence than an Inferred
  Mineral Resource but has a lower level of confidence than a Measured Mineral
  Resource.

The
  estimates of Measured and Indicated Mineral Resources are based on detailed
  and reliable exploration and testing information gathered through appropriate
  techniques from locations such as outcrops, trenches, pits, workings and drill
  holes that are spaced closely enough to confirm geological and grade
  continuity.

Inferred

An
  Inferred Mineral Resource is that part of a Mineral Resource for which
  quantity and grade or quality can be estimated on the basis of geological
  evidence and limited sampling, and reasonably assumed, but not verified,
  geological and grade continuity.  The estimate is based on limited
  information and sampling gathered through appropriate techniques from
  locations such as outcrops, trenches, pits, workings and drill holes.
   Due to the uncertainty attached to Inferred Mineral Resources, it cannot
  be assumed that all or any part of an Inferred Mineral Resource will be
  upgraded to an Indicated or Measured Mineral Resource or that it is
  economically or legally mineable.  An Inferred Mineral Resource has a
  lower level of confidence than that applied to an Indicated Mineral Resource.
   Accordingly, Inferred Mineral Resources are excluded from estimates
  forming the basis of feasibility or other economic studies and cannot become
  part of a Reserve without first being upgraded to a Measured or Indicated
  Resource.

56

---

Part
  Three - SEC Guide 7 Definitions

Reserve

SEC
  Guide 7 defines a Reserve as that part of a mineral deposit which could be
  economically and legally extracted or produced at the time of the reserve
  determination.

Proven
  Reserves

SEC
  Guide 7 defines a Proven Reserve as a reserve for which: (a) quantity is
  computed from dimensions revealed in outcrops, trenches, workings or drill
  holes; grade and/or quality are computed from the results of detailed
  sampling; and (b) the sites for inspection, sampling and measurement are
  spaced so closely and the geologic character is so well defined that size,
  shape, depth and mineral content of reserves are well-established.

Probable
  Reserves

SEC
  Guide 7 defines a Probable Reserve as a reserve for which quantity and grade
  and/or quality are computed from information similar to that used for proven
  reserves, but the sites for inspection, sampling, and measurement are farther
  apart or are otherwise less adequately spaced.  The degree of assurance,
  although lower than that for proven reserves, is high enough to assume
  continuity between points of observation.



57

---

Exhibit B
Audited Consolidated Financial Statements

MANAGEMENT'S REPORT

JANUARY 23, 2004

The accompanying consolidated
  financial statements and related financial information are the responsibility
  of management and have been prepared in accordance with generally accepted
  accounting principles in Canada and necessarily include amounts that reflect
  management's judgment and best estimates. Financial information contained
  elsewhere in this Annual Report is consistent with the consolidated financial
  statements.

Management has established
  systems of accounting and internal control that provide reasonable assurance
  that assets are safeguarded from loss or unauthorized use, and produce
  reliable accounting records for the preparation of financial information.
  Policies and procedures are maintained to support the accounting and internal
  control systems and include an established code of business conduct.

The independent external
  auditors, PricewaterhouseCoopers LLP, have conducted an examination of the
  consolidated financial statements in accordance with Canadian generally
  accepted auditing standards on behalf of the unitholders. The independent
  auditors have full and free access to the Audit Committee.

The Board of Trustees carries
  out its responsibility for the consolidated financial statements principally
  through its Audit Committee, consisting of three members, all of whom are
  unrelated Trustees. This Committee reviews the consolidated financial
  statements with management and the independent auditors prior to submission to
  the Board for approval. The Audit Committee also recommends to the Board the
  independent auditors to be proposed to the unitholders for appointment.
  Interim consolidated financial statements are reviewed by the Audit Committee
  prior to release to the unitholders.

The consolidated financial
  statements are approved by the Board of Trustees on the recommendation of the
  Audit Committee.



| | 
| | 



AUDITOR'S REPORT

TO THE UNITHOLDERS OF FORDING CANADIAN COAL TRUST



We have audited the
  consolidated balance sheets of Fording Canadian Coal Trust as at December 31,
  2003 and 2002 and the consolidated statements of income, accumulated earnings
  and cash flows for each of the years in the three-year period ended December
  31, 2003. These consolidated financial statements are the responsibility of
  the Trust's management. Our responsibility is to express an opinion on these
  financial statements based on our audits.

We conducted our audits in
  accordance with Canadian generally accepted auditing standards. Those
  standards require that we plan and perform an audit to obtain reasonable
  assurance whether the financial statements are free of material misstatement.
  An audit includes examining, on a test basis, evidence supporting the amounts
  and disclosures in the financial statements. An audit also includes assessing
  the accounting principles used and significant estimates made by management,
  as well as evaluating the overall financial statement presentation.

In our opinion, these
  consolidated financial statements present fairly, in all material respects,
  the financial position of the Trust as at December 31, 2003 and 2002 and the
  results of its operations and its cash flows for each of the years in the
  three-year period ended December 31, 2003 in accordance with Canadian
  generally accepted accounting principles.

| | 
| | 



57 |

---



FORDING CANADIAN
  COAL TRUST

CONSOLIDATED
  BALANCE SHEETS

|AS
        AT DECEMBER 31                                    |   |         |  |   |       | 
|------------------------------------------------------------ | - | ------- |  | - | ----- | 
|                                                             |   |         |  |   |       | 
|(millions of Canadian
        dollars)                       |   | 2003    |  |   | 2002  | 
|                                                             |   |         |  |   |       | 
|                                                             |   |         |  |   |       | 
|ASSETS                                                       |   |         |  |   |       | 
|Current Assets                                               |   |         |  |   |       | 
|Cash and cash equivalents                                    | $ | 56.9    |  | $ | 7.0   | 
|Accounts receivable                                          |   | 79.0    |  |   | 47.5  | 
|Inventory (note 7)                                           |   | 130.3   |  |   | 189.7 | 
|Prepaid expenses                                             |   | 2.9     |  |   | 10.3  | 
|                                                             |   |         |  |   |       | 
|                                                             |   | 269.1   |  |   | 254.5 | 
|Capital assets(note
        8)                               |   | 621.9   |  |   | 644.1 | 
|Goodwill(note
        5)                                     |   | 52.4    |  |   | -     | 
|Other assets                                                 |   | 20.2    |  |   | 10.8  | 
|                                                             |   |         |  |   |       | 
|                                                             | $ | 963.6   |  | $ | 909.4 | 
|                                                             |   |         |  |   |       | 
|                                                             |   |         |  |   |       | 
|LIABILITIES                                                  |   |         |  |   |       | 
|Current Liabilities                                          |   |         |  |   |       | 
|Bank indebtedness                                            | $ | 4.4     |  | $ | 8.1   | 
|Accounts payable                                             |   | 94.6    |  |   | 81.6  | 
|Income taxes payable                                         |   | 7.0     |  |   | 3.1   | 
|Distribution payable                                         |   | 46.9    |  |   | -     | 
|                                                             |   |         |  |   |       | 
|                                                             |   | 152.9   |  |   | 92.8  | 
|Reclamation(note
        9)                                  |   | 45.6    |  |   | 35.8  | 
|Pensions and other
        post-retirement benefits(note 10) |   | 15.0    |  |   | 12.2  | 
|Other non-current
        liabilities(note 11)               |   | 8.3     |  |   | -     | 
|Long-term debt(note
        12)                              |   | 300.0   |  |   | 135.0 | 
|Future income taxes(note
        13)                         |   | 197.4   |  |   | 184.9 | 
|Commitments and
        contingencies(note 19)               |   |         |  |   |       | 
|                                                             |   | 719.2   |  |   | 460.7 | 
|                                                             |   |         |  |   |       | 
|                                                             |   |         |  |   |       | 
|UNITHOLDERS' EQUITY                                          |   |         |  |   |       | 
|Trust units(note
        14)                                 |   | 257.3   |  |   | 122.4 | 
|Accumulated earnings                                         |   | 184.0   |  |   | 291.8 | 
|Accumulated cash
        distributions(note 4)               |   | (210.3) |  |   | -     | 
|Foreign currency
        translation adjustments(note 14)    |   | 13.4    |  |   | 34.5  | 
|                                                             |   |         |  |   |       | 
|                                                             |   | 244.4   |  |   | 448.7 | 
|                                                             |   |         |  |   |       | 
|                                                             | $ | 963.6   |  | $ | 909.4 | 
|                                                             |   |         |  |   |       | 

The accompanying
  notes are an integral part of these financial statements.

Due to the Plan of
  Arrangement and conversion into an income trust, certain information included
  in the financial statements for prior periods may not be directly comparable
  (note 1).





| 58

---

|FORDING CANADIAN COAL
        TRUST                             |   |        | 
|--------------------------------------------------------------- | - | ------ | 
|CONSOLIDATED STATEMENTS OF INCOME                              
|YEARS ENDED DECEMBER 31                                         |   |        | 
|                                                                |   |        | 
|(millions of Canadian
        dollars)                          |   | 2003   | 
|                                                                |   |        | 
|                                                                |   |        | 
|Revenues                                                        | $ | 990.4  | 
|                                                                |   |        | 
|Expenses                                                        |   |        | 
|Cost of product sold                                            |   | 447.4  | 
|Transportation and other                                        |   | 337.5  | 
|Selling, general and
        administration                     |   | 20.3   | 
|Depreciation and depletion                                      |   | 59.6   | 
|                                                                |   |        | 
|                                                                |   | 864.8  | 
|                                                                |   |        | 
|Income from operations                                          |   | 125.6  | 
|Other (income) expenses                                         |   |        | 
|Gain on sale of Partnership
        interest (note 1)           |   | (72.0) | 
|Provision for asset write-down
        (note 16)                |   | -      | 
|Reorganization costs (note 1)                                   |   | 22.0   | 
|Interest expense                                                |   | 16.1   | 
|Interest income                                                 |   | (6.4)  | 
|Other, net                                                      |   | (0.8)  | 
|                                                                |   |        | 
|Income (loss) before taxes
        and discontinued operations  |   | 166.7  | 
|                                                                |   |        | 
|Income taxes(note
        13)                                   |   |        | 
|Current                                                         |   | 22.6   | 
|Future                                                          |   | (20.4) | 
|                                                                |   |        | 
|                                                                |   | 2.2    | 
|                                                                |   |        | 
|Net income (loss) before
        discontinued operations        |   | 164.5  | 
|                                                                |   |        | 
|Discontinued operations(note
        6)                         |   | 78.7   | 
|                                                                |   |        | 
|Net income (loss)                                               | $ | 243.2  | 
|                                                                |   |        | 
|                                                                |   |        | 
|Average number of units
        outstanding (millions)(note 14) |   | 47.3   | 
|                                                                |   |        | 
|Basic and diluted earnings
        (loss) per unit before       |   |        | 
|discontinued operations(note
        14)                        | $ | 3.48   | 
|                                                                |   |        | 
|Basic and diluted earnings
        (loss) per unit(note 14)     | $ | 5.14   | 
|                                                                |   |        | 

The accompanying
  notes are an integral part of these financial statements.

Due to the Plan of
  Arrangement and conversion into an income trust, certain information included
  in the financial statements for prior periods may not be directly comparable
  (note 1).





CONSOLIDATED
  STATEMENTS OF ACCUMULATED EARNINGS

YEARS
  ENDED DECEMBER 31

|(millions of Canadian dollars) |   | 2003    |  |   | 2002   |  |   | 2001   | 
|------------------------------ | - | ------- |  | - | ------ |  | - | ------ | 
|                               |   |         |  |   |        |  |   |        | 
|                               |   |         |  |   |        |  |   |        | 
|Balance - beginning of year    | $ | 291.8   |  | $ | 423.6  |  | $ | 361.2  | 
|Net income (loss) for the year |   | 243.2   |  |   | (70.9) |  |   | 94.6   | 
|Dividends                      |   | -       |  |   | (28.2) |  |   | (32.2) | 
|                               |   |         |  |   |        |  |   |        | 
|                               |   | (351.0) |  |   | (32.7) |  |   | -      | 
|                               |   |         |  |   |        |  |   |        | 
|Balance - end of year          | $ | 184.0   |  | $ | 291.8  |  | $ | 423.6  | 
|                               |   |         |  |   |        |  |   |        | 

The accompanying
  notes are an integral part of these financial statements.

Due to the Plan of
  Arrangement and conversion into an income trust, certain information included
  in the financial statements for prior periods may not be directly comparable
  (note 1).

59 |

---

FORDING CANADIAN
  COAL TRUST

CONSOLIDATED
  STATEMENTS OF CASH FLOW

|YEARS ENDED
        DECEMBER 31                         |  |        |         |      |         |         |        |        |     |        |       
|------------------------------------------------------- |  | ------ | ------- | ---- | ------- | ------- | ------ | ------ | --- | ------ | ------
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|(millions of Canadian
        dollars)                  |  |        |         |      |         | 2003    |        | 2002   |     |        | 2001  
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|Operating activities                                    |  |        |         |      |         |         |        |        |     |        |       
|Net income (loss)                                       |  |        |         |      | $       | 243.2   | $      | (70.9) |     | $      | 94.6  
|Provision for asset write-down
        (note 16)        |  |        | -       |      | 140.0   |         |        | -      |    
|Depreciation and depletion                              |  |        |         |      | 60.6    |         | 69.4   |        |     | 70.9   |       
|Employee future benefits
        contribution (note 10) |  |        |         |      | (7.5)   |         | (28.6) |        |     | (5.7)  |       
|Employee future benefits
        expense (note 10)      |  |        | 7.8     |      | 12.3    |         |        | 7.6    |    
|Brooks capital expense (note 6)                         |  |        |         |      | -       |         | 8.2    |        |     | -      |       
|Future income taxes (note 13)                           |  |        |         |      | 35.9    |         | 6.8    |        |     | (9.6)  |       
|Reclamation provision, net
        (note 9)             |  |        | 1.9     |      | 1.3     |         |        | 1.5    |    
|(Gain) loss on disposal of
        assets               |  |        | (204.1) |      | 0.4     |         |        | (1.1)  |    
|Other operating items, net                              |  |        |         |      | 0.6     |         | 1.4    |        |     | (0.3)  |       
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|                                                        |  |        |         |      |         | 138.4   |        | 140.3  |     |        | 158.5 
|Change in non-cash working capital (note
        17)    |  |        |         |      |         | 35.9    |        | (31.5) |     |        | (30.3)
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|Cash from operating activities                          |  |        |         |      | 174.3   |         | 108.8  |        |     | 128.2  |       
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|Financing activities                                    |  |        |         |      |         |         |        |        |     |        |       
|Distributions/dividends                                 |  |        |         |      |         | (210.3) |        | (28.2) |     |        | (32.2)
|Repurchase of capital stock                             |  |        |         |      |         | (377.1) |        | (38.5) |     |        | (14.5)
|Issuance of units or capital
        stock              |  |        |         | 12.3 |         | 0.7     |        |        | 0.4 |       
|Increase (decrease) in
        long-term debt           |  |        | 165.0   |      | 4.0     |         |        | (13.0) |    
|(Decrease) increase in bank
        indebtedness        |  |        | (3.7)   |      | 7.2     |         |        | (9.3)  |    
|Payments to unitholders under
        the Arrangement   |  | (75.3) |         | -    |         |         | -      |       
|Change in distribution payable                          |  |        |         |      | 46.9    |         | -      |        |     | -      |       
|Other                                                   |  |        |         |      |         | (4.2)   |        | -      |     |        | -     
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|                                                        |  |        |         |      | (446.4) |         | (54.8) |        |     | (68.6) |       
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|Investing activities                                    |  |        |         |      |         |         |        |        |     |        |       
|Additions to capital assets                             |  |        |         |      |         | (20.4)  |        | (51.5) |     |        | (65.3)
|Cash payment for Luscar assets                          |  |        |         |      | (12.3)  |         | -      |        |     | -      |       
|Proceeds on disposal of capital
        assets          |  |        | 362.8   |      | 1.2     |         |        | 6.6    |    
|Other                                                   |  |        | (8.1)   |      | (0.4)   |         |        | 0.2    |    
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|                                                        |  |        |         |      | 322.0   |         | (50.7) |        |     | (58.5) |       
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|Increase in cash position                               |  |        |         |      | 49.9    |         | 3.3    |        |     | 1.1    |       
|Cash and cash equivalents -
        beginning of year   |  | 7.0    |         | 3.7  |         |         | 2.6    |       
|                                                        |  |        |         |      |         |         |        |        |     |        |       
|Cash and cash equivalents -
        end of year         |  | $      | 56.9    |      | $ 7.0   |         | $      | 3.7    |    
|                                                        |  |        |         |      |         |         |        |        |     |        |       

The
  accompanying notes are an integral part of these financial statements.

Due
  to the Plan of Arrangement and conversion into an income trust, certain
  information included in the financial statements for prior periods may not be
  directly comparable (note 1).

| 60

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FORDING
  CANADIAN COAL
  TRUST

NOTES
  TO CONSOLIDATED

FINANCIAL
  STATEMENTS

1. CORPORATE REORGANIZATIONS

PLAN OF ARRANGEMENT

Fording Canadian Coal Trust
  (the "Trust") is an open-ended mutual fund trust created pursuant to a
  Declaration of Trust and existing under the laws of the Province of Alberta.
  The Trust was established as part of a Plan of Arrangement (the "Arrangement")
  that became effective on February 28, 2003.

The Arrangement gave effect to
  the transactions contemplated by the Combination Agreement entered into on
  January 12, 2003 by Fording Inc. as it was then constituted ("Old Fording"),
  Teck Cominco Limited ("Teck Cominco"), Westshore Terminals Income Fund ("Westshore
  Terminals"), Ontario Teachers' Pension Plan ("OTPP") and Sherritt
  International Corporation ("Sherritt"). Pursuant to the Arrangement,
  shareholders of Old Fording could elect to receive cash, units of the Trust,
  or a combination of cash and units.

The Trust holds all of the
  shares and subordinated notes of Fording Inc. (the "Corporation"). The
  Corporation is the successor to Fording Coal Limited/Les Charbons Fording
  Limitee and Old Fording. The Corporation was continued under the CBCA as
  4123212 Canada Ltd. but changed its name to "Fording Inc." as part of the
  Arrangement. The Corporation holds a 65% interest in the Elk Valley Coal
  Partnership ("Elk Valley Coal"), formerly the Fording Coal Partnership,
  which was created as part of the Arrangement and a 100% interest in the
  industrial minerals operations. The remaining 35% interest in Elk Valley Coal
  is held by Teck Cominco and its affiliates.

In addition to providing for
  the creation of the Trust and Elk Valley Coal, there were a number of other
  steps that comprised the Arrangement:

- the Corporation sold its Prairie Operations to Sherritt
      Coal Partnership II, a partnership owned by OTPP and Sherritt, for cash
      consideration of $225.0 million plus an amount on account of working
      capital and the grant of a royalty on future expansion of production from
      certain assets comprising the Prairie Operations beyond current levels
      (except the announced expansion of the Genesee operations) of up to 5% of
      gross revenue from such expansion. This transaction resulted in a $76.0
      million gain on sale, net of taxes;
- the Corporation purchased the metallurgical coal assets
      from the Luscar/CONSOL joint ventures, which included the Cardinal River
      mine, the Line Creek mine, the Cheviot assets and a 46% interest in the
      Neptune Bulk Terminals (Canada) Ltd. ("Neptune Terminals"), in
      consideration for the issuance of 6.4 million units plus an amount on
      account of working capital and the grant of a royalty interest on certain
      specified properties;
- the contribution to Elk Valley Coal by Teck Cominco of
      its Elkview mine and certain other North American metallurgical coal
      assets, as well as the liabilities and obligations relating thereto, and
      the payment of $125.0 million, in exchange for a 35% ownership interest in
      Elk Valley Coal;
- the contribution to Elk Valley Coal by the Corporation of
      its metallurgical coal assets including the Fording River mine, the Coal
      Mountain mine, its 80% interest in the Greenhills mine and the assets
      purchased from the Luscar/CONSOL joint ventures, as well as the
      liabilities and obligations attaching thereto, in consideration of a 65%
      Partnership interest and the receipt of $125.0 million. This

61 |

---

transaction resulted in a $72.0 million non-taxable gain to
  the Trust;

- Teck Cominco and Westshore Terminals each paid $150.0
      million for 4.3 million units of the Trust; OTPP paid $275.0 million for
      7.9 million units; and Sherritt paid $100.0 million for 2.9 million units.
      These units were acquired from the former shareholders of Old Fording and
      did not provide any cash to the Trust. Concurrently, the Corporation paid
      $75.3 million, in aggregate, to Sherritt, OTPP, Teck Cominco, Westshore
      Terminals and CONSOL under the Arrangement, which was charged to
      unitholders' equity.

As part of the
  Arrangement, the Corporation put in place a new credit facility and drew down
  $335.0 million to replace existing debt and make other payments in connection
  with the Arrangement.

Upon completion
  of the Arrangement, 46.4 million units were outstanding and 0.7 million
  outstanding options to purchase units became fully vested at the effective
  date of the transaction.

The Arrangement
  gives Teck Cominco the opportunity to increase its interest in Elk Valley Coal
  by up to 5% to the extent that Elk Valley Coal realizes certain operational
  and marketing synergies by March 31, 2007. Teck Cominco's interest in Elk
  Valley Coal will increase at the rate of 0.1% for every $1.0 million of
  synergies in excess of $25.0 million. The maximum 5% ownership change will
  occur if synergies of $75.0 million are achieved. In the event of a change in
  ownership of Elk Valley Coal as a consequence of attaining these synergies,
  the Trust will record a reduction of net assets and an equivalent non-cash
  charge to earnings equal to its proportionate decrease in ownership of the net
  assets of Elk Valley Coal. The Trust has accounted for its 65% interest in Elk
  Valley Coal as a joint venture, using the proportionate consolidation method
  of accounting.

The Arrangement
  has been accounted for as a continuity of interests. Accordingly, these
  consolidated financial statements reflect the financial position, results of
  operations and cash flows as if the Trust had always carried on the businesses
  formerly carried on by Old Fording. All assets and liabilities are recorded at
  historical cost. The 12 months ended December 31, 2003 reflect the results of
  operations and cash flows of Old Fording for the period January 1 to February
  28 and the results of operations and cash flows of the Trust for the period
  March 1 to December 31. Due to the Arrangement and conversion into an income
  trust, certain information included in the financial statements for prior
  periods may not be directly comparable.

The Trust
  recorded charges of $22.0 million in 2003 and $11.5 million in 2002 related to
  the Arrangement. The term "units" has been used in these financial
  statements to identify both the trust units of the Trust issued on or after
  February 28, 2003 as well as the common shares of the Corporation outstanding
  prior to the conversion on February 28, 2003.

CANADIAN PACIFIC LIMITED ("CPL")
  REORGANIZATION

In 2001, Old
  Fording was created as a public company as part of CPL's corporate plan of
  arrangement. Old Fording recorded charges of $3.9 million in 2001 related to
  the CPL reorganization.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated
  financial statements have been prepared in accordance with generally accepted
  accounting principles in Canada and include the accounts of the Trust and its
  subsidiaries, all of which are wholly owned. The material differences between
  Canadian and United States generally accepted accounting principles, insofar
  as they apply to the Trust, are discussed in note 21.

| 62

---

A substantial portion of the
  Trust's activities are conducted on a joint-venture basis. The consolidated
  financial statements reflect the Trust's proportionate interest in such
  ventures, as disclosed in note 17. A joint venture is an economic activity
  resulting from a contractual arrangement whereby two or more venturers jointly
  control the economic activity. Joint control of an economic activity is the
  contractually agreed sharing of the continuing power to determine its
  strategic operating, investing and financing policies.

MANAGEMENT ESTIMATES

The consolidated financial
  statements include certain management estimates that may require accounting
  adjustments based on future occurrences. The most significant estimates relate
  to depletion, depreciation, asset impairment test calculations for capital
  assets, future reclamation liabilities and employee future benefits as all of
  these calculations are based on reserve estimates and/or estimated future
  costs. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

Temporary investments with
  maturities of three months or less are considered to be cash equivalents and
  are recorded at cost, which approximates market value.

INVENTORY

Product and raw minerals
  inventory are valued at the lower of average production cost and net
  realizable value. Production costs include labor, operating materials and
  supplies and an applicable portion of operating overhead, but do not include
  depreciation or depletion costs.

Stores and materials inventory
  is valued at the lower of actual cost and net realizable value. Actual costs
  represent the delivered price of the item.

CAPITAL ASSETS

Land, buildings and equipment
  are recorded at cost; maintenance and repairs of a routine nature are expensed
  as incurred. Buildings are depreciated on the straight-line basis over their
  useful lives, ranging from 15 to 40 years. Equipment is depreciated on the
  straight-line basis over its useful life, based on the number of hours in
  operation and ranging from 5 to 35 years.

Mineral properties and
  development include expenditures to acquire and develop identified mineral
  properties and reserves and net costs relating to production during the
  development phase. Depletion on producing properties is provided using a unit
  of production method based upon the proven and probable mineral reserve
  position of the mine. Development costs incurred to expand the capacity of
  operating mines, to develop new ore bodies or to develop mine areas
  substantially in advance of current production are capitalized and charged to
  operations on a unit of production method based upon the proven and probable
  mineral reserves position of the mine.

Exploration costs are charged
  to earnings in the period in which they are incurred, except where these costs
  relate to specific properties for which economically recoverable reserves have
  been established, in which case they are deferred. Upon commencement of
  production, deferred costs are charged to operations on a unit of production
  method related to the mineral reserve position of the property.

When the net carrying value of
  a capital asset, less its related provision for future removal and site
  restoration costs and less related future income taxes, exceeds the estimated
  undiscounted future net cash flows together with its residual value, the asset
  is written down to its fair value.

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GOODWILL

Goodwill is the
  excess of the cost of the acquired investment over the fair value amounts
  assigned to the assets acquired and liabilities assumed. Goodwill is tested
  for impairment annually. A goodwill impairment loss would be recognized when
  the carrying value of the goodwill exceeds its fair value.

RESEARCH AND DEVELOPMENT

Research costs are charged to earnings in the
  period in which they are incurred.

Development costs
  related to products and processes for which the technical and economic
  feasibilities are established are deferred until commercial production or
  until the process is in use.

CAPITALIZED INTEREST

Interest is
  capitalized on major capital projects under construction based on the
  borrowing rate of debt related to the project or the Trust's average cost of
  borrowing.

RECLAMATION

Reclamation costs
  to be incurred at the completion of the current long-range mine plans are
  estimated based on known or estimated costs to reclaim all disturbed sites to
  meet existing regulatory standards. These costs are then accrued on an
  undiscounted unit of production basis as mining activities release the
  reserves included in the long-range mine plan. The costs include allowances
  for the reclamation of all pits, spoils, tailings ponds and mine
  infrastructure, and are based on the existing cost structure for these
  activities at each of the operations. Reclamation is normally carried out
  continuously over the life of each mining operation and is largely controlled
  by the rate that mining progresses over specific areas and those areas become
  available for reclamation. Reclamation plans and scheduling are predicated on
  completing a large proportion of the outstanding reclamation prior to
  depleting the reserves contained in the long-range mine plan. Accrued
  reclamation costs are periodically reviewed by management and are revised for
  changes in future estimated costs and regulatory requirements.

LONG-TERM DEBT

Long-term debt
  includes debt which matures beyond one year, and borrowings on a revolving
  basis which under the borrowing facility can be extended for more than one
  year at the option of the Trust.

FOREIGN CURRENCY TRANSLATION

The functional
  currency and therefore the unit of measure of the Trust's industrial mineral
  subsidiaries, NYCO Minerals and Minera NYCO, is the U.S. dollar. The
  functional currency of the Trust's Metallurgical Coal operations and the
  reporting currency of the Trust is the Canadian dollar. The financial
  statements of the Trust's Minera NYCO operation are remeasured from Mexican
  pesos into U.S. dollars using the year-end exchange rate for monetary assets
  and liabilities, and the historical exchange rates for non-monetary assets and
  liabilities. Foreign currency revenues and expenses are remeasured at the
  exchange rate in effect on the dates of the related transactions, except for
  provisions for depreciation and depletion, which are remeasured on the same
  basis as the related assets. Foreign currency transaction gains and losses are
  included in income immediately.

The U.S. dollar
  accounts of the Trust's NYCO and Minera NYCO operations are translated into
  Canadian dollars, the reporting currency of the Trust, using the current rate
  method. Assets and liabilities are

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translated using the year-end exchange rates for assets and
  liabilities, and revenues and expenses are translated at the average exchange
  rates in effect for the year. Exchange gains or losses arising from
  translation are deferred and included under Unitholders' Equity as Foreign
  Currency Translation Adjustments.

FINANCIAL INSTRUMENTS

Derivative financial
  instruments, specifically foreign exchange forward contracts, are utilized by
  the Trust to manage its foreign currency exposure. The Trust does not employ
  derivative financial instruments for trading or speculative purposes. The
  gains and losses on derivative instruments used as hedges are recognized in
  income in the period that the hedged exposure is recognized in income, which
  is the same period in which the instrument is settled. The gain or loss is
  netted against the item which was hedged.

REVENUE RECOGNITION

Sales revenues are recognized
  when title passes to the customer. Seaborne coal sales revenues are generally
  recognized when the coal has been loaded on the vessel. Rail direct sales are
  recognized when the ownership of the coal is transferred to the customer -
  either when the coal is loaded on the train, or when the train arrives at its
  destination. Industrial minerals sales revenues are recognized upon shipment
  to customers from the plant or warehouse.

INCOME TAXES

Future tax assets and
  liabilities are recognized based on differences between the bases of assets
  and liabilities used for financial statement and income tax purposes, using
  substantially enacted tax rates. The effect of changes in income tax rates on
  future income tax assets and liabilities is recognized in the period that the
  change occurs. Unless a future tax asset is more likely than not to be
  realized, the asset is provided for.

STOCK-BASED COMPENSATION

The Trust adopted the
  fair-value method of accounting for stock-based compensation related to unit
  options for all awards granted, modified or settled on or after January 1,
  2003. Prior to this date, the exercise price of stock options issued to
  employees was equivalent to market price at the time of the grant; therefore
  no compensation expense was recognized when options were issued. Pro-forma
  fair-value-based net income and earnings per share information are disclosed
  for stock-based compensation and other stock-based payments granted during
  2002. Any consideration paid by employees on exercise of options or purchase
  of units is credited to unitholders' equity.

EMPLOYEE FUTURE BENEFITS

The costs of pensions and
  other post-retirement benefits (primarily health care and life insurance) are
  actuarially determined using the projected benefit method prorated on service
  and management's best estimate of expected plan investment performance,
  salary escalation, retirement ages of employees and expected costs. Market
  related values are used for calculating the expected return on plan assets.
  The projected benefit obligation is discounted using a market interest rate at
  the end of the year on high quality corporate debt instruments.

For defined benefit plans,
  employee future benefit expense includes the cost of pension benefits earned
  during the current year, the interest cost on pension obligations, the
  expected return on pension

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plan assets, the amortization of adjustments
  arising from pension plan amendments and the amortization of the excess of the
  net actuarial gain or loss over 10% of the greater of the benefit obligation
  and the market related value of plan assets. The amortization period consists
  of the expected average remaining service lives of employees covered by the
  various plans.

For defined
  contribution plans, pension costs equal plan contributions made during the
  current year. The costs of post-retirement benefits, other than pension, are
  recognized on an accrual basis over the remaining service life of employees.

RECLASSIFICATION

Certain prior years' figures have been
  reclassified to conform with the presentation adopted in 2003.

3. CHANGES IN ACCOUNTING POLICIES

STOCK-BASED COMPENSATION

In 2003, the
  Trust prospectively adopted the fair-value method of accounting for
  stock-based compensation related to unit options pursuant to the transitional
  rules for stock-based compensation approved by the Canadian Institute of
  Chartered Accountants ("CICA"). Prospective application requires the
  fair-value method to be applied to awards granted, modified or settled on or
  after the beginning of the fiscal year in which this new section is adopted.

Effective January
  1, 2002, the Trust adopted the provisions of CICA Handbook Section 3870, "Stock-based
  Compensation and Other Stock-based Payments". The section applies to all
  stock-based compensation granted on or after January 1, 2002, and encourages
  accounting for stock-based payments and awards using a fair-value-based method
  of accounting. When an entity does not use the fair-value-based method of
  accounting, it must disclose pro-forma fair-value-based net income and
  earnings per share information. Under these recommendations, the Trust's
  accounting for stock options is unchanged from prior periods, except for
  additional pro-forma disclosure as detailed in note 15.

FOREIGN CURRENCY TRANSLATION

Effective January
  1, 2002, the Trust adopted the revised recommendations of CICA Handbook
  Section 1650, "Foreign Currency Translation''. There was no impact to
  the Trust because of this change in accounting policy.

HEDGING RELATIONSHIPS

The CICA issued
  Accounting Guideline 13 (AcG 13), "Hedging Relationships", which will be
  effective for years beginning on or after July 1, 2003 although earlier
  application is encouraged. AcG 13 addresses the identification, designation,
  documentation and effectiveness of hedging relationships for the purposes of
  applying hedge accounting. In addition, it deals with the discontinuance of
  hedge accounting and establishes conditions for applying hedge accounting.
  Under the new guideline, an entity is required to document its hedging
  relationships and explicitly demonstrate that the hedges are sufficiently
  effective in order to continue accrual accounting for positions hedged with
  derivatives. The Trust adopted the Guideline effective January 1, 2003 and
  continues to apply hedge accounting for foreign exchange forward contracts
  under AcG 13. There was no impact to the Trust's income statement or balance
  sheet due to application of this standard.

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DISCONTINUED OPERATIONS

CICA Handbook Section 3475, "Disposal of Long-Lived Assets and Discontinued Operations", applies to
  disposal activities initiated by an enterprise's commitment to a plan on or
  after May 1, 2003. Application is prospective with earlier adoption
  encouraged. The new Section establishes standards for the recognition,
  measurement, presentation and disclosure of the disposal of long-lived assets
  and discontinued operations. There was no impact to the Trust's financial
  statements due to the application of this standard.

DISCLOSURE OF GUARANTEES

The CICA issued Accounting
  Guideline 14 (AcG 14), "Disclosure of Guarantees", which was effective for
  years beginning on or after January 1, 2003. The new guideline requires a
  guarantor to disclose information about guarantees it has provided, without
  regard to whether it will have to make any payments, under the guarantee.
  Disclosures required by this guideline have been included in note 12.

RECENT PRONOUNCEMENTS

ASSET RETIREMENT OBLIGATIONS

CICA Handbook Section 3110, "Asset Retirement Obligations", is effective for fiscal years beginning on
  or after January 1, 2004. This standard focuses on the recognition and
  measurement of liabilities related to legal obligations associated with the
  retirement of property, plant and equipment. Under this standard, these
  obligations are initially measured at fair value and subsequently adjusted for
  the accretion of discount and any changes in the underlying cash flows. The
  asset retirement cost is to be capitalized to the related asset and amortized
  into earnings over time. This new standard is estimated to increase non-cash
  expenses of the Trust by $2 to $3 million in 2004 but will not impact the cash
  flow of the Trust.

IMPAIRMENT OF LONG-LIVED ASSETS

Effective for fiscal years
  beginning on or after April 1, 2003, CICA Handbook Section 3063, "Impairment
  of Long-lived Assets", establishes standards for the recognition,
  measurement and disclosure of the impairment of long-lived assets and replaces
  the write-down provisions of Section 3061, "Property, Plant and Equipment".
  Application of the Section is prospective, with earlier adoption encouraged.
  Under the Section, impairment of long-lived assets is determined by a two-step
  process, with the first step determining when impairment is recognized, and
  the second step measuring the amount of the impairment. An impairment is
  recognized when the carrying amount of a long-lived asset exceeds the sum of
  the undiscounted cash flows expected to result from its use and eventual
  disposition. An impairment loss is measured as the amount by which the
  long-lived asset's carrying amount exceeds its fair value.

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4. DISTRIBUTABLE CASH

The Arrangement became
  effective on February 28, 2003. Distributable cash is based on financial
  results since that date.



Distributable
  cash generally refers to the net cash received by the Trust that is available
  for payment to unitholders on a quarterly basis. Available cash generated by
  Fording Inc. is the principal contributor to distributable cash of the Trust.
  Fording Inc. distributes its available cash to the Trust each quarter. The
  amount is calculated from anticipated results for the quarter and takes into
  account other considerations such as expected future performance, variations
  in levels of quarterly operating and capital activities and other financial or
  legal requirements. Future distributions of available cash will take into
  account these factors and any amounts paid in prior periods that were greater
  or less than the actual available cash for those prior periods. A total of
  $100.4 million of the $118.9 million of cash available for distribution was
  paid or payable to unitholders during the 10-month period ended December 31,
  2003.

In addition to
  distributable cash, two additional sources of cash contributed to cash amounts
  paid or payable to unitholders which were events unique to 2003 and will not
  be repeated. A special payment under the Arrangement totalling $70.0 million
  ($1.50 per unit) was paid in two instalments to unitholders of record at the
  end of each of the first two quarters of 2003. Also, the cash flow benefit of
  the draw down of coal product inventory to more normal operating levels
  contributed $39.9 million (or $0.85 per unit) for the year.

The following
  tables summarize the total cash paid or payable to unitholders from all
  sources since the formation of the Trust on February 28, 2003 on a per unit
  and total dollar basis.





Distributable cash has no
  standardized meaning and is not defined by generally accepted accounting
  principles in Canada. Distributable cash is a term defined in the Declaration
  of Trust. It is a measure of cash paid or to be paid to unitholders, and it is
  based on the financial results of the Trust. Accordingly, distributable cash
  as it is presented here may not be comparable to similarly named measures
  presented by other trusts. The per-unit amounts of cash paid or

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declared to be paid to unitholders reflect the actual
  amounts based on units outstanding at the time of the record dates for the
  payments and differs from the weighted average number of units used to
  calculate earnings per unit.

5. ACQUISITION OF ASSETS

The Corporation purchased the
  metallurgical coal and other assets from the Luscar/CONSOL joint ventures for
  total consideration of $240.3 million, consisting of 6.4 million units of the
  Trust valued at $224.0 million and an estimated working capital payment of
  $16.3 million. The acquisition has been accounted for as a purchase of assets
  in accordance with Canadian generally accepted accounting principles. The
  Trust has allocated the purchase price of the assets and liabilities as
  follows:



These assets were contributed
  to Elk Valley Coal as part of the Arrangement. Coincident with the
  acquisition, management examined the operations and determined that operations
  at the Line Creek mine would be curtailed and a portion of the work force
  terminated. The costs of this employee reduction were accrued as a liability
  in determining the allocation of the cost of the acquisition.

Elk Valley Coal has also
  confirmed the scheduled closure of the Cardinal River mine as its reserves
  will be depleted in 2004 unless additional reserves are identified.
  Termination costs and the vast majority of the Cardinal River mine reclamation
  costs are to be borne by the Luscar/CONSOL joint ventures, pursuant to the
  terms of the Arrangement.

Certain steps under the
  Arrangement have not been finalized due to differences in interpretation
  between certain parties to the transaction. Outstanding issues include working
  capital adjustments, Federal Goods and Services Tax amounts on certain
  payments made by the Corporation under the Arrangement, and obligations for
  reclamation activities. It is not possible at this time to predict the outcome
  of these issues. Depending on the outcome of these items, a change in the
  estimated amounts recorded in the purchase price would be reflected as a
  change to the goodwill allocation or a charge to net income, depending on the
  nature of the adjustment.

6. DISCONTINUED OPERATIONS

As part of the Arrangement,
  the Trust sold the Prairie Operations to Sherritt Coal Partnership II for cash
  consideration of $225.0 million plus $7.1 million for the reimbursement of
  capital expenditures made in early 2003 and an amount for working capital
  estimated to be $6.8 million. After providing for future taxes of $56.3
  million, the Trust recorded a gain of $76.0 million. The working capital
  payment and gain are management's best estimates and will be adjusted when
  the working capital amounts are settled.

The income for the segment for
  the period prior to sale was $2.7 million net of taxes of $1.4 million (2002 -
  $12.9 million; 2001 - $15.1 million). Revenues for the discontinued operations
  prior to the sale were $22.7 million (2002 - $66.9 million; 2001 - $80.2
  million).

During 2002 the Corporation
  expensed $8.2 million of capitalized costs relating to the Brooks power
  project. Due to the state of economic and environmental uncertainties in the
  power industry,

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transmission congestion issues, and the absence
  of a partner for the project, the future recovery of the project costs was
  uncertain. This project is part of discontinued operations in 2003.

The results of discontinued operations are as follows:



During each of
  the last three years, there was no interest expense capitalized to projects
  under construction. At December 31, 2003, $50.3 million was capitalized (2002
  - $3.5 million) for reserves and coal deposits located on properties upon
  which there are no current mining operations and which are not being
  amortized.

9. RECLAMATION

The amount
  accrued for reclamation costs was $2.8 million in 2003 (2002 - $2.2 million;
  2001 - $2.5 million). The actual amount spent on reclamation activities in
  2003 was $0.9 million (2002 - $0.9 million; 2001 - $1.0 million). At December
  31, 2003, the estimated total of all future reclamation costs was $128
  million, of which $45.6 million has been accrued. The balance is being accrued
  over the remaining reserve life at each mine. Commencing in 2004, the new
  accounting standard for asset retirement obligations will be adopted (see note
  3).

Reclamation
  obligations are subject to estimation and the eventual amounts expended may be
  materially different from current estimates.

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10. PENSIONS AND OTHER POST-RETIREMENT BENEFITS



Substantially all of the Trust's
  employees participate in either defined benefit or defined contribution
  pension plans. The defined contribution pension cost for the year ended
  December 31, 2003 was $1.4 million (2002 - $1.3 million; 2001 - $1.3 million).

The defined benefit plans are
  non-contributory and provide for pensions based principally on years of
  service, or years of service and compensation rates near retirement. Annual
  contributions to these plans, which are based on actuarial cost methods, are
  made on the basis of not less than the minimum amounts required by
  legislation. The defined benefit pension expense for the year ended December
  31, 2003 was $6.9 million (2002 - $8.7 million; 2001 -$5.0 million) and
  includes the following components:



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Included in the above accrued
  benefit obligation and fair value of the plan assets at year-end are the
  following amounts in respect of the plans that are not fully funded:



Pension fund assets consisted
  primarily of pooled funds, bonds and listed stocks, while health care and life
  insurance benefits are unfunded.

Actuarial assumptions used at December 31, 2003, 2002, and
  2001 are approximately:



In addition to
  pension benefits, health care and life insurance benefits are provided for
  retired employees. For the year ended December 31, 2003, the net costs of
  post-retirement benefits other than pensions amounted to $(0.5) million (2002
  - $1.6 million; 2001 - $1.3 million), and consisted of current service costs
  of $0.4 million and interest costs on projected benefit obligation of $0.6
  million offset by changes resulting from the Arrangement of $0.8 million and
  changes to certain post-retirement benefits available of $0.7 million.

11. OTHER NON-CURRENT LIABILITIES



Capital lease obligations bear
  interest at rates ranging from 6.6% to 7.1% on fixed rate contracts and prime
  plus 0.5% to prime plus 1.0% on variable rate contracts. Capital lease
  obligations expire in 2004 and 2005.

The equipment financing obligation bears interest of 5.1%
  and has a term of 75 months expiring in 2009.

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12. LONG-TERM DEBT, BANKING FACILITIES AND FINANCIAL INSTRUMENTS



The $300.0 million term
  facility requires $150.0 million to be refinanced by February 28, 2005 and the
  remaining $150.0 million by February 28, 2006.

The Corporation's bank
  credit facilities are supported by an unsecured guarantee by Elk Valley Coal,
  limited in recourse to any partner's interest in Elk Valley Coal (other than
  the Corporation), a general security interest over the assets of the
  Corporation including the Corporation's interest in Elk Valley Coal, and
  unsecured guarantees given by subsidiary companies of the industrial minerals
  operations, NYCO Minerals, Inc. and 627066 Alberta Ltd.

NEPTUNE TERMINALS GUARANTEE

As part of the Arrangement,
  Elk Valley Coal acquired a 46% interest in Neptune Terminals. Neptune
  Terminals's shareholder agreement requires that its shareholders guarantee
  the outstanding bank indebtedness of Neptune Terminals. At December 31, 2003,
  Elk Valley Coal's proportionate share of this guarantee was $19.3 million
  and the Trust's proportionate share in this guarantee was $12.5 million. No
  provision is necessary for this contingent liability.

FOREIGN EXCHANGE FORWARD CONTRACTS

To manage its exposure to
  currency fluctuations, the Trust has foreign exchange forward contracts to fix
  the rate at which certain future anticipated flows of U.S. dollars are
  exchanged into Canadian dollars. The foreign exchange hedging activities of
  the Trust take into account the existing foreign exchange forward contracts of
  Elk Valley Coal. The following chart summarizes the Trust's outstanding
  hedged positions at December 31, 2003. The U.S./Canadian dollar exchange rate
  was US$0.77 at December 31, 2003.



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At December 31,
  2003 the Trust's portion of unrealized gains on foreign exchange forward
  contracts was $124.1 million (unrealized losses at December 31, 2002 - $111.3
  million; 2001 - $183.5 million). The Trust's realized gain on foreign
  exchange included in revenues of 2003 is $41.4 million (realized losses in
  2002 - $83.5 million; 2001 - $54.2 million).

CREDIT RISK MANAGEMENT

Export-coal sales
  represent the principal component of Elk Valley Coal's revenues. Elk Valley
  Coal competes primarily with coal producers from Australia and the United
  States. Coal is sold under contract or in the spot market to approximately 60
  customers worldwide, which are primarily steel or electric power producers.
  Coal sales are contracted in U.S. dollars and terms of payment vary from three
  to 180 days. To manage its credit risk, Elk Valley Coal obtains, to the extent
  practical, either export trade credit insurance or confirmed irrevocable
  letters of credit. Credit risk for wollastonite trade receivables is limited
  by the large and diversified customer base.

The Trust,
  through its interest in Elk Valley Coal, is exposed to credit losses in the
  event of non-performance by counterparties to financial instruments; however,
  Elk Valley Coal deals with counterparties of high credit quality to mitigate
  risk of non-performance. In addition, the Trust does not believe that there
  are any significant concentrations of credit risk.

INTEREST RATE EXPOSURE AND FAIR VALUE

The carrying
  amounts of short-term financial assets and liabilities as presented in the
  balance sheet are reasonable estimates of fair values due to the relatively
  short periods to maturity and the commercial terms of these instruments. The
  carrying amount of long-term debt of $300.0 million at December 31, 2003 is
  considered to be a reasonable estimate of fair value due to the floating
  interest rate of the debt.

13. INCOME TAXES

The difference
  between the income tax expense and the provision obtained by applying the
  statutory tax rate is as follows:





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The temporary differences comprising the future income tax
  assets and liabilities are as follows:





As at December 31, 2003 a
  foreign subsidiary has income tax loss carryforwards of $49.8 million, which
  are available to reduce future years' taxable income and expire in the years
  2007 through 2010.

14. UNITHOLDERS' EQUITY

TRUST UNITS

As a result of the equity
  restructuring, the share capital of Old Fording became Unitholders' Equity
  of the Trust. The following table summarizes the changes during the period.





Under the Arrangement, 10.7
  million shares were repurchased at $35 per share for a total consideration of
  $375.0 million and subsequently cancelled. Capital stock was charged with the
  average carrying value for the shares redeemed ($26.0 million) and the
  remainder ($349.0 million) was charged to retained earnings. Also, 0.1 million
  small non-board lot shares were repurchased at $33.33 per share for a total
  consideration of $2.1 million. Capital stock was charged with the average
  carrying value ($0.1 million) and retained earnings was charged with the
  remainder ($2.0 million).

The Trust has an unlimited
  number of units authorized for issuance pursuant to the Trust Indenture. The
  Trust units represent a beneficial interest in the Trust. All Trust units
  share equally in all distributions from the Trust and carry equal voting
  rights. No conversion, retraction or pre-emptive rights are attached to the
  Trust units. Trust units

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are redeemable at the option of the unitholder
  at a price that is the lesser of 90% of the average closing price of the Trust
  units on the principal trading market for the previous 10 trading days and the
  closing market price on the date of tender for redemption, subject to
  restrictions on the amount to be redeemed each quarter.

In October 2001,
  the Corporation announced a program to enable the repurchase and cancellation
  of a maximum of 10% of outstanding common shares. Purchases under the program
  commenced October 5, 2001 and terminated on September 30, 2002. Over the
  course of the program the Corporation purchased 2.0 million shares at an
  average price of $27 per share. When stock was repurchased, the excess of
  consideration paid over the carrying amount of stock and any contributed
  surplus was charged to retained earnings.



For the years
  ended December 31, 2003 and 2002, earnings per unit are calculated based upon
  a continuity of interest from Old Fording to the Trust. The effect of this is
  to treat shares and units interchangeably. For the year ended December 31,
  2001, the weighted average number of shares outstanding was calculated using
  the number of shares issued as a result of the CPL reorganization for the
  first nine months of 2001 and actual shares outstanding for the remainder of
  the year.

For the three
  years presented, in calculating diluted earnings per unit, net income remains
  unchanged from the basic earnings per unit calculation and the number of
  shares outstanding is increased for the dilutive effect of outstanding unit
  options. The treasury stock method is used to determine the dilutive effect of
  unit options and other dilutive instruments.



For the year
  ended December 31, 2002, the dilutive effect of 0.2 million stock options was
  excluded from the diluted earnings per share calculations on the basis that
  they would have been anti-dilutive to the loss per share.

15. STOCK-BASED COMPENSATION

At December 31,
  2003 the Trust had three unit-based compensation arrangements outstanding
  including an exchange option plan, an employee unit purchase plan and a unit
  equivalent plan for Directors and Trustees. Certain options to acquire units
  in the Trust also have accompanying unit appreciation rights which replace
  previously issued stock appreciation rights ("SARs"). These plans resulted
  in compensation expense in the year of $1.0 million (2002 - $3.4 million; 2001
  - $5.7 million).

Under the terms
  of the Arrangement, all options to purchase common shares were exchanged for
  options to purchase units under the exchange option plan. The exercise price
  for the options to purchase

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units was calculated by prescribed formula to preserve the
  holder's in-the-money amounts immediately before the conversion from options
  to purchase shares, to options to purchase units. Also under the terms of the
  Arrangement, all outstanding options vested on February 28, 2003.

Due to the reorganization of
  CPL in 2001, all employees who were members of CPL's stock-based
  compensation program received in exchange for their CPL options and SARs,
  fully vested replacement options and SARs in the spun off companies, according
  to the reorganization ratio used for common shares. The exercise price of the
  CPL options and SARs was allocated among the replacement options and SARs of
  each of the spun off companies based on a formula using the average trading
  price of the spun off companies for their first 10 days of trading.

By agreement between Old
  Fording and its former affiliates, the difference between the strike price and
  the exercise price of the SARs of the former affiliates held by Fording Inc.
  employees was recognized as an expense, while the difference between the
  strike price and the exercise price of Fording SARs held by employees of the
  former affiliates was recovered from the former affiliates. An expense for
  SARs is recognized on the incremental change in the market value of the
  underlying stock between reporting periods. There is a one-to-one cancellation
  ratio between stock options and SARs.

In 2003, subsequent to the
  Arrangement, a unit equivalent plan was established for Directors and
  Trustees. Each Director and Trustee may elect to have a portion of their
  retainer in unit equivalents. The unit equivalents are granted at the five-day
  weighted average trading price of a Trust unit immediately preceding the award
  date and vest over a one-year period. An expense for a unit equivalent is
  recognized at fair value when granted, and an additional expense is recognized
  on the incremental change in the market value of the underlying unit between
  reporting periods.

Details of the options outstanding are as follows:



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There were no
  additional options granted under the Exchange Unit Option Plan, Key Employee
  Stock Option Plan or the Directors' Stock Option Plan in 2003. As part of
  the Arrangement, all Key Employee Stock Options and Directors' Stock Options
  were cancelled and replaced with Exchange Unit Options, which were issued at
  substantively similar terms from the plans being replaced. On April 23, 2002,
  under the Directors' Stock Option Plan, Old Fording granted 32,000 options
  to purchase common shares at $31.06, being the five-day weighted average
  trading price of the shares on the Toronto Stock Exchange. The expiry date of
  these options is 10 years after the grant date and the options become
  exercisable following the next annual shareholders' meeting. Old Fording
  granted 224,960 options under the Key Employee Stock Option Plan on February
  15, 2002, at an exercise price of $27.60, being the five-day weighted average
  trading price of the shares on the Toronto Stock Exchange. Options issued
  under the Key Employee Stock Option Plan expire 10 years after the grant date
  and become exercisable over a three-year vesting period.

The Trust
  prospectively adopted the fair-value method of accounting for stock-based
  compensation in 2003 pursuant to new transitional rules approved by the CICA.
  Prospective application requires the fair-value method be applied to awards
  granted, modified or settled on or after the beginning of the fiscal year in
  which the new section is adopted.

On a pro-forma
  basis, had compensation expense for the options issued in 2002 been determined
  based on the fair-value method, the Trust's net income and earnings per
  share would have been reduced to the amounts shown below.



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At December 31, 2003, the
  details of all options outstanding, all of which are exercisable, were as
  follows:





EMPLOYEE UNIT PURCHASE PLAN

In October 2001, Old Fording
  created an employee share purchase plan whereby employee and Old Fording
  contributions were used to purchase shares on the open market for the
  employee. This plan was replaced with an employee unit purchase plan as part
  of the Arrangement, with the cost of the plan included in compensation expense
  of Elk Valley Coal. An expense is recognized over a one-year vesting period on
  the contributions.

The initial Plan allowed all
  employees to contribute up to 6% of their base earnings during the first six
  months of the plan and Old Fording matched employee contributions, up to
  $1,700. After the threshold of $1,700 was reached or after the initial six
  months of the program, the employer contributes $1 for every $3 contributed by
  the employee.

At December 31, 2003, 539
  employees (2002 - 916) were participating in the plan. The total number of
  units purchased on behalf of employees, including the employer's
  contributions was 62,910 units (2002 - 134,693). In 2003, the Trust's
  portion of contributions totalled $0.3 million (2002 - $1.3 million).

16. PROVISION FOR ASSET WRITE-DOWN

In 2001, due to a history of
  operating losses and uncertainty around future improvement, Old Fording
  assessed the recoverability of its investment in long-lived assets related to
  the Minera NYCO Industrial Minerals operation in Mexico. The Corporation
  projected the undiscounted future net cash flows of these assets and
  determined that they are less than the carrying value. Accordingly, the
  Corporation recorded a provision for asset impairment of $140 million.
  Estimates of undiscounted future net cash flows are subject to significant
  uncertainties and assumptions, therefore actual results could vary
  significantly from such estimates. The write-down has been reflected in the
  asset balance of the Industrial Minerals segment in note 20.

The excess of tax basis over
  net book value created by the write-down has not been recognized. The asset
  can only be recognized if its realization is more likely than not. The only
  tax effect recognized on the write-down was reversal of a $2.8 million future
  tax liability associated with assets recorded in Canada related to the Minera
  NYCO operation.

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17.  SUPPLEMENTAL INFORMATION





These amounts are actual cash
  outlays made during the respective periods and will not agree with amounts
  reported on the financial statements due to accruals.



INTEREST IN JOINT VENTURES

A portion of the Trust's
  mining activities are conducted through its interests in joint ventures. As
  disclosed in note 2, these are accounted for on a proportionate consolidation
  basis. The consolidated financial statements include the Trust's
  proportionate share of joint venture activities as follows but do not include
  results from discontinued operations that were conducted through joint
  ventures:





SECURITIZATION OF RECEIVABLES

Elk Valley Coal has entered
  into an agreement, whereby it may sell on a non-recourse basis certain of its
  U.S. dollar coal receivables for 100% of the invoiced amount less the
  applicable market financing rate as applied to the period from the date of
  discount to the date of maturity of the receivable. In selling a

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receivable, Elk Valley Coal assigns ownership of the
  receivable and its interest in any applicable trade credit insurance coverage.
  Deductibles under the insurance policy are the responsibility of Elk Valley
  Coal. The Trust reports the cost of the discounting as interest expense. The
  Trust's share of receivables sold in 2003 amounted to US$264.3 million (2002
  - US$233.3 million). The Trust's portion of accounts receivable sold and
  outstanding under this Agreement as at December 31, 2003 amounted to US$24.4
  million (2002 - US$21.5 million).

18. RELATED PARTY TRANSACTIONS

Subsequent to the Arrangement,
  Elk Valley Coal entered into an arrangement with a related company (the
  managing partner of Elk Valley Coal) in the ordinary course of business for
  the provision of certain management services. Elk Valley Coal also sells coal
  to this related company at prevailing market terms. Related party revenues for
  2003 were $2.8 million and related party expenses for 2003 were $0.1 million.
  There were no related party expenses in 2002. Prior to the CPL reorganization,
  Old Fording, in the ordinary course of business, entered into arrangements
  with related companies for the provision of rail services, natural gas,
  financing and other management services. Related party expenses for the first
  nine months of 2001, prior to the reorganization, were $198 million.

19. COMMITMENTS AND CONTINGENCIES

COMMITMENTS

Elk Valley Coal leases various
  mining equipment, vehicles and rail cars at several of its operations. The
  minimum lease payments are payable in both Canadian and U.S. currency and at
  December 31, 2003 the Trust's portion of these minimum payments is as
  follows:





RECLAMATION

On May 14, 2003, Fording was
  served with an Inspector's Direction under federal fisheries legislation
  requiring it to take steps to prevent acid rock drainage from a former
  minesite at Mount Washington on Vancouver Island and to advise Environment
  Canada by November 30, 2003 of the measures taken. Fording's connection to
  the Mount Washington site is that it acquired the mineral rights for the
  properties from another former subsidiary of Canadian Pacific Limited after
  mining operations at the site had ceased.

While Fording disputes that it
  has any liability for the remediation of the former Mount Washington minesite,
  Fording participated with other parties interested in remediation of the
  minesite by contributing $125,000 in funding for a remediation project that
  was completed in November of 2003. Sampling conducted by Environment Canada in
  November 2003 indicates that the remediation has reduced levels of toxicity to
  the compliance standard required by the Inspector's Direction. Ongoing

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sampling will be required to confirm the
  effectiveness of the remediation efforts.

The Trust does
  not have any outstanding environmental claims asserted against it, and there
  are no known additional environmental liabilities outside of the ongoing
  reclamation obligations created through the continuance of the Trust's
  business operations. Reclamation obligations are subject to estimation and the
  eventual amounts expended may be materially different from current estimates.

CHANGE OF CONTROL AGREEMENTS

The corporate
  reorganization described in note 1 constituted a change in control and 'good
  reason' for the purposes of Change of Control Agreements (the "Agreements")
  entered into with certain members of senior management upon Fording becoming a
  public company in 2001. If an individual with one of these Agreements resigns,
  retires or is terminated without cause prior to March 1, 2006 then such
  individual will be entitled to the severance benefits provided for under the
  Agreement.

No provision has
  been accrued for the contingent liability related to Agreements that were
  outstanding on December 31, 2003. The liability is charged to earnings in the
  period in which the resignation, retirement or termination occurs. In 2003,
  compensation expense of $2.9 million was recorded in selling, general and
  administration expenses related to the Trust's share of Agreements
  exercised. The Trust's share of the contingent liability on January 1, 2004,
  which is dependent on the achievement of certain future financial results,
  ranges between $7 million and $14 million. The announced retirement in the
  first quarter of 2004 will result in a charge to income of $5.0 million.

ARBITRATION REGARDING ROYALTIES

Fording is
  currently involved in arbitration proceedings concerning the calculation of
  royalty payments on previously owned coal leases. One arbitration decision,
  which was received in January 2004, resulted in an amount owing to the Trust
  of approximately $3 million. This decision has subsequently been appealed.
  Negotiations are also continuing on other royalty arbitrations, which could
  result in further amounts owing to the Trust. This contingent gain has not
  been accrued in the financial statements.

OTHER

During the normal
  course of business activity, the Trust is occasionally involved in litigation
  proceedings. Management considers the aggregate liability, if any, to the
  Trust in respect of these actions and proceedings not material.

20. SEGMENT INFORMATION

The Trust had two
  operating segments at the end of 2003: metallurgical coal operations and
  industrial minerals operations. The metallurgical coal operations mine and
  process primarily metallurgical coal, principally for export. Prior to
  February 28, 2003, the metallurgical coal operations were referred to as the
  Mountain Operations and consisted of three mines: Fording River, Greenhills
  and Coal Mountain. Subsequent to February 28, 2003, the metallurgical coal
  operations segment represents the Trust's indirect 65% interest in Elk
  Valley Coal. Elk Valley Coal consists of the Fording River, Greenhills, Coal
  Mountain, Elkview, Line Creek and Cardinal River mines as well as corporate
  costs related to the metallurgical coal operations. The industrial minerals
  operations mine and process wollastonite and other industrial minerals from
  two operations in the United States and one operation in Mexico.

Prior to February 28, 2003, Old Fording had a
  third operating segment. The Prairie Operations

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primarily mined thermal coal for mine-mouth power plants and
  collected royalties from third-party mining at the Corporation's mineral
  reserves. This operating segment was sold as part of the Arrangement and
  results have been reflected as discontinued operations.

The Trust's reportable
  segments are distinct strategic business units that offer different products
  and services. They are managed separately due to the different operational and
  marketing strategies required for each segment.







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The accounting policies used
  in these operating segments are the same as those described in the summary of
  significant accounting policies (note 2). Total assets and additions to
  capital assets related to discontinued operations have been included in
  Corporate and Other.

Elk Valley Coal exports coal
  to a certain customer who accounts for greater than 10% of the revenues of Elk
  Valley Coal.



Substantially all of the Trust's
  export coal is transported by one rail company to customers and port
  facilities for which there are limited alternatives. Substantially all export
  sales are loaded through two port facilities. Interruption of rail or port
  services could materially affect the Trust's results.

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21. UNITED STATES ACCOUNTING PRINCIPLES AND REPORTING

The consolidated financial
  statements of the Trust have been prepared in accordance with generally
  accepted accounting principles (GAAP) in Canada. The material differences
  between Canadian and United States GAAP (U.S. GAAP) relating to measurement
  and recognition are explained below, along with their effect on the Trust's
  statements of consolidated income and consolidated balance sheet. There are no
  material differences on the consolidated cash flow statements. Certain
  additional disclosures as required under U.S. GAAP have not been provided as
  permitted by the Securities and Exchange Commission (SEC).

DERIVATIVE INSTRUMENTS AND HEDGING

For U.S. GAAP purposes, the
  Trust adopted FASB Statement No. 133 "Accounting for Derivative Instruments
  and Hedging Activities" (FAS 133) effective January 1, 2001. FAS 133
  requires that all derivatives be recorded on the balance sheet as either
  assets or liabilities at their fair value. Changes in the derivatives' fair
  values are recognized in current period net income unless specific hedge
  accounting criteria are met. As of December 31, 2001, management had not
  designated any instruments as hedges for U.S. GAAP purposes under FAS 133.
  Effective January 1, 2002, the Trust chose to designate all new foreign
  exchange forward contracts as hedges under FAS 133 and implement hedge
  accounting for those contracts. Forward contracts designated as hedges will
  not impact current period earnings under U.S. or Canadian GAAP.

ASSET RETIREMENT OBLIGATIONS

In June 2001, FASB issued
  Statement No. 143, "Accounting for Asset Retirement Obligations" (FAS
  143). FAS 143 requires that an asset retirement obligation be recognized as a
  liability, measured at fair value, in the period in which the obligation is
  incurred if a reasonable estimate of fair value can be made. The associated
  asset retirement costs are capitalized as part of the carrying amount of the
  long-lived asset and amortized to expense over the asset's useful life. The
  Trust adopted FAS 143 for the year beginning January 1, 2003, thus net income
  and balance sheets adjustments are required under U.S. GAAP to recognize the
  cumulative effect of the application of the standard and an increase to
  non-cash expenses. The application of FAS 143 also results in change to the
  gain recognized by the Trust on the sale of a portion of its interest in Elk
  Valley Coal (note 1).

STOCK-BASED COMPENSATION

Under FASB Interpretation No.
  44 "Accounting for Certain Transactions Involving Stock Compensation", a
  compensation expense must be recorded if the intrinsic value of stock options
  is not exactly the same immediately before and after an equity restructuring.
  As a result of the Arrangement (note 1), options to purchase units in the
  Trust and on the CPL reorganization (note 1) options to purchase shares in
  Fording had a different intrinsic value after the restructuring than prior to
  the restructuring. Canadian GAAP does not require revaluation of these
  options. The additional expense required under U.S. GAAP increases other paid
  in equity.

COMPREHENSIVE INCOME

FASB Statement No. 130 "Reporting
  Comprehensive Income" requires the disclosure, as other comprehensive
  income, of the change in equity from transactions and other events from
  non-owner sources during the period. Canadian GAAP does not require similar
  disclosure. Other comprehensive income arose from foreign currency
  translation, minimum pension liability adjustments and unrealized gains on
  hedges.

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EMPLOYEE FUTURE BENEFITS

In accordance with FASB
  Statement No. 87 "Employers' Accounting for Pensions" the Trust recorded
  an additional pension liability for underfunded pension plans representing the
  excess of unfunded accumulated benefit obligations over the pension
  liabilities recorded under Canadian GAAP. The increase in liabilities required
  for U.S. GAAP is charged or credited to other comprehensive income net of
  related deferred income taxes.

START-UP COSTS

Effective for years beginning
  on or after December 15, 1998, U.S. GAAP requires that expenses associated
  with the start-up of an operation be recognized in income during the period
  that the costs are incurred. Under Canadian GAAP, start-up costs are
  capitalized and amortized over future periods.

JOINT VENTURES

U.S. GAAP requires investments
  in joint ventures to be accounted for under the equity method, while under
  Canadian GAAP, the accounts of joint ventures are proportionately
  consolidated. However, under rules promulgated by the SEC, a foreign
  registrant may, subject to the provision of additional information, continue
  to follow proportionate consolidation for the purposes of registration and
  other filings notwithstanding the departure from U.S. GAAP. Consequently, the
  consolidated balance sheets have not been adjusted to restate the accounting
  for joint ventures under U.S. GAAP. Additional information concerning the
  Trust's interests in joint ventures is presented in note 17. There are no
  material differences between the information in note 17 prepared under
  Canadian GAAP and U.S. GAAP.

DISCLOSURE OF GUARANTEES

FASB Interpretation No. 45 "Guarantor's
  Accounting and Disclosure Requirements for Guarantees, Including Indirect
  Guarantees of Indebtedness of Others" (FIN 45) elaborates on the disclosures
  to be made by a guarantor in its interim and annual financial statements about
  its obligations under certain guarantees that it has issued. It also clarifies
  that a guarantor is required to recognize, at the inception of a guarantee, a
  liability for the fair value of the obligation undertaken in issuing the
  guarantee. The initial recognition and initial measurement provisions of this
  interpretation are applicable on a prospective basis to guarantees issued or
  modified after December 31, 2002, irrespective of the guarantor's fiscal
  year-end. The disclosure requirements in this Interpretation are effective for
  financial statements of interim or annual periods ending after December 15,
  2002. There is no impact on disclosure made by the Trust as a result of this
  interpretation.

RECENT PRONOUNCEMENTS

The following pronouncements are currently being evaluated
  by the Trust.

In April 2003, FASB issued
  Statement No. 149 "Amendments of Statement 133 on Derivative Instruments and
  Hedging Activities" (FAS 149) which is primarily effective for contracts
  entered into or modified after June 30, 2003. The statement amends FAS 133 for
  certain decisions made by the FASB as part of the Derivatives Implementation
  Group process and incorporates clarifications of the definition of a
  derivative. Adoption of FAS 149 is not expected to impact the Trust's
  financial position and results of operations.

In May 2003, the FASB issued
  Statement No. 150 "Accounting for Certain Financial Instruments with
  Characteristics of both Liabilities and Equity" (FAS 150). This statement
  establishes standards for how an

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issuer should classify and measure certain
  financial instruments having characteristics of both liabilities and equity.
  FAS 150 requires that an issuer classify a financial instrument that is within
  its scope as a liability or an asset. FAS 150 is effective for financial
  instruments entered into or modified after May 31, 2003, and otherwise is
  effective at the beginning of the first interim period beginning after June
  15, 2003. The adoption of FAS 150 has no impact as the Trust does not have
  financial instruments with characteristics of both liabilities and equity.

Net income is reconciled from Canadian to U.S.
  GAAP in the following manner:







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Had the consolidated balance
  sheet been prepared under U.S. GAAP, the balances would have been higher
  (lower) under U.S. GAAP as follows:





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Exhibit C
Management Discussion and Analysis



FORDING
  CANADIAN COAL TRUST

MANAGEMENT'S
  DISCUSSION

AND
  ANALYSIS

FORWARD-LOOKING INFORMATION

This 2003 annual report,
  including management's discussion and analysis, contains forward-looking
  information within the meaning of theUnited States
  Private Securities Litigation Reform Act of 1995relating,
  but not limited to, Fording Canadian Coal Trust's (the Trust) expectations,
  intentions, plans and beliefs. Forward-looking information can often be
  identified by forward-looking words such as "anticipate", "believe", "expect",
  "goal", "plan", "intend", "estimate", "may",
  and "will" or similar words suggesting future outcomes, or other
  expectations, beliefs, plans, objectives, assumptions, intentions or
  statements about future events or performance.

Unitholders and prospective
  investors are cautioned not to place undue reliance on forward-looking
  information. By its nature, forward-looking information involves numerous
  assumptions, known and unknown risks and uncertainties, of both a general and
  specific nature, that could cause actual results to differ materially from
  those suggested by the forward-looking information or contribute to the
  possibility that predictions, forecasts or projections will prove to be
  inaccurate. These factors include, but are not limited to: changes in
  commodity prices; changes in steel-making methods and other technological
  changes; the strength of various economies; difficulties inherent with
  operating and selling in foreign countries; changes in the regulation of
  metallurgical coal and wollastonite products; the magnitude of the Trust's
  interest in the Elk Valley Coal Partnership (Elk Valley Coal); the
  effectiveness of the managing partner of Elk Valley Coal in managing its
  affairs; the effects of competition and pricing pressure in the metallurgical
  coal and industrial minerals markets; the oversupply of, or lack of demand
  for, metallurgical coal and wollastonite products; currency and interest rate
  fluctuations; various events which could disrupt operations and/or the
  transportation of products, including labor stoppages and severe weather
  conditions; and management's ability to anticipate and manage the foregoing
  factors and risks.

Information relating to the
  magnitude or quality of mineral deposits is deemed to be forward-looking
  information. The reliability of such information is affected by, among other
  things, uncertainty involving the geology of mineral deposits; uncertainty of
  estimates of their size or composition; uncertainty of projections relating to
  costs of production or estimates of market prices for the mineral; the
  possibility of delays in mining activities; changes in plans with respect to
  exploration, development projects or capital expenditures; and various other
  risks including those relating to health, safety and environmental matters.

The Trust cautions that the
  list of factors set forth above is not exhaustive. Some of the risks,
  uncertainties and other factors which negatively affect the reliability of
  forward-looking information are discussed in the Trust's public filings with
  the Canadian securities regulatory authorities, including its most recent
  management information circular, annual information form, quarterly reports,
  material change reports and news releases, and with the United States
  Securities and Exchange Commission, including its most recent annual report on
  form 40-F as supplemented by its filings on form 6-K. Copies of the Trust's
  Canadian public filings, including its annual information form, are available
  at www.sedar.com. The Trust's U.S. public filings are available at
  www.sec.gov. The Trust further cautions that information contained on, or
  accessible

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through, these websites is current only as of
  the date of such information and may be superseded by subsequent events or
  filings. The Trust undertakes no obligation to update publicly or otherwise
  revise any information, including any forward-looking information, whether as
  a result of new information, future events or other such factors which affect
  this information.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The Trust is an
  open-ended mutual fund trust created pursuant to a Declaration of Trust and
  existing under the laws of the Province of Alberta. The Trust was established
  as part of a Plan of Arrangement (the Arrangement) that became effective on
  February 28, 2003, which is more fully described in note 1 to the Consolidated
  Financial Statements.

The Trust holds
  all of the shares and subordinated notes of Fording Inc. As the operating
  subsidiary of the Trust, Fording Inc. holds a 65% interest in the Elk Valley
  Coal Partnership (Elk Valley Coal) that was created as part of the
  Arrangement, and a 100% interest in the industrial minerals operations. The
  remaining 35% interest in Elk Valley Coal is held by Teck Cominco Limited and
  its affiliates. Teck Cominco has the opportunity to increase its interest in
  Elk Valley Coal by up to 5% to the extent that Elk Valley Coal realizes
  certain synergies and improves the operating results of the Elkview mine by
  March 31, 2007.

This management's
  discussion and analysis, dated February 25, 2004, is a year-over-year review
  of the activities, results of operations, liquidity and capital resources of
  the Trust and its subsidiaries on a consolidated basis. The Arrangement has
  been accounted for as a continuity of interests. The Consolidated Financial
  Statements reflect the financial position, results of operations and cash
  flows as if the Trust had always carried on the businesses formerly carried on
  by its predecessor, Fording Inc., being the public company existing prior to
  the Arrangement (Old Fording). All assets and liabilities are recorded at
  historical cost. The financial statements for the 12 months ended December 31,
  2003 reflect the results of operations and cash flows of Old Fording for the
  period January 1 to February 28, and the results of operations and cash flows
  of the Trust for the period March 1 to December 31. The Trust has accounted
  for its 65% interest in Elk Valley Coal as a joint venture, using the
  proportionate consolidation method of accounting. Due to the Arrangement and
  conversion into an income trust, and the resulting change in our interest in
  metallurgical coal assets and the sale of our thermal coal operations, certain
  information included in the Consolidated Financial Statements for prior
  periods may not be directly comparable.

One of the
  factors that led to the conversion of Old Fording into an income trust was our
  belief that the income trust structure would be a more effective model for
  both the support of the underlying businesses and the return of cash to
  investors compared with the former corporate structure. One of the goals of
  the Arrangement was to unlock the value of the significant cash flows normally
  generated by the underlying businesses.

The Trust had two
  operating segments at the end of 2003. The metallurgical coal operations mine
  and process primarily metallurgical coal, principally for export, from
  operations in western Canada. The industrial minerals operations mine and
  process wollastonite and other industrial minerals from operations in the
  United States and Mexico.

The following
  should be read together with the Consolidated Financial Statements, the notes
  thereto and other public disclosures of the Trust and Old Fording. The
  Consolidated Financial Statements have been prepared in accordance with
  generally accepted accounting principles (GAAP) in Canada. These principles
  conform in all material respects with GAAP in the United States, except as
  disclosed in note 21 to the Consolidated Financial Statements.

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The Trust reports its
  financial information in Canadian dollars, and all monetary amounts set forth
  herein are expressed in Canadian dollars unless specifically stated otherwise.

This management's discussion
  and analysis refers to certain financial measures that are not determined in
  accordance with GAAP in Canada or the United States. These measures do not
  have standardized meanings and may not be comparable to similar measures
  presented by other trusts or corporations. Although such measures as cash
  available for distribution and net income before unusual items and
  discontinued operations do not have standardized meanings prescribed by GAAP,
  these measures are determined by reference to our financial statements. We
  discuss these measures because we feel that they facilitate the understanding
  of the results of our operations and financial position.



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Our revenues from
  continuing operations in 2003 increased 21% from the prior year, setting a
  record for the organization at nearly $1 billion. Contributing significantly
  to these results were higher coal sales volumes resulting from increased
  demand due to improved coal markets. To a lesser extent, we have benefited
  from our 65% interest in the coal sales of Elk Valley Coal versus 100% of the
  sales of the three Old Fording metallurgical coal operations. Canadian dollar
  coal prices decreased only slightly because gains on foreign currency hedges
  largely offset the impacts of lower U.S. dollar coal prices and the adverse
  effects of the stronger Canadian dollar.

At the start of
  2003, coal markets were characterized by producers holding surplus
  inventories, which contributed to lower coal prices for the coal year
  commencing April 1, 2003. Later in the year, producer and consumer coal
  inventories had been reduced significantly and the markets were highlighted by
  robust demand for coal, production problems at some mines in Australia and the
  United States, the emergence of China as an importer of seaborne hard coking
  coal versus an exporter in prior years, and the absence of significant new
  coal supply.

Net income in
  2003 included significant gains, net of related expenses, resulting from the
  formation of the Trust and other aspects of the Arrangement. The loss in 2002
  resulted from the write-down of the value of our Mexican operation to reflect
  a history of operating losses.

Management
  believes that net income before unusual items and discontinued operations
  represents a more comparable measure of our earnings from ongoing operations
  than net income. This non-GAAP measure increased in 2003 to $84 million from
  $55 million the prior year. This improvement reflects that, as an income
  trust, we have lower income taxes than as a common share corporation. Higher
  sales volumes had a positive effect on 2003 results, but this was partially
  mitigated by higher unit cost of product sold, selling, general and
  administration expenses, and interest on bank debt.

The purpose of
  the Arrangement that formed the Trust was to reorganize the way in which
  investors hold the equity in the underlying businesses. One of the goals of
  the Arrangement was to unlock the value of the significant cash flows normally
  generated by those businesses. For the 10 month period as an income trust, we
  generated cash available for distribution of $119 million, or $2.52 per unit
  based on the number of outstanding units at the end of each quarter.



Distributable
  cash generally refers to the net cash received by the Trust that is available
  for payment to unitholders on a quarterly basis. It is anticipated that
  available cash generated by Fording Inc. will represent the primary source of
  our cash payments to unitholders. In 2003, available cash generated by Fording
  Inc. contributed $100 million to cash paid or payable to unitholders.
  Available cash carried over by Fording Inc. at the end of the year was nearly
  $19 million.

Two additional sources contributed cash amounts
  to payments to unitholders, which were events

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unique to 2003. First, as part of the Arrangement, a special
  distribution of $70 million was paid to unitholders in two installments during
  the first and second quarters.

Second, on completion of the
  Arrangement and the formation of Elk Valley Coal, inventories of coal products
  were higher than what we considered to be normal. Mine production was managed
  so that our coal sales would reduce inventory to normal operating levels by
  the end of 2003. This reduction of coal inventories resulted in a cash flow
  benefit that contributed a total of $40 million to cash paid or payable to
  unitholders for the third and fourth quarters. Excess coal inventories have
  been reduced to more normal levels and, accordingly, future payments of cash
  to unitholders will not include any similar benefit.

Since our conversion into an
  income trust, cash paid or payable to unitholders was $4.49 per unit from the
  following sources:



Our Prairie Operations mined
  thermal coal for mine-mouth power plants from three mines at Genesee, Highvale
  and Whitewood, collected royalties from third-party mining of our mineral
  reserves, and removed overburden for an oil sands project until the completion
  of the contract in 2001.



Effective February 28, 2003
  and as part of the Arrangement, we sold our Prairie Operations. Accordingly,
  we reported income from discontinued operations of $79 million in 2003,
  including a gain on the sale of the assets of $76 million and net income for
  the 2 month period prior to the sale of $3 million.

Results in 2002 reflect the
  expensing of accumulated capitalized costs of $8 million related to the Brooks
  power project. Economic and environmental uncertainties in the power industry,
  transmission congestion issues, and the withdrawal of our partner, which put
  the continuation of the project in question, indicated that the future
  recovery of project costs was uncertain.

RESULTS OF OPERATIONS

The financial results and
  financial statements of the Trust reflect the results of operations and cash
  flows of Old Fording for January and February, and the Trust's results of
  operations and cash flows thereafter. The financial results and financial
  position of the Trust include the metallurgical coal operations representing
  the Trust's indirect 65% interest in Elk Valley Coal, and the industrial
  minerals operations based in the United States and Mexico. The corporate costs
  reflect general and administration expenses not allocated to specific business
  segments. Our metallurgical coal operations have traditionally accounted for
  most of our revenues, income from operations and net income.

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2003 Compared With 2002

METALLURGICAL COAL OPERATIONS

Our metallurgical coal
  operations continue to have the most influence on our financial results and
  financial position. These operations accounted for 96% of revenues in 2003,
  and 94% and 95% of revenues in 2002 and 2001, respectively.

Prior to February 28, 2003,
  Old Fording owned 100% of the Fording River and Coal Mountain mines, and 80%
  of the Greenhills mine with Pohang Steel Canada Limited and Pohang Iron and
  Steel Company Limited owning the remaining 20%. As part of the Arrangement, we
  exchanged our interests in these three mines for a 65% interest in Elk Valley
  Coal owning six producing mines consisting of Fording River, Greenhills (80%),
  Coal Mountain, Elkview, Line Creek and Cardinal River. This change in assets
  had an impact on the comparability of the operating and financial results of
  the metallurgical coal operations for 2003 with those for 2002.

The results of operations,
  figures and other information presented in this management's discussion and
  analysis includes the results of operations, figures and other information of
  Old Fording for January and February and, thereafter, our share of results of
  operations, figures and other information of Elk Valley Coal unless
  specifically stated otherwise. The Consolidated Financial Statements reflect
  the financial position, results of operations and cash flows as if the Trust
  had always carried on the businesses formerly carried on by Old Fording.



Approximately 60% of worldwide
  steel production is from integrated steel mills that depend on metallurgical
  coal as an integral input for making steel.

There are three main
  categories of metallurgical coal. Hard coking coal forms high-strength coke,
  semi-soft coking coal produces coke of lesser quality, and pulverized coal for
  injection is used for its heat value and is not typically a coking coal.
  Semi-soft and pulverized coals have lower sales values compared with hard
  coking coal due to the lower quality of these products. Nearly all of our coal
  is sold as coking coal. Historically only 5% to 10% of our production has been
  sold as thermal coal to industrial users or as pulverized coal for injection
  to steel mills.



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Revenues
  in 2003 increased 24% from 2002. Coal
  sales volumes were

up
  approximately 25% from the prior year and average Canadian dollar

prices of coal were
  down less than 1%. The increase in coal sales volumes reflects stronger demand
  in 200 3 for Canadian metallurgical coal, and the
  benefits of our 65% interest in Elk Valley Coal in contrast to the three
  operations owned in 2002.

Our coal markets in 2003 were
  characterized by a tightening of the supply and demand balance. Demand for
  coking coal strengthened with global steel production, declining producer and
  consumer inventories and production problems at some mines in Australia and
  the United States. Integrated steel mills and coke producers around the world
  are finding it difficult to purchase sufficient quantities of coking coal, and
  traded coke supplies are not sufficient to meet high demand.

Elk Valley Coal currently has
  the capacity to produce about 25 million tonnes of coal for sale, of which our
  share is approximately 16 million tonnes. It is the second-largest supplier of
  seaborne hard coking coal in the world, with approximately 20% of the global
  market in 2003. The other main producing regions of seaborne hard coking coal
  are Australia and the United States. Principal competitors to Elk Valley Coal
  are centered in Australia and include the BHP Billiton/Mitsubishi Alliance
  which has approximately 30% of the global market, and Anglo American Plc./Mitsui
  & Co. Ltd. and Xstrata Plc. which have, on a combined basis, about 15% of
  the global market. Generally, the coal products of Elk Valley Coal are
  comparable in quality with those of its competitors and perform well when
  blended by customers with other coals.

U.S. dollar coal prices
  declined about 5% for the coal year commencing April 1, 2003 after two years
  of increases following the historic lows experienced in 2000. On a
  calendar-year basis, the U.S. dollar price of coal fell 3% in 2003. The impact
  of lower U.S. dollar prices and the stronger Canadian dollar was largely
  mitigated by foreign exchange hedging gains, resulting in a 1% decrease in
  average Canadian dollar coal sales prices.

Almost all of our coal sales
  are denominated in U.S. dollars, and the U.S. dollar weakened against many
  currencies in 2003, including the Canadian dollar. A weaker U.S. dollar
  reduces the amount received for our coal in Canadian dollar terms, serving to
  reduce revenues, net income and cash available for distribution. However,
  approximately 60% of our 2003 U.S. dollar exposure was hedged at about US$0.65
  cents, resulting in gains on the hedge contracts of $41 million, which helped
  offset the impact of the weakening U.S. dollar. Compared with 2003,
  proportionately less of our U.S. dollar revenues are hedged for the years 2004
  through 2007. No hedges are currently in place for years after 2007.





Since the development of our
  first mine, we have strived to diversify our customer base. Old Fording's
  first operation, the Fording River mine, was developed in the early 1970s and
  was originally designed to produce three million tonnes of coal each year for
  sale to Japanese steel mills. We now sell coal into all

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the steel producing regions of the world
  serviced by seaborne coking coal, and continue to broaden our customer base.
  Diversification over time has reduced the risk of variablility of sales
  volumes by increasing the number of customers we serve and created new markets
  for our coal, thereby allowing

us to raise our production levels.
  Diversification has also helped support our coal sales volumes when certain
  markets have experienced depressed local or regional economic activity.

For the first
  time, China became a customer and accounted for a small part of our sales
  during the year. Seaborne coking coal sales into China are expected to grow in
  coming years. While China is not, at this time, a large importer of seaborne
  coking coal, its incremental demand for this coal has contributed to the
  current tight supply situation in all our markets.

Most of our coal
  is sold on an annual basis and normally less than 10% of our sales are in the
  spot market. However, we have contracted to sell all of our expected
  production for 2004 and little coal, if any, will be available for spot sales.
  Typically 75% of our annual sales are under evergreen or other multi-year
  contracts and the remaining 25% are pursuant to negotiated or tender
  arrangements. For the upcoming coal year commencing April 1, 2004, in excess
  of 95% of our coal sales will be under evergreen contracts.

Evergreen
  contracts provide for the sale of a base-level volume each year, unless
  cancelled by either party with notice, with final volumes and prices
  determined each year. Evergreen contracts have tended to provide for one year's
  notice by either party to change or cancel the contracts. However, the
  provisions of most of these contracts are negotiated to include the sale of a
  fixed volume each year and multi-year notice periods for the coal year
  commencing April 1, 2004. Evergreen contracts reduce some of our risk
  associated with sales and production volumes by providing a minimum level of
  sales from year to year.

The usual terms
  of our seaborne coal sales result in customers taking possession of the coal
  once it is loaded onto the vessels at the port. Our customers typically
  arrange and pay for ocean freight and off loading from vessels. Ocean freight
  rates depend on a number of factors including destination and vessel size.
  Ocean freight costs from Australia into European, south Asian and South
  American markets tend to be slightly less than those from Canada. Costs for
  ocean freight into Japan and Korea are normally similar for production from
  either Canada or Australia. United States production normally has an ocean
  freight advantage over Canada and Australia into Europe and eastern South
  America.



On the whole, the
  cost of product sold for Elk Valley Coal is competitive with that of the
  average Australian producer; however, this can depend on a number of factors
  including the operations of a particular competitor and foreign currency
  exchange rates. Australian coking coal production is generally from open-cut
  mines using dragline and truck and shovel methods. Other production is from
  underground operations. Some Australian producers are more competitive than
  Elk Valley Coal as a result of being located closer to port facilities and
  having lower transportation and other costs. The combined cost of product sold
  and transportation and other costs of Elk Valley Coal generally compare
  favorably with competitors in the United States.

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Our operations largely employ
  conventional open-pit mining techniques using truck and shovel methods.
  Overburden rock is drilled and blasted with explosives then loaded onto trucks
  by shovels and loaders and hauled outside of the pit. Once the overburden is
  removed, the raw coal is loaded onto trucks for transport to the coal
  preparation plant. These plants employ breakers, which size the raw coal and
  remove large rocks, wash the raw coal using conventional techniques, and then
  convey the clean coal to dryers. The cost of product sold includes expenses to
  move overburden and extract, crush and clean coal for delivery to customers.
  It also includes other expenses such as engineering, exploration and the
  administration of the minesite.



Movement of rock overburden
  and the extraction of raw coal constitute a significant portion of the unit
  cost of product sold because several times more rock must be blasted and moved
  than there is coal to transport to the preparation plant. Certain key
  variables are carefully managed with a view to the long-term economic
  viability of the coal reserve.

- The strip ratio is the volume of rock that must be moved
      for each tonne of clean coal produced. A lower strip ratio reduces the
      unit cost of product sold.
- The haul distance is how far the trucks, on average, have
      to travel to move overburden. The haul distance impacts fleet size and
      productivity in the mine, and also influences the cost of consumables,
      such as tires and fuel. Shorter haul distances lower the cost of product
      sold.
- Mine productivity is a measure of efficiency, stated in
      volume of rock and coal moved per eight-hour manshift. Higher
      productivity, which depends on such things as mine design, staff levels,
      fleet size, haul distance and equipment capacity, reduces the unit cost of
      product sold.



Coal preparation plant
  processing includes the washing and drying of coal for sales. Washing coal
  removes rock and ash, which are impurities in the raw coal. Drying the coal
  after washing reduces the moisture level of the coal in order to meet
  customers' specifications. Certain key variables related to processing coal
  are also carefully managed with a long-term view to mine operations.

- The percentage of clean product recovered to the amount
      of raw coal processed is referred to as yield. The yield achieved is a
      function of the coal being processed and the amount of ash included with
      the raw coal delivered by the mine operations. In the cleaning process,
      ash particles in the raw coal are removed to levels acceptable for the
      ultimate production of coke for the steel-making process. Generally, a
      higher yield lowers the unit cost of product sold.
- Plant productivity is a measure of the overall efficiency
      of the coal preparation plant and minesite functions. It is stated as the
      amount of clean coal produced per eight-hour manshift. In addition to
      factors that affect productivity in the mining operations, productivity
      for coal preparation plants is dependent upon plant design and staff
      levels.

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Cost of product sold increased
  36% over 2002 levels as a result of higher sales volumes, and unit costs that
  were up 9%. The unit cost of product sold increased largely because of the
  change in the asset mix with the addition of the three new mines and the
  reduced interest in the three Old Fording mines that occurred with the
  formation of Elk Valley Coal and the creation of the Trust. On a combined
  basis, shorter haul distances and a slightly better production yield from the
  coal preparation plants helped offset some of the impacts of overall lower
  productivity and higher strip ratios.

High strip ratios and low
  production levels at both the Line Creek and Cardinal River operations,
  especially during the first half of 2003, contributed to the high average unit
  costs. The production plan at the Line Creek mine during 2003 was scaled back
  to two million tonnes per year, and the Cardinal River Operation is working
  towards the scheduled closure of its Luscar mine in 2004. The operating
  results for these mines during the second half of 2003 demonstrated noticeable
  improvements in unit cost of product sold and indicate that previously
  announced rationalization strategies are effective.

The Elkview and Greenhills
  mines are in the midst of a period of high stripping activity where the strip
  ratio is higher than the long-term average due to the geology of the mines.
  This intensive removal of overburden rock will set the mines up for lower
  strip ratios and increased production in the future. Greenhills is expected to
  exit this high strip activity during 2004 and Elkview is expected to be
  finished in 2006. Greenhills has a higher average haul distance than the other
  mines, and this will continue for the next several years.

Our current five-year
  integrated production plan covering all of our producing properties was
  developed to maximize cash flow while maintaining our infrastructure over the
  longer term. Specific actions were, and will continue to be, taken at the
  mines that may increase unit cost of product sold in the near term with the
  view to adding to total value and reducing the long-term average unit costs.
  Unit cost of product sold declined markedly since the formation of Elk Valley
  Coal. Factors that contributed to improved cost performance later in the year
  were improved operating productivity, manpower reductions, declining strip
  ratios at the Cardinal River and Line Creek operations and higher overall
  production during the fourth quarter.



Transportation
  and other costs are made up of the cost of rail service to move coal to ports
  and to customers, port charges for handling, storage and loading of coal onto
  vessels, and other costs that may be incurred such as coal testing fees and
  demurrage charges for vessel waiting times. Rail costs are significant because
  most of our coal is shipped to west-coast ports that are in excess of 1,100
  kilometres from the mines. Distances to customers in eastern North America are
  even greater, though the customers pay for the rail cost for some of this
  coal. Total transportation and other costs are highly variable to coal sales
  volumes and, accordingly, rose 21% compared with 2002. The increase was
  modestly offset by slightly lower unit transportation and other costs.

A significant
  portion of rail rates is now tied to the change in the average U.S. dollar
  price of our coal sales on a coal-year basis. A considerable proportion of our
  port rates is tied to the Canadian dollar price of coal, again on a coal-year
  basis, before taking into account any foreign currency hedge gains or losses.
  Accordingly, unit transportation and other costs were down 2% in 2003 as a
  result of reductions in rail and port rates driven by lower coal sales prices,
  moderated slightly by higher charges for vessel waiting times.

Selling, general
  and administration expenses of these operations increased in 2003. This was
  due to the formation of the Trust and creation of Elk Valley Coal, which
  resulted in a change to the manner in

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which corporate costs were allocated to the operations
  compared with the prior year, and to costs incurred under change of control
  agreements upon the retirement and resignation of certain executive employees.

Depreciation and depletion increased slightly from 2002
  levels primarily due to higher production volumes.



The industrial minerals
  operations consist of mining operations producing wollastonite in the United
  States and Mexico, and tripoli in the United States. Wollastonite is a
  specialized industrial mineral that we mine using open-pit methods and process
  for use in numerous applications. These include automotive composites,
  adhesives and sealants, metallurgical fluxes, friction material, paints and
  corrosion-resistant coatings, fire-resistant construction wallboard,
  cement-based products and ceramics. Tripoli, also mined by open-pit methods
  and processed for sale, is primarily used in buffing and polishing
  applications. Revenues from these operations accounted for 4% of our revenues
  in 2003, and 6% and 5% of our revenues in 2002 and 2001, respectively.

The results of the industrial
  minerals operations reflect the global oversupply of wollastonite.
  Particularly intense competition comes from China and India for lower-end
  products and applications. We continue to focus on mid- and high-value
  products, and we are active in identifying new products and applications. We
  continue to exit unprofitable lines and markets.

The improved income from
  operations for the year was mainly due to lower depreciation and depletion
  expense, which reflects the impact of the write-down of the Mexico operation
  during the fourth quarter of 2002. The benefits of higher U.S. dollar prices
  resulting from an improved product mix and lower unit costs were offset by
  lower sales volumes and a stronger Canadian dollar.

CORPORATE

Corporate costs reflect
  general and administration expenses not allocated to specific business
  segments, and depreciation on corporate assets.



Selling, general and
  administration expenses decreased nearly $2 million to $6 million in 2003.
  This was due to the formation of the Trust and creation of Elk Valley Coal,
  which resulted in a change to the manner in which corporate costs were
  allocated to the various operations compared with the prior year.

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OTHER INCOME AND EXPENSES

Interest expense
  rose to $16 million during 2003 due to higher debt levels resulting from the
  Arrangement and higher interest rates. Interest income of $6 million for the
  year included $5 million of interest received on income tax refunds.

As part of the
  Arrangement, a portion of our interest in Elk Valley Coal was sold to Teck
  Cominco. This transaction resulted in a gain of $72 million. Also as part of
  the Arrangement we incurred legal, consulting and other associated costs of
  $22 million in 2003 and $12 million in the prior year.

INCOME TAXES

Total income
  taxes for the year includes income taxes related to the two-month period
  occurring prior to the conversion into an income trust, British Columbia
  mineral taxes, a small amount of Alberta crown royalties, and foreign income
  taxes related to the industrial minerals operations.





Canadian current
  income taxes of $6 million in 2003 largely reflect taxes of Old Fording prior
  to our conversion into an income trust. Old Fording paid Canadian current
  income, or cash, taxes of $22 million in 2002 and $38 million in 2001.

Five of six mines
  operate in British Columbia and are therefore subject to mineral taxes.
  British Columbia mineral tax is a two-stage tax with a minimum rate of 2% and
  a maximum rate of 13%. A minimum tax of 2% applies to operating cash flow as
  defined by regulations. A tax rate of 13% applies to cash flow after taking
  available deductions for capital expenditures and other permitted deductions.
  British Columbia mineral taxes declined in 2003 despite higher operating cash
  flows from the metallurgical coal operations because of a lower average tax
  rate resulting from the formation of Elk Valley Coal.

Our current
  income tax expense was essentially offset by a $26 million reduction in future
  income taxes payable resulting from changes to Canadian federal income tax
  rates for resource companies. Future income taxes, including this recovery,
  are a non-cash item and do not impact our cash available for distribution.

2002 Compared With 2001

The Arrangement
  and conversion into an income trust, and the resulting change in our interest
  in metallurgical coal assets, was completed on February 28, 2003. The
  Consolidated Financial Statements reflect the financial position, results of
  operations and cash flows as if the Trust had always carried on the businesses
  formerly carried on by Old Fording. Accordingly, this year-over-year analysis
  compares the results of operations for the same group of assets of Old Fording
  for the years 2002 and 2001.

Revenues in 2002
  were down 11% from the prior year's record high due to an 18% reduction in
  coal sales volumes, offset to some extent by higher coal prices. Our sales
  declined in 2002 due to protracted

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coal negotiations, a reduction in sales tonnage to
  long-standing customers, and our inability to place volume into spot and
  tender markets.

A net loss in 2002 of $71
  million was the result of, on an after-tax basis, the $137 million write-down
  of the carrying value of our Mexico operations, reorganization costs
  associated with the Arrangement of almost $8 million, and the charge to
  expenses of $5 million on the cessation of the Brooks power project. The
  write-down of the Mexico operations followed several years of operating losses
  and the uncertainty of future recovery. In part, because of the uncertainty of
  future results from these operations, income taxes were reduced only minimally
  by the write-down.

Net income before these
  unusual items and discontinued operations declined 13% from 2001. Lower coal
  sales volumes and higher unit cost of product sold and unit transportation and
  other costs were only partially offset by higher coal prices that year.

METALLURGICAL COAL OPERATIONS

Revenues were down 12% in 2002
  compared with the prior year. Sales volumes were down 18% while Canadian
  dollar sales prices were up 7% from 2002.

Coal sales declined due to
  protracted negotiations for the 2002 coal year, which resulted in
  significantly lower sales volumes for the 2002 calendar year. A reduction in
  tonnage from certain long-standing customers, unexpected coke plant closures
  in the United States, United Kingdom and Italy, and the inability to place
  volume in the spot and tender markets, including the large tender by mills in
  Turkey, all contributed to sales volumes well below 2001 levels. Also
  influencing results was an oversupply of finished coke that resulted in a
  temporary increase in the use of semi-soft coals at the expense of Canadian
  hard coking coal.

Those same coal negotiations,
  however, led to higher U.S. dollar coal prices. The average sales price for
  2002 increased 10% from a year earlier. The Canadian dollar price increased
  7%. Losses on previously established foreign exchange forward contracts offset
  some of the benefits of higher U.S. dollar prices.

While coal sales volumes
  decreased 18%, cost of product sold only fell 11% as a result of a 9% increase
  in unit cost of product sold. This increase reflected lower production
  volumes, increased haul distances and higher strip ratios. The impact of these
  items was lessened slightly by an improved plant yield.

Total transportation and other
  costs declined 15% primarily due to lower sales volumes. Unit transportation
  and other costs were up 3% in 2002 primarily due to rail and port rate
  increases effective with the 2001 coal year and the impact of a larger
  proportion of North American sales, which have higher rail costs. Rail and
  port rates did not change with the price increases received for the coal year
  commencing April 1, 2002.

Selling, general and
  administration expenses were consistent with 2001. Depreciation and depletion
  decreased 3% from the prior year primarily due to lower production.

INDUSTRIAL MINERALS OPERATIONS

Results for our industrial
  minerals operations reflected reduced sales volumes. Offsetting this to some
  degree was an increase in the average sales price, which was primarily a
  result of our product mix and our focus on the mid-and high-value market.
  Wollastonite sales volumes in 2002 were 15% lower than the prior year. This
  was mainly attributable to our exit from lower-priced markets and the weak
  economies in the United States and Europe.

CORPORATE AND OTHER INCOME AND EXPENSES

Selling, general and
  administration expenses in 2002 were largely comparable with the prior year.
  Net interest expense decreased to $6 million in 2002 from $8 million in 2001
  due to lower debt levels and lower interest rates.

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Due to a history
  of operating losses and uncertainty around future improvement, we updated our
  assessment of the recoverability of our investment in assets related to our
  wollastonite operations in Mexico. Projections of undiscounted future net cash
  flows generated by these assets were less than their carrying values and,
  accordingly, a pre-tax provision of $140 million was recorded in the 2002
  results. No future tax asset was recognized in connection with the write-off
  because the realization of the asset is uncertain.

Reorganization
  costs of $12 million were expensed in 2002 relating to our planned conversion
  into an income trust and our response to the unsolicited offer by Sherritt
  Coal Acquisition Inc. In 2001, we became a public company and costs of $4
  million were incurred in relation to our spin off from the Canadian Pacific
  Limited group of companies.

INCOME TAXES

Income taxes
  decreased in 2002 from the prior year primarily as a result of lower pre-tax
  income. Several other factors impacted the income tax expense and the
  effective tax rate for the year. Income taxes were not recognized on the $140
  million write-down of our investment in our Mexican operations except for $3
  million related to assets recorded in Canada. In the absence of this
  write-down, the effective tax rates for 2002 would have been approximately
  49%.

The impact of
  lower income tax rates in British Columbia and Alberta and favorable
  adjustments related to prior years were partially offset by higher mineral
  taxes. Mineral taxes were up despite lower income from the metallurgical coal
  operations primarily due to larger foreign currency exchange losses which are
  not deductible.



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Our quarterly results over the
  past two years are indicative of the variability of our underlying businesses,
  especially the metallurgical coal operations, and have been impacted by
  unusual items. During the first quarter of 2003, net gains resulting from the
  Arrangement had a pronounced effect on net income. In the fourth quarter of
  2002, we wrote down our investment in the Mexico operation resulting in a $137
  million after-tax charge to earnings. Additional debt incurred in connection
  with the Arrangement increased interest expense in 2003 compared with 2002.



Net income before unusual and
  discontinued items is influenced largely by the results of the metallurgical
  coal operations. The results of these operations are highly sensitive to coal
  prices, the U.S./Canadian dollar exchange rate, sales volumes, and the unit
  cost of product sold and unit transportation and other costs.

U.S. dollar coal prices
  typically change during the second quarter of the year because most of our
  coal business is contracted on a coal-year basis that commences April 1. As
  coal is typically sold in U.S. dollars we have in the past entered into
  foreign currency hedges to manage the risk of fluctuations in the
  U.S./Canadian dollar exchange rate. Accordingly, the Canadian dollar price of
  coal will vary with changes in the U.S. dollar price of coal, the
  U.S./Canadian dollar exchange rate and our existing foreign currency hedge
  contracts.

Coal sales are typically
  contracted under evergreen agreements with final sales volumes determined for
  a year-long period. However, the timing of these coal sales is largely
  dependent on the customer who determines when the coal will be loaded onto
  vessels and, therefore, recognized as revenues. Quarterly sales can also be
  affected by delay of vessels due to factors such as weather and mechanical
  problems, congestion at the port and, recently, the strong demand for vessels
  across a number of commodity sectors, which reflects vessel availability and
  timing. Sales can also be impacted by weather or mechanical problems affecting
  the minesites, railways and ports, and other factors such as a lack of coal at
  the ports arising from railway transportation problems.

The unit cost of product sold
  can be influenced quarter to quarter by changing mining operations such as the
  timing of stripping activities and raw coal release, production shut downs for
  vacation and planned maintenance, the timing of purchases and the cost of key
  consumable items such as fuel and tires. Unit transportation and other costs
  can change based on the timing of rate negotiations and the price of our coal
  products.

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LIQUIDITY

We anticipate that we have the
  ability to generate sufficient amounts of cash and cash equivalents from
  operating and financing activities, in the short term and the long term, to
  maintain our productive capacity and to fund planned growth and development
  activities.



At the end of
  2003, we held cash and cash equivalents of $57 million, which was considerably
  higher than amounts held in previous years. We do not have any borrowings
  under our revolving bank credit facilities and we accumulated cash and cash
  equivalents at the end of the year to pay declared distributions of $47
  million to unitholders in January 2004.

Cash flows from
  operating activities are the primary generator of cash available for
  distribution and also provide cash resources over the long term for capital
  expenditures and debt servicing. Cash flows from operating activities are
  largely influenced by the results of our metallurgical coal operations. The
  industrial minerals operations contributed approximately $7 million and $13
  million to cash flows from operating activities in 2003 and 2002,
  respectively. Cash flows from operating activities historically have been
  sufficient to meet our normal working capital needs, capital expenditure
  requirements and our debt service obligations, and to pay dividends to
  shareholders prior to becoming an income trust and, as an income trust,
  distributions to unitholders. Included in cash flows from operating activities
  during the year were the after-tax costs associated with the Arrangement of
  $18 million.

The Arrangement
  had a significant influence on cash flows from financing activities in 2003.
  Major items included the repurchase of capital stock ($377 million),
  additional bank financing ($165 million), payments to certain parties to the
  Arrangement ($75 million) and the special distributions to unitholders paid in
  the first and second quarters ($70 million).

Other financing
  activities included distributions to unitholders of $93 million, net of the
  fourth quarter distribution of $47 million that was payable at year-end. In
  2002, we paid dividends of $28 million and we repurchased $39 million of stock
  under our normal course issuer bid that expired in September 2002.

The Arrangement
  also had a significant influence on cash flows from investing activities. This
  included significant proceeds ($363 million) on the sale of the Prairie
  Operations and an interest in Elk Valley Coal, and payments made for certain
  Luscar assets ($12 million). These net cash inflows largely offset the net
  cash outflows from the financing activities associated with the Arrangement.

Investing
  activities unrelated to the Arrangement included capital expenditures of $20
  million. Approximately $9 million was categorized as sustaining in nature.
  Sustaining capital expenditures are the investments in areas such as fleet
  equipment, mine infrastructure, and coal processing plants that are necessary
  to maintain the current productive capacity of our existing mines. Investments
  in sustaining capital are required on an ongoing basis, and are expected to be
  principally funded by cash flows from operating activities and will be
  deducted when we determine cash available for distribution. The remaining $11
  million included expenditures to equip mines in the Prairie Operations prior
  to their sale under the

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Arrangement (these costs were recovered under the terms of
  sale) and to increase our interest in the Elco coal property located adjacent
  to our Fording River mine. In 2002, capital expenditures were $51 million.
  These expenditures were sustaining in nature and included a new shovel in the
  metallurgical coal operations and new support equipment at Whitewood, one of
  our Prairie Operations.

Our contractual obligations are identified in the following
  table:



Our foreign exchange forward
  contracts are normally fulfilled by delivering U.S. dollars generated from
  coal sales. To ensure we will have an adequate future flow of U.S. dollars to
  cover the obligations under our contracts, our hedge position is less than the
  amount of U.S. dollars expected from future coal sales.

Long-term bank debt of $300
  million was outstanding at December 31, 2003. The terms of the bank debt
  require repayment of $150 million by February 28, 2005 and the remaining $150
  million by February 28, 2006. It is our expectation that the bank debt will be
  refinanced in one or more transactions and/or repaid from cash flows from
  operating activities in advance of scheduled maturity of the bank debt. If
  Fording Inc. is unable to refinance its existing bank debt with alternative
  financing, the amount of cash that would otherwise be available to the Trust
  for distribution to unitholders would have to be used to repay the bank debt,
  which would result in lower distributions to unitholders.

Anticipated payments for
  pension and other post-retirement benefit funding requirements cover the
  period 2004 through 2013.

Other contractual obligations
  are consistent with our operating and financing practices and we expect
  sufficient cash flows from operating activities will be available to meet
  these obligations as they become due.

The bank loan facilities
  include provisions that may restrict our ability to pay cash available for
  distribution to unitholders. The bank loan facility of Elk Valley Coal
  precludes a cash payment by Elk Valley Coal to Fording Inc. during an event of
  default or if the making of such payment would result in an event of default.
  Similarly, the bank loan facilities of Fording Inc. preclude a cash payment by
  Fording Inc. to the Trust during an event of default or if the making of such
  payment would result in an event of default. Loan covenants that would create
  an event of default include tests for interest, asset and cash flow coverage,
  as well as covenants which restrict the disposition of certain core mining
  assets. Fording Inc. and Elk Valley Coal are currently in compliance with
  their loan covenant provisions.

In addition, the bank loan
  facilities limit distributions from Elk Valley Coal to Fording Inc., and from
  Fording Inc. to the Trust to an amount that is essentially equal to the
  available cash of Elk Valley Coal, or Fording Inc., as the case may be, plus
  releases of cash reserves and undistributed cash flow from prior periods.
  Fording Inc. may use, within limits, its revolving bank credit facility to
  fund quarterly distributions to the Trust subject to availability under the
  facility. It is anticipated that our use of this

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funding would only be undertaken on a temporary
  basis to manage the short-term timing vagaries inherent in our cash flows.

The Fording Inc.
  bank loan facilities are secured by a guarantee of Elk Valley Coal. During the
  time this guarantee is in place, Fording Inc. may not sell its interest in Elk
  Valley Coal or carry on any business other than in respect of Elk Valley Coal
  or the industrial minerals operations, unless agreed to by Teck Cominco.

OUTLOOK

DISTRIBUTABLE CASH

Distributable
  cash generally refers to the net cash received by the Trust that is available
  for payment to unitholders on a quarterly basis. Available cash generated by
  Fording Inc. is the principal contributor to distributable cash of the Trust.
  Fording Inc. distributes its available cash to the Trust in a quarter, which
  is based on anticipated results for that quarter, and takes into account other
  considerations such as expected future performance, variations in levels of
  quarterly operating and capital activities, and other financial or legal
  requirements. Future distributions of available cash will take into account
  these factors and any amounts paid in prior periods that were greater or less
  than the actual available cash for those prior periods. Please refer to our
  annual information form for a more detailed disclosure of our distribution
  policies.

FIRST AND SECOND QUARTERS OF 2004

The following
  discussion generally highlights our expectation that improved operating
  results will be achieved in 2004. Contracted coal prices will rise from 2003
  levels, sales and production of coal are expected to increase and to be at or
  near capacity, and cost of product sold is expected to decline.

However, the
  results of operations for the first and second quarters will be adversely
  impacted by the following factors:

- Our coal inventories at the ports are low
      and we have experienced difficulties with rail shipments. As a result, we
      can expect sales volumes for the first quarter to be below normal levels
      and we will likely incur considerable demurrage charges for vessel waiting
      times, both of which may carry into the second quarter of 2004.
- The low inventories and rail difficulties
      will result in a carryover of 2003 pricing into the second quarter as we
      satisfy the commitments to our customers for the 2003 coal year.
      Accordingly, the higher prices expected for the 2004 coal-year sales
      volumes may not be effective until May of 2004.
- The first quarter will also include a
      charge for severance benefits pursuant to change of control agreements
      with certain senior executives.

These items, on
  the whole, will serve to significantly lower our operating results, net income
  and cash available for distribution for the first quarter and, to a lesser
  degree, the second quarter compared with the balance of the year. Cash to be
  paid to unitholders for the first quarter may not be affected to the same
  extent because of the carryover by Fording Inc. of available cash from the
  fourth quarter of 2003.

METALLURGICAL COAL OPERATIONS

COKING COAL MARKETS

Demand for
  seaborne coking coal continues to strengthen in global coal markets.
  International crude steel production is anticipated to remain strong into
  2005. Integrated steel mills and coke producers around the world are finding
  it difficult to purchase sufficient quantities of coking coal at a time when
  their

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inventories of coal are low. Indications are that traded
  coke supplies are not sufficient to meet high demand.

The supply and demand balance
  for seaborne coking coal is difficult to predict over the long term.
  Additional seaborne coking coal supply is now coming on stream from Australia.
  Producers in the United States are increasing coking coal exports in response
  to recent high coal prices. It is expected that coal producers will try to
  maximize and expand coal production from existing operations.

Current and anticipated market
  conditions for our coal products have caused us to review and evaluate
  expansion projects. The Cardinal River Operation's Cheviot Creek pit is
  receiving the highest priority in this regard. We are in the process of
  conducting our due diligence with respect to this potential project and, if
  approved, we will increase our capital spending.

We have a number of projects
  that can increase overall production of Elk Valley Coal by up to five million
  tonnes on a cumulative basis. The individual projects will entail capital
  expenditures that are far less than those required for new mine development.
  Our current objective is to approach 30 million tonnes of annual production by
  Elk Valley Coal within the next five years. Contributing to the additional
  capacity, assuming the necessary approvals can be obtained, will be the
  development of Cheviot Creek pit, utilizing plant capacity at some mines by
  using reserves of other mines, and declining strip ratios at some of the
  existing operations.

In addition to the factors
  discussed above, other influences affecting the supply and demand balance for
  seaborne coking coal are evident.

- The Bullmoose mine in Canada closed and shipped its last
      coal in 2003.
- Underground mines, more typical to Australia and the
      United States, have recently experienced operating problems delaying or
      limiting production.
- Domestic production of coking coal in Europe is
      declining.
- Economic growth is driving demand for steel in China, and
      steel mills in that and other Asian countries are fueling strong demand
      for seaborne coking coal.
- China is now importing higher quality coal to satisfy
      demands that cannot be met from its domestic sources.

COAL PRICES

Coal is generally priced on an
  annual basis for the coal year that starts April 1, particularly in Asia and
  Europe. The most significant determinant of coal prices is the supply and
  demand balance for coal at the time negotiations are completed. Given the
  current tight supply situation in our coal markets, coal sales agreements
  covering virtually all of our expected production have been concluded for the
  2004 coal year. Contract settlements indicate that the average price for coal
  sales for the 2004 coal year (April 1, 2004 - March 31, 2005), including
  normal levels of sales carried over from the current coal year, is expected to
  be approximately US$51 per tonne. This represents an increase of nearly 20%
  from the average U.S. dollar price realized during the 2003 coal year. Price
  increases were attained for all of our coal products. Contract negotiations
  for coal sales within North America, which account for a smaller part of our
  sales, were concluded for the year commencing January 1, 2004.

Through the negotiations for
  the 2004 coal year we were also able to achieve some of our other marketing
  goals.

- We simplified our pricing structure to achieve more
      uniform pricing for products.
- We eliminated option provisions in our coal purchase
      agreements that allowed customers to elect to purchase up to 10% more or
      10% less than the coal agreed to under the contract.
- We priced our various coal brands appropriately to better
      position them in the marketplace.

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- We negotiated several multi-year evergreen supply
      agreements compared with our previous selling arrangements. Generally,
      coal prices under these contracts will continue to be set annually, but
      they will give us more certainty with respect to sales volumes going
      forward.

Average coal
  prices for our 2004 fiscal year (January 1, 2004 - December 31, 2004) are
  expected to be US$48 per tonne, an increase of 13% over the 2003 fiscal year.
  The Canadian dollar price of coal is expected to increase 9% to $67 per tonne
  for the 2004 fiscal year assuming a U.S./Canadian dollar exchange rate of
  US$0.77 and taking into account our foreign currency hedge position in 2004.
  The anticipated Canadian dollar price of coal before taking into account our
  foreign currency hedge position under the same exchange rate assumption is $62
  per tonne.

COAL SALES AND PRODUCTION

Our coal product
  inventories were reduced to normal levels by the end of 2003, with most of the
  inventories located at the minesites. Accordingly, with the current conditions
  of seaborne coking coal markets and the fact that we are sold out of coal, it
  is expected that production at all mines will be at or near full current
  capacity to meet forecast sales. Coal sales for Elk Valley Coal in 2004 are
  expected to be in the order of 25 million tonnes, of which our share will be
  approximately 16 million tonnes.

Our coal sales
  volumes during the first quarter of 2004 are expected to be lower than those
  for the balance of the year. Our inventory levels at Westshore Terminals and
  Neptune Terminals are low due to the current high demand for our coal and the
  recent difficulties experienced by our principal rail service provider to meet
  our shipping requirements. The problems reported by the railway company are
  primarily weather related. Accordingly, vessels are experiencing waiting times
  to load, leading to delayed sales and additional transportation and other
  costs. While we have experienced problems, we are optimistic that rail service
  will return to levels which are sufficient to meet the productive capacity of
  the five Elk Valley mines. However, should recent problems affecting rail
  service continue, delayed sales and higher transportation and other costs
  resulting from demurrage costs that could exceed $2 per tonne, depending on
  when problems with rail service are resolved, will significantly impact the
  operating results, net income and cash available for distribution for the
  first quarter and, to a lesser degree, the second quarter of 2004.

Some variation in
  quarterly coal sales should be expected. Our coal is typically sold on a
  coal-year basis, usually commencing April 1, and the timing of shipments and,
  therefore, sales is determined by the customer. Shipments can be affected by
  customers' scheduling of vessels, delay of vessels due to factors such as
  weather and mechanical problems, congestion at the port and, recently, the
  strong demand for vessels across a number of commodity sectors, which affects
  vessel availability and timing. Sales can also be impacted by weather or
  mechanical problems affecting the minesites, railway and ports, and other
  factors such as a lack of coal at the ports arising from railway
  transportation problems.

Production levels
  will also vary from quarter to quarter. Shut downs will be taken at the mines
  at various times throughout the year in order to provide for employee
  vacations and planned maintenance requirements. Operating efficiencies, cost
  improvements, and declining strip ratios are expected to improve cost of
  product sold from 2003 levels.

COST OF PRODUCT SOLD, TRANSPORTATION AND OTHER
  COSTS

We are
  aggressively pursuing sustainable cost reductions, improvements in product
  value, and the integration of operations in areas such as marketing,
  transportation, administration, site operating costs, working capital

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and sustaining and expansion capital expenditures. Efforts
  to identify additional value improvements and synergies will continue as a
  normal part of optimizing our mining operations over the long term.

Numerous value improvements
  and synergies should continue to lower cost of product sold as the
  improvements are realized over the next several years, including:
  rationalizing production to reduce costs; adopting best practices across all
  minesites; coordinating purchasing and inventories of parts and stores;
  lowering product inventories, reducing the number of stockpiles at the port
  and by coordinating rail and port services; and economies of scale relating to
  transportation management and administrative functions.

Cost control efforts, falling
  strip ratios, and synergy and value-enhancement initiatives are improving our
  outlook with respect to cost expectations. The unit cost of product sold has
  started to decline more rapidly than originally estimated. Current
  expectations are that our average cost of product sold can be lowered to about
  $26 per tonne over the next three years. This is slightly higher than our
  previous expectation of $25 per tonne, and reflects our current outlook on
  factors such as inflation, labor costs, fuel prices and the cost of other
  consumables.

Transportation and other costs
  include the costs of shipping coal by rail to port facilities and customers,
  and the cost of handling and loading coal onto vessels at the ports. A
  significant portion of rail and port costs move with changes in the U.S.
  dollar and Canadian dollar price of coal, respectively. Accordingly, under
  current contract arrangements, transportation and other costs will increase
  significantly when higher coal prices come into effect commencing in the
  second quarter of 2004.

CAPITAL EXPENDITURES

Capital expenditures during
  2003 were at levels lower than would be considered normal over a multi-year
  period. The combination of the mines in Elk Valley Coal allowed for a
  significant amount of capital expenditures to be cancelled or deferred. In
  2004, our sustaining capital expenditures are anticipated to be approximately
  $27 million. If we proceed with the development of Cardinal River Operation's
  Cheviot Creek pit we will make additional capital expenditures.

MINERAL TAXES

The current maximum mineral
  tax rate in British Columbia is 13%. Our average tax rate is expected to
  increase over the next few years as our mines exhaust permitted deductions
  and, therefore, will be subject to mineral taxes at the maximum rate. The tax
  rate applicable to the mines and the periods in which the maximum rate will
  apply depends on such factors as the profitability of the site, capital
  expenditures, and available deductions.

The Cardinal River Operations
  are located in Alberta and are required to pay Alberta crown royalties on coal
  production. These royalties are determined in a similar fashion as British
  Columbia mineral taxes.

SENSITIVITIES

Our financial results and,
  therefore, the amount of cash available for distribution to be paid to
  unitholders are highly dependent on, and sensitive to, key variables of the
  metallurgical coal operations such as coal prices, cost of product sold and
  transportation and other costs, sales volumes and the U.S./Canadian dollar
  exchange rate. The table that follows outlines the approximate sensitivity in
  2004 of cash available for distribution per unit for given changes in certain
  key variables. These annual sensitivities, calculated before any cash reserve
  and before any change in our interest in Elk Valley Coal, take into account
  our current foreign currency hedges, assume a U.S./Canadian dollar exchange
  rate of US$0.77, and are based on the number of units outstanding at the end
  of 2003.

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INTEGRATION AND OPTIMIZATION

The creation
  earlier this year of Elk Valley Coal consolidated substantially all of Canada's
  metallurgical coal mining operations into a single entity. The six mines are
  now operating under an integrated plan. The integration has resulted in
  significant improvements in cost and value, and is expected to continue to do
  so.

Under the Elk
  Valley Coal partnership agreement, Teck Cominco can increase its ownership
  share of Elk Valley Coal from 35% to a maximum of 40% by attaining synergies
  within the combined operations and/or by improving the operating results of
  the Elkview mine. A mining engineering firm has been retained as an
  independent expert to develop a program to assess, measure and document the
  attainment of synergies and improvements in the operating results of the
  Elkview mine in order to determine whether Teck Cominco's interest in Elk
  Valley Coal is to be increased.

The first
  calculation, which is required for the coal year ending March 31, 2004, is
  expected to be completed toward the end of the second quarter of 2004. The
  period during which Teck Cominco can increase its ownership share of Elk
  Valley Coal will expire on completion of the coal year ending March 31, 2007.
  Any increase in Teck Cominco's ownership share will be effective at the
  start of the following coal year.

In the event of a
  change in ownership of Elk Valley Coal as a consequence of attaining these
  synergies, we will record a reduction of net assets and an equivalent non-cash
  charge to earnings equal to the proportionate decrease in our investment in
  the net assets of Elk Valley Coal as at the effective date of the change of
  Teck Cominco's interest. Teck Cominco's increased interest in the results
  of operations of Elk Valley Coal would apply prospectively from the effective
  date of the change in Teck Cominco's interest.

INDUSTRIAL MINERALS OPERATIONS

Earnings of this
  segment are expected to improve in 2004. We expect improved sales volumes;
  however, average sales prices are anticipated to decline slightly due to a
  change in product mix and a stronger Canadian dollar. These operations are
  expected to remain focused on mid- and high-value product lines, and the
  higher cash margins will have a positive impact on income from operations.
  Actual results will depend to a large degree on economic activity in our
  markets, and our success with new targeted sales applications.

CAPITAL RESOURCES

Sustaining
  capital expenditures are the investments in capital assets necessary to
  maintain the current productive capacity of our existing mines. Investments in
  sustaining capital are required on an ongoing basis, and are expected to be
  funded principally by cash flows from operating activities and deducted when
  we determine cash available for distribution. Expansion capital expenditures
  are generally made in order to substantially increase the productive capacity
  of our operations and to develop or acquire new mineral bodies, and would
  include new mines. Expansion capital expenditures generally

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require financing from sources other than cash flows from
  operating activities.

Our normal ongoing capital
  expenditure requirements to sustain the productive capacity of our various
  operations are expected to average between $25 million to $30 million per
  year. Actual expenditures may be less than or exceed this by a considerable
  amount in any given year. Our sustaining capital expenditures in 2004 are
  expected to be approximately $27 million. If we proceed with the development
  of Cardinal River Operations' Cheviot Creek pit, our share of the additional
  capital expenditures over a two-year period would be up to approximately $80
  million. The final amount and timing of expenditures will be determined based
  on how the project will proceed on approval.

Commitments for sustaining
  capital will be funded by cash flow from operating activities. Commitments for
  expansion capital, including the development of the Cheviot Creek pit, will be
  funded by financing available under existing bank credit facilities, or
  alternative credit facilities or equity financing.

Bank credit facilities in the
  total amount of $540 million have been established for Fording Inc. and Elk
  Valley Coal, and are comprised of $420 million available to Fording Inc. and
  $120 million available to Elk Valley Coal.

The bank credit facilities of
  Fording Inc. are supported by an unsecured guarantee by Elk Valley Coal,
  limited in recourse to any partner's interest in Elk Valley Coal other than
  that of Fording Inc.; a general security interest over the assets of Fording
  Inc. including Fording Inc.'s interest in Elk Valley Coal; and, unsecured
  guarantees given by certain subsidiary companies.

Elk Valley Coal and Fording
  Inc. each have a $120 million bank credit facility in the form of an
  extendable 364-day revolving, one-year non-revolving facility. Fording Inc.
  also has $300 million of term bank credit facilities, which require repayment
  of $150 million by February 28, 2005 and the remaining $150 million by
  February 28, 2006. Borrowing rates are based on bankers' acceptances or
  Canadian prime rates and are subject to interest rate movements and certain
  financial ratios.

At December 31, 2003, Fording
  Inc. had outstanding $300 million of long-term debt and $28 million of letters
  of credit or letters of guarantee, leaving unused lines of credit of $92
  million under the bank credit facilities. At the same date, Elk Valley Coal
  had $32 million of letters of credit or letters of guarantee outstanding,
  leaving unused lines of credit of $88 million. Adequate credit facilities are
  in place to fund working capital and other requirements. Cash flows are
  expected to be sufficient to fund sustaining capital expenditures, service
  debt facilities and make cash distributions to unitholders.

As part of the Arrangement,
  Elk Valley Coal acquired a 46% interest in Neptune Terminals. Neptune Terminal's
  shareholder agreement requires that its shareholders guarantee its outstanding
  bank indebtedness. At December 31, 2003, Elk Valley Coal's proportionate
  share of this guarantee was $19.3 million, of which our proportionate share
  was $12.5 million.

OFF-BALANCE SHEET ARRANGEMENTS

Elk Valley Coal uses available
  export trade credit insurance to provide security for non-payment for coal
  sales by customers. Elk Valley Coal has entered into an agreement with the
  insurer and a Canadian Schedule 1 bank for the sale of accounts receivable
  from coal sales at Elk Valley Coal's discretion, subject to a maximum amount
  outstanding at any one time of US$50 million.

Proceeds on the sale of these
  accounts receivable is based on the invoice amount, invoice due date and
  current LIBOR. Elk Valley Coal benefits from a lower borrowing rate spread on
  LIBOR compared with a rate spread that would normally be available because the
  insurer is a Canadian crown corporation and,

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therefore, rate spreads are based on sovereign
  rather than corporate risk.

These
  arrangements allow Elk Valley Coal to receive cash for its accounts receivable
  more quickly, and they shorten the period of time during which foreign
  exchange rate movements will impact the Canadian dollar value of the accounts
  receivable.

Export trade
  credit insurance is transferred with the accounts receivable sold to the
  buyer. The risk to Elk Valley Coal of non-payment by the customer is the
  deductible on the insurance. Other commercial risks, such as non-performance
  by Elk Valley Coal under the terms of the contract, remain with Elk Valley
  Coal.

TRANSACTIONS WITH RELATED PARTIES

As part of the
  Arrangement, Elk Valley Coal entered into an agreement with Teck Cominco for
  the provision of certain management services. Teck Cominco is the managing
  partner of Elk Valley Coal and does not charge a fee in this role. Teck
  Cominco does provide certain specific services to Elk Valley Coal on a
  fee-for-service basis. Our share of the cost of these services was $0.1
  million in 2003. Elk Valley Coal also sells metallurgical coal to an operating
  unit of Teck Cominco. The total revenue generated from these sales in 2003 was
  $2.8 million, of which our share was $1.8 million. These transactions have
  been negotiated in the normal course of business, at prevailing commercial and
  market rates.

Prior to the
  reorganization of Canadian Pacific Limited in October 2001, when Old Fording
  became a public company, Old Fording entered into arrangements with
  subsidiaries of Canadian Pacific Limited for the provision of rail services,
  natural gas, financing and other management services. Transactions with these
  Canadian Pacific companies for the first nine months of 2001, prior to the
  reorganization, were $198 million. All transactions were in the normal course
  of business and at prevailing commercial rates.

FOURTH QUARTER

Our fourth
  quarter interim report was released on February 2, 2004. It was filed with
  Canadian securities regulatory authorities and the United States Securities
  and Exchange Commission, and is available at www.sedar.com and www.sec.gov.

OUTSTANDING UNIT DATA

We are authorized
  to issue an unlimited number of units of the Trust. Each unit represents the
  right to an equal interest in any distributions or other amounts payable to
  unitholders. All units rank among themselves equally and ratably without
  discrimination, preference or priority.

We may create and
  issue rights, warrants, options and convertible securities at such time or
  times as we may determine. No such rights, warrants, options and convertible
  securities have been issued and are outstanding.

CRITICAL ACCOUNTING ESTIMATES

Our consolidated
  financial statements are prepared in accordance with GAAP in Canada and
  require us to make estimates and assumptions that affect the reported amounts
  of assets, liabilities, revenues and expenses, and the related disclosure of
  contingent assets and liabilities. We make assumptions that are believed to be
  reasonable under the circumstances and are based upon historical experience,
  current conditions and expert advice. On an ongoing basis, we review estimates
  based on currently available information. The use of different assumptions
  would result in different estimates, and actual results may differ from
  results based on these estimates.

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A summary of our significant
  accounting policies is contained in note 2 to the Consolidated Financial
  Statements. The following is a discussion of the accounting estimates that are
  significant in determining our financial results.

RECLAMATION

We have significant long-term
  liabilities relating to mine reclamation and end-of-mine closure costs. As
  mining activities release the reserves included in the long-range mine plans,
  liabilities are recorded for the estimated costs to reclaim disturbed sites to
  meet existing regulatory standards. Reclamation liabilities are not funded.
  The liability is determined on a mine-by-mine basis, and various assumptions
  are used in the engineering studies including current mine plans, future
  reclamation costs, and estimates of reserves and resources. Costs incurred
  under the reclamation programs are charged against the associated liability.
  We have developed reclamation programs and cost estimates based on meeting
  existing government regulations and standards.

EMPLOYEE FUTURE BENEFITS

We have post-retirement
  benefit plans that include pension plans and other post-retirement benefit
  plans, the cost of which are based on estimates. Actuarial calculations of
  benefit costs and obligations are dependent on our estimates and assumptions
  about future events. Major estimates and assumptions relate to expected plan
  performance, salary escalation, discount rates, retirement ages of employees
  and future cost trends. In addition, actuaries incorporate subjective factors
  into their assumptions, such as withdrawal and mortality rates.

CAPITAL ASSETS

Mineral properties and
  development assets include expenditures to acquire and develop identified
  mineral properties and reserves and net costs relating to production during
  the development phase. Depletion on producing properties is provided using a
  unit-of-production method based upon the proven and probable mineral reserves
  of the mine.

The determination of mineral
  reserves is a complex task in which a number of estimates and assumptions are
  made. These involve the use of geological sampling and modeling as well as
  estimates of future costs. Knowledge derived from ongoing exploration and
  development of the ore body may also affect reserve estimates. In addition,
  the determination of economic reserves is dependent upon a number of
  assumptions, including long-term coal prices and foreign exchange rates.

The allocation of the purchase
  price related to the purchase of the metallurgical coal and other assets from
  the Luscar/CONSOL joint ventures as part of the Arrangement was completed in
  accordance with GAAP in Canada. This allocation resulted in values being
  assigned to the Line Creek mine and Cardinal River Operations' Cheviot
  permit area based on expected cash flows from the identified reserves of these
  properties and other information available at the time of the Arrangement.
  Significant estimates and assumptions included future sales prices, sales
  volumes, U.S./Canadian dollar exchange rates and operating costs.

We review and evaluate capital
  assets for impairment of value on an ongoing basis. The expected undiscounted
  future cash flows from an asset used in these evaluations are developed using
  assumptions that reflect our best estimate of the long-term operating plans
  for the asset. Changes in market conditions, reserve estimates and operating
  conditions are updated periodically as part of the test for impairment of
  value.

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CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL
  ADOPTION

STOCK-BASED COMPENSATION

For the fiscal
  year beginning January 1, 2003, we prospectively adopted the fair-value method
  of accounting for stock-based compensation related to unit options, pursuant
  to new transitional rules recently approved by the Canadian Institute of
  Chartered Accountants (CICA). Prospective application requires the fair-value
  method to be applied to stock-based awards granted, modified or settled on or
  after the beginning of the fiscal year in which this new section is adopted.

ASSET RETIREMENT OBLIGATIONS

CICA Handbook
  Section 3110, "Asset Retirement Obligations", is effective for fiscal
  years beginning on or after January 1, 2004. This standard focuses on the
  recognition and measurement of liabilities related to legal obligations
  associated with the retirement of property, plant and equipment. Under this
  standard, these obligations are initially measured at fair value and
  subsequently adjusted for the accretion of discount and any changes in the
  underlying cash flows. The asset retirement cost is to be capitalized to the
  related asset and amortized into earnings over time. This new standard is
  estimated to increase non-cash expenses by between $2 million to $3 million in
  2004, but will not impact our 2004 cash flow from operating activities.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

Almost all of our
  coal sales are denominated in U.S. dollars and the vast majority of our costs
  are denominated in Canadian dollars. Accordingly, our revenues, net income,
  cash flows and cash available for distribution are highly sensitive to changes
  in the U.S./Canadian dollar exchange rate.

We use derivative
  financial instruments, specifically foreign exchange forward contracts, to
  manage our cash flows with respect to our foreign currency exposure. Foreign
  exchange forward contracts fix the rate at which future anticipated flows of
  U.S. dollars are exchanged into Canadian dollars. We do not enter into
  derivative financial instruments for trading or speculative purposes. Our
  foreign exchange forward contracts are designated as hedges of our anticipated
  U.S. dollar cash flows and unrealized gains or losses on the contracts are not
  recorded in our financial results or financial position. Our unrealized gains
  on these contracts at December 31, 2003 were $124 million.

We have
  established limits to allow hedges of up to 100% of our estimated U.S. dollar
  exposure within the first 24 months and, thereafter, up to 50%, 30% and 15% of
  expected U.S. dollar revenues during each of the next three 12-month periods,
  respectively. There is no minimum amount required to be hedged. The hedging
  limits are established with reference to the Trust's share of the U.S.
  dollar exposure of Elk Valley Coal, and will take into account any hedges of
  Elk Valley Coal. At December 31, 2003, our foreign exchange forward contracts,
  including contracts we entered into directly and our share of the contracts of
  Elk Valley Coal, totalled $605 million. Our outstanding foreign exchange
  forward contracts as at December 31, 2003 are disclosed in note 12 to the
  Consolidated Financial Statements.

The layering of
  foreign exchange forward contracts implied by this strategy further reduces
  the risk to us of rapidly changing U.S./Canadian dollar exchange rates while
  controlling the risk associated with fluctuating coal sales volumes and prices
  arising from changing conditions in our coal markets. The net investment in
  and the net U.S. dollar demoninated cash flows of the industrial minerals
  operations are not hedged.

We are pursuing
  arrangements with counterparties to allow us to enter into foreign exchange
  forward contracts under these policy limits. Our ability to enter into foreign
  exchange forward contracts will

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depend on the total hedge position we wish to undertake, the
  credit worthiness of available counterparties, and the counterparties'
  assessment of our credit risk and that of Elk Valley Coal.

The gains and losses on
  foreign exchange forward contracts designated as hedges are recognized in
  revenues and income in the period that the hedged exposure is recognized,
  which is the same period in which the instrument is settled. The gain or loss
  is netted against the item that was hedged. During 2003, we realized gains on
  foreign exchange forward contracts of $41 million due to the U.S. dollar
  weakening relative to the U.S./Canadian dollar exchange rate specified in the
  contracts. In 2002, we realized a loss of $84 million as a result of the U.S.
  dollar strengthening relative to the U.S./Canadian dollar exchange rate
  specified in the contracts.

We are exposed to gains or
  losses depending on the difference between the U.S./Canadian dollar exchange
  rate and the rate in the foreign exchange forward contracts in the event of
  non-performance by the counterparties to our contracts. To mitigate this risk
  of non-performance, we deal with several counterparties of high credit
  quality. We do not believe that there are any significant concentrations of
  credit risk.

RISKS AND UNCERTAINTIES

An investment in units of the
  Trust involves a number of risks. Our financial performance is entirely
  dependent upon the operations and assets of Fording Inc. and, in particular,
  Fording Inc.'s interest in Elk Valley Coal. Accordingly, unitholders are
  exposed to all of the risks to which the Trust is exposed, and to the risks to
  which Fording Inc. and Elk Valley Coal are exposed.

Through our subsidiaries, we
  have operations throughout North America and customers around the world. As
  such, we are exposed to changes in various markets and economies, and our
  operations can be affected by a variety of conditions. To minimize the impacts
  of such changes and conditions on our financial performance, we seek to
  identify, evaluate and, where appropriate, hedge financial, market and
  operation risk.

RISKS RELATING TO THE TRUST

Risk factors specific to an investment in the units include,
  but are not limited, to the following:

CASH DISTRIBUTIONS TO UNITHOLDERS ARE DEPENDENT ON FORDING
  INC.

Distributable cash generally
  refers to the net cash received by the Trust that is available for payment to
  unitholders on a quarterly basis. We are entirely dependent upon the
  operations and assets of Fording Inc. through our ownership of the
  subordinated notes, preferred shares and common shares of Fording Inc., and
  accordingly, our ability to make cash distributions to unitholders will be
  dependent upon the ability of Fording Inc. to pay its obligations under its
  subordinated notes and to declare dividends or make other distributions on its
  outstanding shares.

Although we intend to
  distribute the interest and dividend income earned, and any returns of capital
  on, or redemptions of, the common shares or preferred shares of Fording Inc.,
  less expenses and amounts, if any, we pay in connection with the redemption of
  units, there is no assurance regarding the amounts of cash to be generated by
  Fording Inc., and therefore funds available to us for distribution to
  unitholders. The actual amount distributed in respect of the units will depend
  on a variety of factors such as coal prices, sales volumes, profitability, the
  level of Elk Valley Coal sustaining capital expenditures, credit agreements
  and other factors that may be beyond our or Fording Inc.'s control. In the
  event significant sustaining capital expenditures are required, coal prices
  and/or sales volumes

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decline, or the profitability of Fording Inc.
  declines, there would be a decrease in the amount of cash available for
  distribution to unitholders and such decrease could be material.

Our distribution
  policy and that of Fording Inc. is subject to change at the discretion of the
  board of directors of Fording Inc. or the Trustees of the Trust. The recourse
  of unitholders who disagree with any change in policy is limited and could
  require such unitholders to seek to replace the Trustees or the board of
  directors of Fording Inc.

INTEREST RATES AND OTHER FACTORS AFFECTING
  YIELD

One of the
  factors that may influence the price of our units in the public trading
  markets will be the annual yield on the units as compared with the annual
  yield on other financial instruments. An increase in market interest rates may
  lead potential purchasers of our units to demand a higher annual yield, which
  could adversely affect the market price of the units. Annual yield and
  therefore the price of units in the public trading markets may also be
  affected by short-term supply and demand factors for income trust products. A
  rise in the annual yield on financial instruments could be expected to result
  in an increase in the required yield on our units, and such increase could
  result in a decrease in the trading price of units and such decline could be
  material.

INCOME TAX

There is no
  assurance that Canadian federal income tax laws or the current treatment of
  mutual fund trusts will not be changed in a manner which affects our
  unitholders in a material adverse way. If we cease to qualify as a "mutual
  fund trust" under the Income Tax Act, it is possible that our units would
  cease to be qualified investments for deferred income plans and registered
  education savings plans.

Further, it is
  possible that the Canadian taxation authorities could choose to change the tax
  laws and regulations applicable to income trusts, thereby reducing or
  eliminating the tax advantages that such structures enjoy. Any such changes
  could negatively affect, in a material way, the amount of cash available for
  distribution to unitholders, and the market value of the units.

Interest on the
  subordinated notes of Fording Inc. accrues at the Trust level under the Income
  Tax Act whether or not actually paid. Our Declaration of Trust provides that,
  in the event that the aggregate of the taxable income of the Trust, including
  taxable capital gains, if any, and the non-taxable portion of the capital
  gains, if any, exceeds distributions otherwise made payable in the year, the
  amount of such excess will become payable to unitholders on December 31 and
  will be paid to unitholders in the following year. This may result in income
  distributable to unitholders exceeding cash available for distribution. In
  such case, the Declaration of Trust provides that additional units must be
  distributed to unitholders in lieu of cash distributions. Unitholders will
  generally be required to include an amount equal to the fair market value of
  those units in their Canadian federal taxable income, in circumstances where
  they do not directly receive a cash distribution.

NATURE OF UNITS

Our units are
  hybrids in that they share certain attributes common to both equity securities
  and debt instruments. The units do not represent a direct investment in
  Fording Inc.'s business and should not be viewed by investors as shares in
  Fording Inc. As holders of units, unitholders do not have all of the statutory
  rights normally associated with ownership of shares of a company including,
  for example, the right to bring "oppression" or "derivative" actions.
  The units represent a fractional interest in the Trust.

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The Trust's primary asset is its investment in the
  subordinated notes, preferred shares and common shares of Fording Inc. The
  units are not "deposits" within the meaning of the Canada Deposit
  Insurance Corporation Act and are not insured under the provisions of that act
  or any other legislation. Furthermore, we are not a trust company and,
  accordingly, are not registered under any trust and loan company legislation
  as we do not carry on or intend to carry on the business of a trust company.

LIMIT OF NON-CANADIAN OWNERSHIP

At no time may more than 49%
  of our outstanding units be held by or for the benefit of non-residents of
  Canada. Periodically, we review the level of ownership of units by
  non-residents of Canada. If this limit has been, or is about to be exceeded,
  certain steps specified in the Declaration of Trust will be taken to keep or
  reduce the unit holdings of non-residents of Canada below 49%. The acquisition
  of more than 49% of our outstanding units by non-residents of Canada could
  have a material adverse effect on the Trust and the units, and could result in
  non-residents of Canada being compelled to dispose of their units.

REDEMPTION RIGHT

Registered unitholders are
  entitled to require the Trust to redeem units in accordance with conditions
  stated in the Declaration of Trust. It is anticipated that the redemption
  right will not be the primary mechanism for unitholders to liquidate their
  investments. Cash redemptions are subject to limitations set out in the
  Declaration of Trust. In certain circumstances, securities of Fording Inc. or
  the Trust may be distributed to unitholders in connection with redemption as
  opposed to cash. Such securities will not be listed on any stock exchange and
  no established market is expected to develop for them. Unitholders receiving
  such securities may not be able to dispose of them for value, or at all.

DISTRIBUTION OF SECURITIES ON REDEMPTION OR TERMINATION OF
  THE TRUST

Upon redemption of units or
  termination of the Trust, the Trustees may distribute securities of Fording
  Inc. or other securities of the Trust directly to the unitholders, subject to
  obtaining any required regulatory approvals. Securities of Fording Inc. or
  other securities of the Trust distributed in this manner may not be qualified
  investments for deferred income plans or registered education savings plans,
  depending upon the circumstances at the time. Such securities will not be
  listed on any stock exchange and no established market is expected to develop
  for them. Unitholders receiving such securities may not be able to dispose of
  them for value, or at all.

LIMITED LIKELIHOOD OF UNITHOLDER LIABILITY

Because of the absence of
  statutory limited liability for unitholders and resulting uncertainties in the
  law, there is a risk that a unitholder could be held personally liable for
  obligations of the Trust (to the extent that claims are not satisfied by
  Fording Inc. or the Trust) in respect of contracts that the Trust enters into
  and for certain liabilities arising other than out of contract including
  claims in tort, claims for taxes, and possibly certain other statutory
  liabilities. Our Counsel has advised that they view the risk of unitholder
  liability as remote.

The Declaration of Trust
  provides that no unitholder will be subject to any liability in connection
  with the Trust or its assets or obligations and that in the event that a court
  determines that unitholders are subject to any such liabilities, the
  liabilities will be enforceable only against, and will be satisfied only out
  of, the unitholder's share of the Trust's assets. The Declaration of Trust
  also provides that the Trust

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shall use reasonable commercial efforts to
  include as a specific term of any obligations or liabilities being incurred by
  the Trust or the Trustees on behalf of the Trust a contractual provision to
  the effect that neither the unitholders nor the Trustees have any personal
  liability or obligation in respect thereof.

Fording Inc. is a CBCA corporation and provides
  the Trust as its shareholder with limited liability.

ADDITIONAL UNITS

The Declaration
  of Trust authorizes us to issue an unlimited number of units for the
  consideration, and on terms and conditions, established by Trustees without
  the approval of any unitholders. If the Trustees make a decision to issue
  additional units, existing unitholders may suffer significant dilution and
  distributable cash per unit could decline.

CAPITAL INVESTMENT

The timing and
  amount of capital expenditures incurred by Fording Inc. and by Elk Valley Coal
  will directly affect the amount of cash available to the Trust for
  distribution to unitholders. Distributions may be reduced, or even eliminated
  at times when significant capital expenditures are incurred or other
  expenditures are made.

RESTRICTIONS ON POTENTIAL GROWTH

The payout by
  Fording Inc. of its available cash to the Trust means that capital
  expenditures to expand operations or to exploit reserves and resources can
  only be made in the event that other sources of financing are available. Lack
  of access to such additional financing could limit the future growth of the
  businesses of Fording Inc. and, over time, could have a material adverse
  effect on the amount of cash available for distribution to unitholders.

FORWARD-LOOKING INFORMATION MAY PROVE
  INACCURATE

We have made
  forward-looking statements and provided forward-looking information in this
  document and such statements and information are subject to risks and
  uncertainties. Unitholders and other readers should note that many factors,
  some of which are discussed elsewhere in this document, could affect future
  financial and operating results and could cause those results to differ
  materially from those expressed in the forward-looking statements and
  information.

RISKS RELATING TO FORDING INC. AND ITS
  INTERESTS IN ELK VALLEY COAL AND INDUSTRIAL MINERALS

CREDIT FACILITIES

Fording Inc.'s
  credit facilities contain covenants that require it to meet certain financial
  tests and that restrict, among other things, the ability of Fording Inc. to
  incur additional debt, dispose of assets or pay dividends in certain
  circumstances. These restrictions may preclude Fording Inc. from paying
  interest on its subordinated notes, returning capital or paying dividends or
  making distributions on its common shares and preferred shares, or redeeming
  any of the foregoing. If this should occur, the Trust would be prevented from
  making distributions to unitholders.

At December 31,
  2003, Fording Inc. had outstanding $300 million of long-term bank debt which
  requires $150 million to be refinanced by February 28, 2005 and the remaining
  $150 million by February 28, 2006. There is no guarantee that this bank debt
  can be refinanced on terms that will be favourable to

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Fording Inc. The inability of Fording Inc. to refinance its
  existing indebtedness would decrease the amount of cash available to the Trust
  for distribution to unitholders as such debt would have to be repaid from cash
  flow from operating activities. In such circumstances, the amount of cash
  available for distribution to unitholders could be reduced by a material
  amount or eliminated altogether.

MARKET RISKS - OVERSUPPLY OF COKING COAL

The prices for coking coal and
  hard coking coal in particular, have a significant impact on our
  profitability, and are dependent on the supply/demand balance for coking coal
  and, to a lesser degree, the economic conditions of the markets into which the
  coal is sold. In the past, there have been periods of oversupply of coking
  coal in the market which have resulted in price decreases. Profitability and,
  therefore, funds available to us for distribution to unitholders, are also
  affected by the cost of product sold and transportation and other costs,
  product quality and taxation. An oversupply of coking coal in world markets or
  a general downturn in the economies of any of our significant markets could
  have a material adverse effect on the profitability of Fording Inc. and,
  accordingly, the amount of cash available for distribution to unitholders.

CONFLICTS OF INTEREST

The Trust and its unitholders
  are dependent upon Teck Cominco, as managing partner and 35% owner, to manage
  the day-to-day operations of Elk Valley Coal. There is a risk to us, should
  any conflict arise between the Trust, Elk Valley Coal and/or Teck Cominco.
  Should Teck Cominco not fulfill its obligations under the terms of the
  Partnership Agreement, there could be adverse affects on the amount of
  available cash Fording Inc. may be able to pay to the Trust. Procedures are in
  place to ensure that any such conflicts are appropriately resolved. Further,
  the Partnership Agreement states that partner approval is required for
  strategic or significant decisions such as any delegation of Teck Cominco of
  its powers to manage Elk Valley Coal, or any sale, lease, exchange, transfer,
  disposition or assignment of material assets of Elk Valley Coal other than as
  contemplated by approved annual operating and capital plans and budget.

OPERATIONAL RISKS

COAL TRANSPORTATION

The majority of coal that is
  produced by Elk Valley Coal is exported outside of North America. Elk Valley
  Coal's mines are located more than 1,100 kilometres from seaports.
  Accordingly, our operations are highly dependent on both rail and port
  services and a significant portion of total transportation and other costs are
  attributable to rail and port costs, and also may include demurrage charges
  for vessel waiting times. A substantial portion of the coal production from
  Elk Valley Coal is transported to port facilities by Canadian Pacific Railway
  (CPR), and to a lesser extent Canadian National Railway (CNR), and loaded onto
  vessels in Vancouver at either Westshore Terminals or Neptune Terminals.
  Prolonged labor stoppages, weather problems or other factors that prevent CPR,
  CNR, Westshore Terminals or Neptune Terminals from providing their services
  could seriously impact our financial results, and therefore, funds available
  to us for distribution to unitholders.

THE STEEL INDUSTRY

Substantially all of the
  coking coal that Elk Valley Coal produces is sold to steel manufacturers. The
  steel industry's demand for coking coal is affected by a number of factors
  including the cyclical nature of that industry's business, technological
  developments in the steel-making process and the availability of

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substitutes for steel such as aluminum,
  composites and plastics. A significant reduction in the demand for steel
  products would reduce the demand for coking coal which would have a material
  adverse effect upon Fording Inc. and the funds available to us for
  distribution to unitholders. Similarly, if less expensive ingredients could be
  used in substitution for coking coal in the integrated steel mill process, the
  demand for coking coal would materially decrease, which would also materially
  and adversely affect the funds available for distribution to unitholders.

FOREIGN CURRENCY EXCHANGE

Elk Valley Coal's
  operating results and cash flows are affected by foreign currency exchange
  rates. Exchange rate movements can have a significant impact on results since
  a vast majority of Elk Valley Coal's operating costs are incurred in
  Canadian dollars and most of its revenues are denominated in U.S. dollars. An
  increase in the value of the Canadian dollar relative to the U.S. dollar would
  reduce our realized Canadian dollar selling price, thereby reducing the
  profitability of Fording Inc. and the cash available for distribution to
  unitholders, and such reduction could be material.

This risk is
  mitigated to some extent by our policy to hedge a portion of our U.S. dollar
  exposure through the use of foreign exchange forward contracts. However, our
  ability to enter into foreign exchange forward contracts will depend on the
  total hedge position we wish to take and the counterparties' assessment of
  our credit risk and that of Elk Valley Coal. The effectiveness of such hedges
  will depend in part on the credit worthiness of the counterparties to our
  foreign exchange forward contracts. Our inability to put in place effective
  hedges could materially increase our exposure to increases in the value of the
  Canadian dollar relative to the U.S. dollar.

DERIVATIVE INSTRUMENTS

From time to
  time, Elk Valley Coal and Fording Inc. may employ forward currency exchange
  contracts, interest rate swap agreements and other derivative instruments to
  hedge exposure to specific financial risks. While forward currency exchange
  contracts can provide protection from certain fluctuations in currencies and
  realized selling prices, they will correspondingly limit the ability of Elk
  Valley Coal and Fording Inc. to capitalize on favourable changes in the
  factors that have been hedged by these instruments. In a period of volatile
  economic conditions, these derivative instruments may reduce or increase
  profitability relative to what it would have realized in the absence of the
  derivative instruments and relative to competitors who have hedged their risk
  exposure to a different degree or are unhedged.

DEPENDENCE ON MAJOR CUSTOMERS

The metallurgical
  coal industry is characterized by a relatively small number of customers
  worldwide, many of whom have long-standing relationships with Elk Valley Coal
  and Fording Inc. For example, sales to a single customer accounted for
  approximately 10% of Elk Valley Coal's revenue in 2003. A loss of, or a
  significant reduction in, purchases by any of its largest customers could
  adversely affect Fording Inc.'s revenues and the amount of cash available
  for distribution to unitholders.

PERSONNEL ISSUES

Five of Elk
  Valley Coal's six mines are unionized. Two of the industrial minerals
  operations' three mines are unionized. In addition, rail carriers and port
  facilities on which Elk Valley Coal is dependent to deliver coal to its
  customers are also unionized. Strikes, lockouts or other work stoppages or
  slow-downs

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involving Elk Valley Coal's unionized employees or those
  of its service suppliers could have a material adverse effect upon Fording
  Inc. and the funds available for distribution to unitholders.

The success of the Trust will
  be dependent in large measure on the services of a number of key executives of
  the Trust, Fording Inc., and Elk Valley Coal. The loss of such key personnel
  and the inability of the Trust, or Teck Cominco as managing partner of Elk
  Valley Coal, to replace them with people of similar experience and
  capabilities could have a material adverse effect on the financial condition
  or results of operations of Elk Valley Coal and Fording Inc. which, in turn,
  could reduce the amount of cash available to the Trust for distribution to
  unitholders.

RISKS INHERENT IN THE MINING INDUSTRY

Mining operations are subject
  to conditions that are beyond the control of management and can delay coal
  production or delivery, or increase the cost of mining. These conditions
  include natural disasters, unexpected equipment repairs or replacements,
  unusual geological formations, environmental hazards, industrial accidents,
  and inclement or hazardous weather conditions. Such conditions could result in
  damage to or the destruction of mineral properties or production facilities,
  personal injury or death, environmental damage, delays in mining, monetary
  losses and legal liability. In this regard, Elk Valley Coal and Fording Inc.
  maintain insurance against risks which are typical in the mining industry. In
  addition, Elk Valley Coal and Fording Inc. have insured their physical assets
  on a replacement cost basis and purchased business interruption insurance and
  liability insurance at levels they believe to be reasonable. However, there is
  no guarantee that the insurance coverage will be adequate in all cases.

Insurance against certain
  risks, including liabilities for environmental damage, is not available at
  reasonable economic rates to Elk Valley Coal, Fording Inc., or others in the
  mining industry.

RESERVES AND RESOURCES

Disclosed reserves and
  resources should not be interpreted as assurances of mine life or of the
  profitability of current or future operations. Ultimately, actual production,
  recovery, revenues and expenditures for the reserve properties will vary from
  estimates used and those variations could be material.

While the estimates of the
  reserves and resources of Elk Valley Coal and Fording Inc. have been prepared
  in accordance with industry standards and applicable law based on information
  which management believes to be reliable, there are numerous uncertainties
  inherent in the estimation of mineral reserves and resources. For example, the
  estimation of reserves and resources involves a determination of economic
  recovery of minerals that are in the ground, which in turn requires that
  assumptions be made regarding their future price and the cost of recovery, as
  well as other factors that are beyond the control of Elk Valley Coal and
  Fording Inc. For these reasons, the actual mineral tonnage recovered from
  identified reserve areas or properties, and revenues and expenditures related
  to the exploitation of such reserves, may vary materially from estimates. The
  estimates of reserves and resources therefore may not accurately reflect
  actual reserves and resources of Elk Valley Coal and Fording Inc.

Fording Inc.'s profitability
  will depend substantially on Elk Valley Coal's ability to mine coal deposits
  which have the geological characteristics that enable them to be mined at
  competitive costs. Replacement deposits may not be available when required or
  may not be capable of being mined at costs comparable to those of the
  depleting mines. Elk Valley Coal will seek to replace its economic mineral
  holdings through exploration and development of currently owned properties and
  the acquisition of properties from third parties. However, management may not
  be able to fully assess the geological

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characteristics of any properties that it
  acquires until after the acquisition, which may adversely affect the
  profitability and financial condition of Fording Inc.

Fording Inc.,
  both directly and through its interest in Elk Valley Coal, has extensive coal
  and wollastonite properties which are undeveloped. Authorization from federal,
  provincial or state governments may be required before these properties can be
  brought into production. Access to such lands for mining purposes may be
  restricted by future legislation. Accordingly, there can be no assurance that
  Fording Inc. and/or Elk Valley Coal will be able to obtain the necessary
  authorizations to develop resource properties in the future and this may
  negatively affect that ability of the Trust to make future distributions to
  unitholders.

OPERATIONS IN AND SALES TO FOREIGN COUNTRIES

Elk Valley Coal
  operates in Canada and sells its products to customers located around the
  world. In addition Fording Inc.'s industrial minerals operations operate in
  the United States and Mexico and sell products to customers located around the
  world. Operations and sales to customers in foreign countries result in added
  risks and uncertainties due to the different economic, political and cultural
  environments of those countries. Some of these risks include the potential for
  nationalization of foreign enterprises, expropriation of assets without
  adequate compensation, social unrest, political uprisings, trade barriers,
  capital flow controls and material changes in taxation.

NEW APPLICATIONS FOR WOLLASTONITE

The wollastonite
  market is currently in an oversupply position and has been for several years.
  Management believes that the oversupply situation will only be resolved if
  demand for wollastonite substantially increases, which management believes
  will not occur until further applications for this mineral are developed and
  there is market acceptance of the use of wollastonite in those applications. A
  failure to develop new applications for the use of wollastonite or a failure
  of consumers to accept the use of wollastonite in those applications would
  have a material adverse effect on the growth of Fording Inc.'s industrial
  minerals business.

HEALTH ISSUES - INDUSTRIAL MINERALS
  OPERATIONS

Tremolite
  asbestos has been classified by the International Agency for Research on
  Cancer as a Group 1 agent. This category is used when there is sufficient
  evidence of carcinogenicity when humans are exposed to the substance in
  certain circumstances. The earlier presence of tremolite asbestos at one of
  the industrial minerals operations ore sources in the United States and in
  some of its products could result in NYCO Minerals becoming exposed to
  liabilities, including workers' compensation and product liability claims.
  Further, in the event that NYCO Minerals' wollastonite products continue to
  contain small amounts of asbestiform tremolite, the demand for these products
  could materially decrease.

Tripoli produced
  at American Tripoli is a type of crystalline silica which has been classified
  by the International Agency for Research on Cancer as a Group 1 agent. In the
  event that it was demonstrated that tripoli contributed to the development of
  cancer, the markets for this product would be very limited and American
  Tripoli could become exposed to workers' compensation and product liability
  claims.

RISKS RELATED TO GOVERNMENT REGULATIONS

Government
  authorities regulate the coal mining industry to a significant degree, in
  connection with, among other things, employee health and safety, air quality
  standards, water pollution, groundwater

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quality and availability, plant and wildlife protection, the
  reclamation and restoration of mining properties and the discharge of
  materials into the environment. Such regulation can have a significant effect
  on Elk Valley Coal's and Fording Inc.'s costs of production and
  competitive position.

THE ENVIRONMENT

It is our policy and that of
  Elk Valley Coal to achieve and demonstrate sound environmental performance by
  controlling the impact of our activities on the environment through our
  policies and practices, and to comply with applicable laws and regulations.
  Effective environmental management systems form an integral part of our mining
  operations and aid in the continual monitoring and improvement of
  environmental performance and reduced environmental risks and liabilities. A
  number of our operations have achieved ISO 14000 certification to further
  demonstrate to customers and the general public a strong environmental ethic
  by implementing an internationally recognized system for environmental
  management.

Canada and the United States
  have not introduced comprehensive regulations addressing greenhouse gas
  emissions, including emission targets for specific industrial sectors. While
  the United States has decided that it will not ratify the Kyoto Protocol, an
  international agreement which sets limits on greenhouse gas emissions from
  certain signatory countries, the Canadian Parliament has voted to ratify this
  agreement. Should this agreement enter into force, Canada will be committed to
  limiting its net greenhouse gas emissions to 6% below the levels emitted in
  1990. Canada's current level of greenhouse gas emissions significantly
  exceeds the agreed-upon limit.

The primary source of
  greenhouse gas emissions in Canada is the use of hydrocarbon energy. The
  operations of Elk Valley Coal depend significantly on hydrocarbon energy
  sources to conduct daily operations, and there are currently no economic
  substitutes for these forms of energy. A significant proportion of Canada's
  industrial sector faces a similar situation. The federal and provincial
  governments have not finalized any formal regulatory programs to control
  greenhouse gases, and it is not yet possible to reasonably estimate the
  nature, extent, timing and cost of any programs contemplated or their
  potential effects on our operations. Most of our products are sold outside of
  Canada, and sales are not expected to be significantly affected by Canada's
  Kyoto ratification decision. However, the broad adoption of emission
  limitations or other regulatory efforts to control greenhouse gas emissions
  would negatively affect in a material adverse way the demand for coal, oil and
  natural gas, as well as increase production and transportation costs.

Mining companies must obtain
  numerous permits that strictly regulate environmental and health and safety
  matters in connection with coal mining. Regulatory authorities exercise
  considerable discretion in whether or not to issue permits and the timing of
  permit issuances. Also, private individuals and the public at large possess
  rights to comment on and otherwise engage in the permitting process, including
  through intervention in the courts. Accordingly, new permits required by Elk
  Valley Coal and Fording Inc. to fully develop properties may not be issued, or
  if issued, may not be issued in a timely fashion, or may contain requirements
  which restrict the ability of Elk Valley Coal and Fording Inc. to conduct
  mining operations or to do so profitably.

ACCURACY OF LIABILITY ACCRUALS

The funding requirements of
  Elk Valley Coal's and Fording Inc.'s defined benefit pension plans are
  based on actuarial valuations. The rates of investment return realized by
  pension funds can fluctuate

55 |

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with the general performance of the economy and
  shortfalls in investment returns could lead to materially increased funding
  requirements that could have a material adverse effect upon Fording Inc. and
  the funds available to the Trust for distribution to unitholders.

Elk Valley Coal
  also has obligations arising under federal and provincial environmental
  legislation in relation to future mine closures and land reclamation. These
  obligations are estimated based on permit requirements and various assumptions
  concerning costs and production. These obligations are currently unfunded.
  While Elk Valley Coal believes that it has properly accrued, in accordance
  with GAAP in Canada, for the costs likely to be incurred for these
  environmental matters, there is no assurance that total liabilities and
  expenses for these matters will not increase in the future. As a result, there
  is no assurance that additional liabilities or expenses related to
  environmental matters will not be incurred in the future and such liabilities
  could have a material adverse effect upon Fording Inc. and the funds available
  to us for distribution to unitholders.

ASSERTION OF ABORIGINAL RIGHTS CLAIMS

Canadian courts
  have recognized that aboriginal peoples may continue to have certain rights at
  law in respect of land used or occupied by their ancestors where treaties have
  not been concluded which extinguish those rights. These rights may vary from
  limited rights of use for traditional purposes to a right of aboriginal title
  and will depend upon, among other things, the nature and extent of prior
  aboriginal use and occupation. The courts have encouraged the federal and
  provincial governments and aboriginal peoples to resolve rights claims through
  negotiation of treaties.

In British
  Columbia, few treaties exist with aboriginal peoples. In the mid 1990s, the
  provincial government, together with the federal government, established the
  British Columbia Treaty Commission to facilitate negotiations with aboriginal
  peoples to resolve outstanding aboriginal rights and other claims. Under this
  process, each aboriginal people files a statement of intent to negotiate,
  identifying the territory in which they have historically lived and carried
  out traditional activities. Nearly all of the land in British Columbia has
  been identified as being part of a traditional territory for at least one
  aboriginal people.

It is not
  possible to predict with certainty the impact which future treaties may have
  on resource development in British Columbia. However, it is possible that any
  such future treaties, or the assertion of native land claims outside the
  treaty process, may limit the ability of Elk Valley Coal to develop new
  projects or further develop existing properties.

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Exhibit D
Consent of Independent Accountants

We hereby consent to the inclusion in this Annual Report on Form 40-F of Fording Canadian Coal Trust of our report dated January 23, 2004 relating to the consolidated financial statements, which appears in the Annual Report to
Unitholders.



PricewaterhouseCoopers LLPCalgary, Alberta, Canada

January 23, 2004







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Exhibit E
Certifications Required by Rule 13a-14(a) of the Securities Exchange Act of 1934

I, James L. Popowich, President of the Fording Canadian Coal Trust, certify that:

1.

I have reviewed this annual report on Form 40-F of the Fording Canadian Coal Trust;

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-115(e)) for the issuer and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)

Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5.

The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of issuer's board of directors (or persons performing the equivalent function);

(a)

All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and





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(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date:

March 19, 2004

/s/ James L. Popowich



James L. Popowich,
President



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I, Ronald A. Millos, Chief Financial Officer, certify that:

1.

I have reviewed this annual report on Form 40-F of the Fording Canadian Coal Trust;

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-115(e)) for the issuer and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)

Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5.

The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of issuer's board of directors (or persons performing the equivalent function);

(a)

All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and





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(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date:

March 19, 2004

/s/ Ronald A. Millos



Ronald A. Millos,

Chief
Financial Officer





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Exhibit F
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
as enacted by Section 906 of the Sarbanes-Oxley act of 2002

In connection with the Annual Report on Form 40-F of Fording Canadian Coal Trust (the
"Company") for the period ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), we, James L. Popowich, the President, and Ronald A. Millos, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that:

1.

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

|Date:
March 19, 2004 | /s/ James L. Popowich
James L. Popowich
President
/s/ Ronald A. Millos
Ronald A. Millos
Chief Financial Officer
|-------------------- | ---------------------------------------------------------------------------------------------------------------
|                     |                                                                                                                

A signed original of this written statement required by Section 906 has been provided to Fording Canadian Coal Trust and will be retained by Fording Canadian Coal Trust and furnished to the Securities and Exchange Commission or its staff upon request.