As
        filed with the Securities and Exchange Commission on April 20, 2005


SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549

_________

FORM
40-F/A



(Check
One)

Registration
Statement pursuant to Section 12 of the Securities Exchange Act of 1934

or

[X]

Annual
Report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For
the fiscal year ended December 31, 2001

Commission
file number 1-15230



FORDING
CANADIAN COAL TRUST

(Exact
Name of Registrant as Specified in its Charter)

ALBERTA
        (Province
        or Other Jurisdiction of Incorporation or Organization)
      1221
        (Primary
        Standard Industrial Classification Code Number)
      98-0393766
        (I.R.S.
        Employer Identification Number, if applicable)




Suite 1000,
205 - 9th Avenue SE, Calgary, Alberta T2G 0R3, (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)

________________________________

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:

[X]
 Annual Information Form

[X]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, 2004, there were 48,980,479 Units of the issuer 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

82
- _______

No

[X]





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-
2 -



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
      [X]
      No
|----------------------







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3 -



Explanatory
Note

Fording
Canadian Coal Trust (the "Trust") is filing this Form 40-F/A to include
certain Exhibits that were inadvertently either not included, or not included in
their entirety, in the Trust's original filing on Form 40-F made on March 31,
2005. This situation resulted from a technical error that occurred when the
third-party service provider retained by the Trust to undertake its EDGAR
filings was loading the file provided by the Trust, and containing the complete
filing, onto a submission template resulting in an incomplete filing.  The
Issuer became aware on April 19, 2005 that the original filing was incomplete
and accordingly, is updating its original filing with this amendment.

The
following Exhibits were either incomplete, or were omitted from the original
filing but are included, in their entirety, in this filing:

Exhibit
"B"

Audited
Consolidated Financial Statements, including consolidated balance sheets as at
December 31, 2004 and 2003 and consolidated statements of income, accumulated
earnings and cash flows for each of the years in the three-year period ended
December 31, 2004 (including a reconciliation to US GAAP).

Exhibit
"C"

2004
Management Discussion and Analysis.

Exhibit
"D"

Consent
of the Independent Accountants.

Exhibit
"E"

Certifications
Required by Rule 13a-14(a) of the Securities Exchange Act of 1934.

Exhibit
"F"

Section
906 certification of James L. Popowich, the President, and Ronald A. Millos, the
Vice-President and Chief Financial Officer.

The
Trust notes that complete versions of Exhibits "B and "C" were filed on
the System for Electronic Document Analysis and Retrieval (SEDAR) on March 14,
2005, and that Exhibit "E" was filed on SEDAR on March 29, 2005. Complete
versions of Exhibits "B" and "C" were filed on EDGAR on March 21, 2005.

Information
to be Filed on This Form

Exhibit

Description

"A"

2004
Annual Information Form.

"B"

Audited
Consolidated Financial Statements, including consolidated balance sheets as at
December 31, 2004 and 2003 and consolidated statements of income, accumulated
earnings and cash flows for each of the years in the three-year period ended
December 31, 2004 (including a reconciliation to US GAAP).

"C"

2004
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
Vice-President and Chief Financial Officer.







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4 -





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
disclosure controls and procedures for the Trust and this involves ensuring that
appropriate disclosure controls and procedures are in place and operating
effectively.  As of December 31, 2004, 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.

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 on the Trust's
web site at www.fording.ca and in print to any unitholder 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 unitholder who
requests them.  There were no waivers of the Joint Code of Business Conduct
in 2004.

Audit
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 those members, Harry G. Schaefer, F.C.A. is designated as an
audit committee financial expert.





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5 -



Principal
Accounting Fees and Services

The
following is a summary of professional services provided by the Trust's
principal auditors, PricewaterhouseCoopers LLP, during the years ended December
31, 2003 and 2004, and the related fees:

|                         | 2004             |  | 2003            
|------------------------ | ---------------- |  | ----------------
|Audit
      fees         | $277,500         |  | $258,000        
|Audit
      related fees | $128,413         |  | $241,500        
|Tax
      fees           | $
       22,750  |  | $
       57,510 
|All
      other fees     | $
         1,625 |  | $
         1,625
|Total                    | $430,288         |  | $558,635        



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:  accounting consultations; review of documents
required for debt refinancing; audits related to pension plans; compliance with
terms of various contractual agreements; and requirements of the Sarbanes-Oxley
Act of 2002.

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 the purchase of a license to access a financial reporting and
assurance information database developed by PricewaterhouseCoopers LLP.

Pre-approval
Policies and Procedures

All
services provided by and fees 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 Trust's principal auditors with auditor independence.

Off-Balance
Sheet Arrangements

Reference
is made to the section titled "Other Information - Off-Balance Sheet
Arrangements" in the 2004 Management Discussion and Analysis attached as an
Exhibit hereto.





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-
6 -



Contractual
Obligations

Reference
is made to the contractual obligations table included in the section titled "Liquidity
and Capital Results" in the 2004 Management Discussion and Analysis attached
as an Exhibit hereto.

New
York Stock Exchange Corporate Governance Disclosures

In
2004, the Trust had four independent trustees and three non-independent
trustees, within the meaning of the rules of the New York Stock Exchange.
 A majority of the trustees will be independent after the Trust's annual
meeting in 2005 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, within the meaning of the rules of the New York Stock
Exchange.

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.

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.





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-
7 -



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/A and has duly caused this
Annual Report to be signed on its behalf by the undersigned, thereto duly
authorized.

Date:
 April 20, 2005

FORDING
CANADIAN COAL TRUST



By:

/s/
James Frederick Jones

James
Frederick Jones

Trust
Secretary





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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 February 28, 2005 and our Comment by
Auditors for US Readers on Canada-US Reporting Differences also dated February
20, 2005 relating to the consolidated financial statements, which appears in the
Annual Report to Unitholders.

PricewaterhouseCoopers
LLP
Calgary, Alberta, Canada

Date:
 March 31, 2005





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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

(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 31, 2005

/s/
James L. Popowich

James
L. Popowich

President







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2 -



I,
Ronald A. Millos, Vice-President and 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

(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 31, 2005

/s/
Ronald A. Millos

Ronald
A. Millos,

Vice-President
and 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, 2004 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 Vice-President and
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, that:

6.

The
Report fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and

7.

The
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.

Date:
 March 31, 2005

/s/
James L. Popowich

James
L. Popowich

President

/s/
Ronald A. Millos

Ronald
A. Millos

Vice-President
and 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.

*
This exhibit is "furnished" and not "filed" for the purposes of
Section 18 of the Exchange Act





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Exhibit
A
Annual Information Form

FORDING
CANADIAN COAL TRUST

ANNUAL
INFORMATION FORM

March
29, 2005



1



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TABLE
OF CONTENTS



FORWARD-LOOKING
INFORMATION ADVISORY

1

NON-GAAP
FINANCIAL MEASURES

1

DEFINED
TERMS

2

CONVERSION
TABLE

2

REFERENCES
TO CURRENCY

2

CORPORATE
STRUCTURE

3

GENERAL
DEVELOPMENT OF THE BUSINESS

3

DESCRIPTION
OF THE BUSINESS

6

RESERVES
AND RESOURCES

18

RISK
FACTORS

27

OTHER
INFORMATION REGARDING THE TRUST

27

ANNUAL
AND QUARTERLY FINANCIAL INFORMATION

31

CAPITAL
STRUCTURE

31

MARKETS
FOR SECURITIES

36

GOVERNANCE

36

LEGAL
PROCEEDINGS

44

INTEREST
OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

44

TRANSFER
AGENT AND REGISTRAR

44

MATERIAL
CONTRACTS

45

ADDITIONAL
INFORMATION

47

APPENDIX
"A":  GLOSSARY OF TECHNICAL TERMS

A-1

APPENDIX
"B":  GENERAL GLOSSARY

B-1

APPENDIX
"C":  DEFINITIONS FOR RESERVES AND RESOURCES

C-1

APPENDIX
"D":  FORDING CANADIAN COAL TRUST AUDIT COMMITTEE CHARTER

D-1

i



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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 Fording
Canadian Coal Trust's 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 and exchange rates; 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 in
respect to the use of metallurgical coal and wollastonite products; the
effectiveness of the managing partner of the Elk Valley Coal Partnership in
managing its affairs; the effects of competition and pricing pressures 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 labour stoppages and severe weather
conditions; the demand for and availability of rail, port and other
transportation services; 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, transportation 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 report, 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 are available at
www.sedar.com and U.S. public filings are available at
www.sec.gov, respectively.  The Trust further cautions
that information contained on, or accessible 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 that affect this information.

NON-GAAP
FINANCIAL MEASURES

Financial
measures such as cash available for distribution, Distributable Cash and net
income before unusual items, future income taxes and discontinued operations are
not measures recognized under Canadian generally accepted accounting principles
("GAAP") and do not have standardized meanings prescribed by GAAP.
 These measures are presented in this Annual Information Form because
management of the Trust believes these non-GAAP measures are relevant measures
of the ability of the Trust to earn and distribute cash returns to holders of
Units.  These measures as computed by the Trust may differ from similar
computations made by other similar issuers and accordingly, may not be
comparable to such measures as reported by such other issuers.

1



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DEFINED
TERMS

The
meanings of certain capitalized terms used in this Annual
Information Form can be found in the Glossary of Technical
Terms and the General Glossary set forth respectively at Appendix
"A" and Appendix "B".

CONVERSION
TABLE

|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            



REFERENCES
TO CURRENCY

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

2



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CORPORATE
STRUCTURE

Name
and Formation

The
Fording Canadian Coal Trust is an
open-ended mutual fund trust created pursuant to the Declaration
of Trust and governed by the laws of Alberta.  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, 2004 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)

Reducing
to 61% on April 1, 2005 and to 60% on April 1, 2006.  See "Three-Year
History - Achievement of Synergies."

(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.

GENERAL
DEVELOPMENT OF THE BUSINESS

General
Description of the Business

The
Trust is one of the largest income trusts in Canada.
 The Units are publicly traded in Canada
on the TSX (FDG.UN) and in the United
States on the NYSE (FDG).
 Through investments in metallurgical coal and industrial minerals mining
and processing operations, the Trust makes quarterly cash
distributions to Unitholders from its Distributable
Cash.

3

---

Three-Year
History

The
Trust was established in connection with the Arrangement
between Old Fording, Teck Cominco, Westshore,
Sherritt Coal Partnership II and CONSOL that became
effective on February 28, 2003.  The nature and
development of the businesses in which the Trust, through Fording
Inc., has invested during the three most recently completed financial years is
described in "Elk Valley Coal Partnership - The Last Three Years" and
"NYCO - The Last Three Years".

Reorganization

Pursuant
to the Arrangement, the business of Old Fording was
reorganized under the Trust and its subsidiary, Fording
Inc. and the Elk Valley Coal Partnership was formed.  The
Elk Valley Coal Partnership is a general partnership, the Partners
of which, on December 31, 2004, were Fording Inc., Teck
Cominco and certain affiliates of Teck Cominco.  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
Elk Valley Coal 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
Elk Valley Coal Partnership its metallurgical coal business comprised
substantially of the Fording River mine, the Coal Mountain
mine and its interest in the Greenhills mine.  Teck
Cominco contributed to the Elk Valley Coal Partnership its
North American metallurgical coal business comprised substantially of the
Elkview mine.  These contributions established the Elk Valley Coal
Partnership as the world's second-largest producer of seaborne
metallurgical hard coking coal.

In
addition, and as part of the Arrangement, and subject to
the Fording Royalty, Old Fording sold
its Prairie Operations to Sherritt Coal Partnership II and each of Teck Cominco,
Westshore, Sherritt and OTPP
subscribed for Units.  The Arrangement is described in
detail in the Trust's 2003 Annual Information Form.
 On March 22, 2005, Golden Apple Income Inc., a wholly owned subsidiary of
OTPP, announced that it plans to sell 750,000 Units.

Issuance
of Two Million Units

The
Trust filed a short form prospectus on April
12, 2004 in connection with the issuance of two million Units
on a bought deal basis to a syndicate of underwriters led by RBC
Capital Markets at $52.50 per Unit.
 The offering closed on April 16, 2004.  The Trust
invested the net proceeds of the offering of $99
million in additional Fording Preferred Shares and Fording Subordinated Notes.
 In turn, Fording Inc. used the proceeds to pay down
indebtedness, which provided it with a greater range of financing alternatives
for funding its portion of the development of the Cheviot
Creek pit at the Cardinal River mine.

Achievement
of Synergies

The
Elk Valley Coal Partnership was initially owned 65% by the Trust
and 35% by Teck Cominco and certain affiliates of Teck
Cominco.  The Partnership
Agreement provided for an increase in Teck Cominco's interest in the
Elk Valley Coal Partnership to a maximum of 40% in the event that Teck Cominco,
as managing Partner, was able to realize certain synergies  as a result of
the combination of the various mines and other properties comprising the
Partnership.  After discussions among the Partners and upon review of
reports of various experts, the Partners determined that synergies had been
achieved and that Fording Inc.'s interest would be
reduced to 62% effective April 1, 2004, to 61% on April
1, 2005 and to 60% on April 1, 2006.  Teck Cominco's
entitlements will increase correspondingly over the same period.  The
entire 5% reduction in interest in the Elk Valley Coal
Partnership is being recorded to earnings.  This charge is reduced by an
estimate of cash to be received for the estimated additional Distribution
Entitlements of 2% for the year ended March 31, 2005 and 1%
for the year ended March 31, 2006.  These additional
Distribution Entitlements will be included in cash available for distribution
over the period ending March 31, 2006.

Quintette
Mine Asset Transfer

The
Elk Valley Coal Partnership accepted the contribution of certain of the Quintette
mine assets and purchased certain other assets of Teck
Cominco related to the Quintette mine on December
31, 2004.  The contribution of mine assets, including equipment, coal
leases, permits and licenses associated with the Quintette
Mine was contemplated

4



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by
the Arrangement and was to occur once
Teck Cominco had completed the reclamation of the Quintette minesite.  However,
the Elk Valley Coal Partnership agreed to an earlier transfer of the Quintette
mine assets before reclamation was completed in return for an agreement by Teck
Cominco to complete the reclamation and provide the Elk
Valley Coal Partnership with an indemnity against any liability arising from the
early transfer.

Elkview
Mine Equity Interest

On
December 20, 2004, the Trust announced
jointly with Teck Cominco, NSC and POSCO that they had
signed letters of intent which contemplate that NSC and
POSCO would enter into 10 year sales contracts for 4.85 million tonnes per annum
in aggregate of metallurgical coal for 2005 from the Elkview
mine and other Elk Valley mines, increasing to 6.25 million
tonnes per annum in aggregate in 2007.  The letters of intent also
contemplate that each of NSC and POSCO would acquire,
through subsidiaries, a 2.5% equity interest in a new entity which would own and
operate the Elkview mine.  Consideration of US$25
million is being paid by each of NSC and POSCO for such equity interests.
 Completion of this transaction is subject to due diligence, completion of
definitive documentation and board approval.

Proposed
Reorganization

At
the Annual and Special Meeting, Unitholders will be asked to approve a
three-for-one split of the Trust's Units.  It is anticipated that the
Unit split will result in a corresponding reduction in the market price per Unit
making them more affordable for retail investors.

Unitholders
will also be asked to provide conditional approval of a two-step reorganization
of the Trust and its subsidiaries.  The first step would result in the
creation of a flow-through structure which would effectively see distributions
from Elk Valley Coal Partnership taxed at the Unitholder level.  The second
step, if undertaken, would be a transaction whereby the Trust would acquire a
direct interest in the Elk Valley Coal Partnership.

In
addition to Unitholder approval, completion of the reorganization is subject to
receipt of certain regulatory and third-party approvals.  A more detailed
description of the reorganization and the required approvals will be contained
in the Notice of Meeting and Management Information Circular that will be mailed
to Unitholders in early April in advance of the Annual and Special Meeting.

Changes
to Applicable Tax Legislation

The
Government of Canada announced a number of proposals in
2004 that had or have the potential to affect the manner in which certain types
of distributions from an income trust are taxed and to limit investment in those
vehicles by certain classes of investors.  These proposals are summarized
below.  Unitholders are encouraged to consult their
own tax advisors regarding the application of the proposals to their particular
circumstances.

Limits
on Investments by Designated Taxpayers

One
of the initiatives proposed in the March 23, 2004 Federal
Budget would have the effect of limiting the level of investment in business
trusts, such as the Trust, by certain designated taxpayers,
including registered pension plans, pension corporations and various tax-exempt
pension investment corporations, through the imposition of a tax on Units
held by such taxpayers.  Following the announcement of these initiatives,
various affected taxpayers made submissions to the Federal Department
of Finance regarding such proposals.  These  measures have now been
suspended to allow for further consultation.

Withholding
on Distributions to Non-Residents

The
March 23, 2004 Federal Budget
contained further proposals impacting distributions made by an income trust to Unitholders
not resident in Canada ("Non-Residents")
for the purposes of the Tax Act.
 Generally, these proposals, which are stated to apply as of January
1, 2005, contemplate that certain types of distributions made by an income trust
to Non-Residents that are otherwise not subject to Canadian tax, including
withholding tax, will be subject to withholding under the Tax
Act at a rate of 15% of the gross amount of the distribution.

5

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Limitations
on Non-Resident Ownership

The
Tax Act provides that a trust will
lose its status as a mutual fund trust if it is maintained primarily for the
benefit of Non-Residents.  On September 16, 2004, the
Federal Department of Finance released a proposed amendment to this test which
would have provided that status as a mutual fund trust would be lost if the fair
market value of the units of a trust owned by Non-Residents exceeded 50% of the
fair market value of all units of the trust.  However, the Notice of Ways
and Means Motion tabled in the House of Commons on December 6, 2004 did not
include this proposed amendment.  In the accompanying Department of Finance
press release, it was noted that further discussions would be pursued with the
private sector concerning the appropriate Canadian tax treatment of
non-residents investing in resource property through mutual funds.

In
the Federal Budget released on February 23, 2005, the Minister of Finance
indicated that he will continue to monitor developments in the markets for
business income trusts and future initiatives, if any, will be taken following
these consultations and in full consideration of the costs and benefits related
to business income trusts.

Based
on geographical reports received by the Trust, the Trustees believe that the
Trust is not maintained primarily for the benefits of Non-Residents.  See
"Capital Structure - Limitations on Non-Resident Unitholders".

DESCRIPTION
OF THE BUSINESS

The
Trust does not carry on any active business.
 Distributions to Unitholders are facilitated by the Trust's
investment in Fording Inc.  The Trust holds all of the
issued and outstanding Fording Common Shares, Fording Preferred Shares and
Fording Subordinated Notes and does not own any other
material assets.

Through
Fording Inc., the Trust holds a 62%
interest, declining to 61% effective April 1, 2005 and to
60% effective April 1, 2006, in the
Elk Valley Coal Partnership and a 100% interest in NYCO.
 The Trust uses the cash it
receives from its investment in Fording Inc. to make
quarterly cash distributions to its Unitholders.  The
Elk Valley Coal Partnership accounted for 96% of the Trust's
revenues in 2004 and NYCO accounted for the balance.

The
Trust had revenues of $1.17 billion in
2004 and revenues of $1.04 billion in 2003.

The
Elk Valley Coal Partnership

Overview

The
Elk Valley Coal Partnership is a general partnership formed under the laws of
the Province of Alberta.  On December 31, 2004 the Partners
of the Elk Valley Coal Partnership were Fording
Inc., Teck Cominco and certain affiliates of Teck Cominco.
 On February 28, 2005, Teck Cominco and TBCI
contributed their interests in the Elk Valley Coal Partnership to the Teck
Cominco Coal Partnership of which Teck Cominco and TCBI are the partners with
the result that the Partners are now comprised of Fording Inc., Teck Cominco
Coal Partnership (which serves as managing partner) and QCP.

Summary
of Partnership Agreement

The
Elk Valley Coal Partnership is operated pursuant to the terms of the Partnership
Agreement, the material terms of which are summarized below.

Management
of the Elk Valley Coal Partnership

On
December 31, 2004, Teck Cominco was the managing partner of the Elk Valley Coal
Partnership.  As set forth above, effective February 28, 2005, Teck Cominco
Coal Partnership became the managing partner.  The managing partner
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 less
than 95% of the outstanding Distribution Entitlements (a "Special Resolution
of Partners"), as further described below.

6

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The
managing partner can resign as managing partner on 60 days advance notice to the
other Partners.  Further, the managing partner will be deemed to have
resigned in certain circumstances (insolvency, reduction in its interest below
20%, or wilful default of the Partnership Agreement). In such circumstances,
Partners holding a Distribution Entitlement of more than 5% (other than the
resigning managing partner if the managing partner was deemed to have resigned
due to insolvency or wilful default of the Partnership Agreement) must
unanimously select a new managing partner. Pending the selection of a new
managing partner, the Partner then holding the largest Distribution Entitlement
can designate a temporary managing partner.

The
day-to-day operations of the Elk Valley Coal Partnership are undertaken by
officers of the Elk Valley Coal Partnership and other  management personnel
designated by the managing partner.

Annual
Budget Approval Process

The
annual operation of the Elk Valley Coal Partnership, including budgeting and
capital spending, must be set out in a capital and operating plan and budget for
each calendar year (the "Operating and Capital Plans").  The Operating
and Capital Plans 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.

The
managing partner must use its best efforts to ensure that the business of the
Partnership is conducted substantially in accordance with Operating and Capital
Plans, except in certain extraordinary circumstances.  Any material
amendment or variation to such plans must also be approved by Special Resolution
of Partners.

Special
Resolution of Partners Matters

In
addition to the approval of the Operating and Capital Plans or any material
amendment thereto, a special resolution of Partners is required in a variety of
other circumstances such as any change in the distribution policy of the Elk
Valley Coal Partnership, any proposed merger, arrangement or reorganization of
the Elk Valley Coal 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.

Distribution
Entitlements

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, 2004, the Distribution Entitlements of the Partners were as follows:

Partner
      
      Distribution
        EntitlementFording
        Inc.
      
      62.000%Teck
        Cominco
      
      37.833%QCP
      
      0.164%TBCI
      
      0.003%Total
      
      100.000%




Teck
Cominco's Distribution Entitlement will increase to 39.833% and Fording Inc.'s
will decrease to 60% over the course of the next two coal years.  See "Three-Year
History - Achievement of Synergies".

Reporting

The
Elk Valley Coal Partnership reports monthly to the Partners with respect to the
operational results and financial performance of the Partnership.  In
addition, on a quarterly basis, the managing partner reports to the Board of
Directors with respect to the operational results and financial performance of
the Elk Valley Coal Partnership and such other matters as the Board of Directors
may reasonably request.

7

---

The
Elk Valley Coal Partnership is also required to provide to each Partner, within
55 days of the end of each calendar year, audited financial statements of the
Partnership for the previous calendar year and such other financial information
relating to such calendar year as the Partners may request.

Further,
the Elk Valley Coal Partnership is required to provide to each of the Partners
such information as those Partners may require in order to satisfy their public
company reporting obligations.  In this regard, the Elk Valley Coal
Partnership is required to provide to the Partners a report of any material
change in the affairs of the Partnership, quarterly and annual financial
statements prepared in accordance with generally accepted accounting principles,
management's discussion and analysis for the relevant period covered by the
aforementioned financial statements and such other documents as are customarily
required in connection with the preparation and release of quarterly and annual
financial information by public issuers in Canada and the United States.

Sale/Assignment
of Partnership Interest

A
Partner may sell, assign, transfer or dispose of its Elk Valley Coal Partnership
interest to a subsidiary or affiliate (a "permitted transferee"); however,
any intended sale, assignment, transfer or disposition to other than a permitted
transferee is subject to a right of first offer to the other Partners.
 Notwithstanding the foregoing, the sale by Teck Cominco and certain
affiliates of Teck Cominco of their Elk Valley Coal Partnership interest, other
than to a permitted transferee, will be subject to the consent of the
Independent Directors, such consent not to be unreasonably withheld.

Assets
of the Elk Valley Coal Partnership

The
Elk Valley Coal 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 that operates the Greenhills
mine.  The remaining 20% interest in the joint venture is owned by POSCO
Canada Ltd., an affiliate of POSCO, a Korean steel company.  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, which includes the Cheviot
Creek pit, is located in west central Alberta.  The
Elk Valley Coal Partnership operates its mines through its wholly owned
subsidiary, the Elk Valley Coal Corporation.  The
Elk Valley Coal Partnership also owns numerous other
properties, including the coal preparation plant and coal resources at the
former Quintette mine and other coal
resources in northeast British Columbia and a 46.4%
interest in Neptune which owns Neptune Terminals in Vancouver,
British Columbia.

All
of the Elk Valley Coal 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 Elk Valley Coal Partnership's Reserves, facilities and waste dumps
are all proximate to its mine locations.

8

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



|Mine
      Locations       
|---------------------------
|Ca[fordingaif2005001.jpg]  
|Source:
      Fording Data.



Principal
Product and Markets

The
principal product of the Elk Valley Coal Partnership is
hard coking coal.  Hard coking coal is a type of metallurgical coal that is
used primarily for making coke in integrated steel mills.  When making
steel, two 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 metallurgical coal are
needed to produce one 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 melt, swell and
re-solidify when heated) and low impurity (e.g. moisture, ash, sulphur, etc.).

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 that forms high-strength coke;
semi-soft coking coal that produces coke of lesser quality; and PCI
coal that is used primarily for its heat value and is not typically considered a
coking coal.  Semi-soft and PCI coals have lower sales
values compared to hard coking coal due to the relative availability 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
reduces 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.

9

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[fordingaif2005003.gif]



The
principal market for the Elk Valley Coal Partnership's hard coking coal is the
seaborne hard coking coal market.  The
seaborne hard coking coal market 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
120 million tonnes in 2004.  Australia is the largest
source of seaborne hard coking coal
while Canada is the second largest source, with the
Elk Valley Coal Partnership accounting for substantially all of Canadian
production in 2004.  Australia, Canada
and the United States account for approximately 80% of
the world's seaborne hard coking coal production.

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 2004, Canada's share of
the seaborne hard coking coal market was approximately 21%
or about 25 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 desire of steel
producers to diversify their supplier base in order to create competition and
security of supply.  The Elk Valley Coal Partnership's principal markets
are Asia and Europe.  See "The Elk Valley Coal
Partnership - Last Three Years".

Principal
Competition

The
Elk Valley Coal Partnership currently competes primarily with coal producers
from Australia and the United States
in the seaborne hard coking coal market.  The supply of coal in the global
markets and the demand for coal among the world's 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 provide Australian producers with a cost advantage over
Canadian producers such as the Elk Valley Coal Partnership.  In addition, a
number of steel producers deal with multiple coal suppliers in order to promote
security of supply and further competitiveness in this market, although this
dynamic has been off-set somewhat by consolidation of producers.  The
competitive position of the Elk Valley Coal 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,
mining and processing input costs, transportation and port costs, currency
exchange rates, operating and management skill and government taxation and
policy.

Cyclical
Nature of Seaborne Hard Coking Coal
Markets

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 Old Fording's markets
for the 2001 and 2002 coal years.  However, excess supply resulted in
average pricing for the 2003 coal year decreasing by approximately 3% from 2002.
 Demand for hard coking coal strengthened in the last half of 2003
resulting in sales volumes of the
Partnership for the fiscal year ended December 31, 2003
that were 24% higher than sales volumes for the same mines for
the fiscal year ended December 31, 2002.  Demand for
seaborne hard coking coal was strong in 2004 and is
expected to remain strong into 2005.  Integrated steel mills and coke
producers around the world are currently finding it difficult to secure
sufficient quantities of hard coking coal.  In
addition, steel production in China

10

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is
forecast to increase in the next few years.  Although not as large as the
forecasted increase for China, India's steel production is also expected to
increase. These factors could result in further increased demand for hard coking
coal.  Accordingly, sales and production for the 2005 coal year are
expected to be at or near capacity.

The
following chart sets forth the average hard coking coal price received by Old
Fording from 1980 to 2002 and by the Elk Valley Coal
Partnership thereafter:







Coal
Markets

Hard
coking coal markets continue to remain tight due to the strong demand from the
global steel industry.  A significant factor in market demand is that China
has reversed its position from a net exporter of hard
coking coal to that of a net importer.  The loss of Chinese coke exports
has increased the global steel industry's demand for hard coking coal from
producers such as the Elk Valley Coal Partnership.

Increasingly,
steel producers are signing long-term contracts or purchasing interests in coal
producers in order to secure supplies of hard coking coal
to meet their future needs.  Higher coal prices are also attracting new
supply to the market.  In addition to the Elk Valley Coal Partnership's
planned production increases, other smaller-scale Canadian
producers have now started production and began making their first metallurgical
coal shipments in 2004.  Australian producers have also announced plans for
capacity increases.  There are a limited number of brownfield opportunities
of significance existing globally that can be brought into production quickly
and logistics chains in Canada and Australia
are operating at or near capacity and will require expansion to accommodate
significant new production supply.  The global increase in mining activity
throughout the world has resulted in significant lead time for delivery of large
mining equipment, which will be needed in order to bring new sources of supply
online.  These factors and expected continued strong demand suggest that it
may be one to two years before metallurgical coal markets return to balance.

The
Elk Valley Coal Partnership's production is fully contracted for the 2005 coal
year, with more than 95% of volumes contracted under evergreen or long-term
agreements.  The strong metallurgical coal market and undersupply situation
has resorted in significant increases in coal prices.

In
response to these market opportunities, the Elk Valley Coal Partnership is
proceeding with the development of the Cheviot Creek pit at the Cardinal River
operations. Capacity expansions at the other existing mines are also being
reviewed with the objective of increasing total annual production at all
operations to 30 million tonnes over the next two to three years.  Elk
Valley Coal Partnership is presently discussing its future increased production
plans with its rail and port service providers and their ability to handle the
higher production volumes.

11



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Mining
and Processing

The
Elk Valley Coal Partnership's 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 techniques and conveyed to coal or gas fired dryers for drying.

Production
and Quality Control

All
exposed coal seams are sampled and analyzed under the supervision of
professional geologists and categorized by quality and coking potential.
 This data is then used to determine stockpiling and blending strategies.
 As a result, the Elk Valley Coal Partnership has an
available inventory of coal sources of varying qualities, which can be combined,
as required, to form blended products.  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
Elk Valley Coal Partnership is able to create a consistent, high quality
product.

Coal
Transportation

Processed
coal is conveyed to clean coal silos or other storage
facilities for storage and loadout to rail cars.  The loadout facilities
are set up to load and weigh unit trains (each train carrying up to 13,000
tonnes).  A spray system coats the coal in each rail car 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 ("CPR").
 Service from the Fording River, Greenhills
and Coal Mountain mines to west coast ports is provided
pursuant to an agreement expiring March 31, 2007.
 Separate agreements for rail service to the Elkview
and Line Creek mines expired on March
31, 2004.

The
Elk Valley Coal Partnership and CPR are in a dispute
concerning the manner in which freight rates for coal shipped to west coast
ports from the five mines is to be determined.  Legal proceedings in
relation to the dispute have been initiated by CPR in the Alberta
Court of Queen's Bench and by the Elk Valley Coal Corporation in a final offer
arbitration under the Canadian Transportation Act ("CTA")
in respect of the Elkview Mine.  On December 13, 2004,
an arbitrator accepted CPR's final offer in the
arbitration, which could determine the rate payable by the
Elk Valley Coal Partnership for coal shipped from the Elkview
Mine to the west coast ports.  The arbitrated rate is confidential and
cannot be disclosed.  However, CPR has also challenged
the Canadian Transportation Agency's jurisdiction under the CTA
to refer the determination of freight rates for the Elkview
Mine to the arbitrator.  If that challenge is successful, it would
supersede the decision of the arbitrator.  If CPR's jurisdictional
challenge is not successful, the arbitrated rate for the Elkview Mine may
 apply to some or all of the other four mines, depending on the outcome of
the Alberta Court of Queen's Bench action.

Regardless
of the outcome of the proceedings, rail rates for westbound coal will increase
and such increase is likely to be material. An unfavourable outcome of one or
both of the legal proceedings will also result in a material increase in rail
rates charged to the Elk Valley Coal Partnership for
westbound coal.

In
January 2005, the Elk Valley Coal
Partnership and CPR agreed to engage in a confidential
mediation/negotiation process to attempt to resolve the dispute and that process
is ongoing.  CPR has stated that the dispute is not
expected to adversely affect the shipment of coal from the Elk Valley mines.

Rail
service provided by CPR to eastern destinations from the Elk
Valley Mines is not the subject of either legal proceeding.  Rail service
in respect of the Cardinal River mine is provided by Canadian
National Railway.

Westshore
Terminals Ltd. provides ship-loading services at Roberts Bank for approximately
75% of the Elk Valley Coal Partnership's metallurgical coal pursuant to
long-term contracts.  Neptune Terminals, in which the
Elk Valley Coal Partnership has a 46.4% ownership interest, provides
ship-loading services for approximately 12% of the Elk Valley Coal Partnership's
metallurgical coal.  The remaining 13% of the Elk Valley Coal Partnership's
metallurgical

12

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coal
products are shipped from the sites to eastern North American customers either
directly by rail or by rail and ship via Thunder Bay Terminals in Thunder Bay, Ontario.
 A small amount of product is shipped by truck to customers in western Canada.

Changes
to Coal Sales Contracts

Beginning
with the 2004 coal year, approximately 95% of the Elk Valley Coal Partnership's
sales contracts are in the form of multi-year evergreen supply agreements with
customers.  Evergreen contracts allow for coal prices to be set annually,
but provide greater certainty of sales volumes, as customers are obligated to
continue to purchase coal for a number of years after notice of termination is
given by either party.  See Management's Discussion
and Analysis of Financial Condition and Results
of Operations for the year ended December
31, 2004 in the Trust's 2004 Annual Report.

The
Elk Valley Coal Partnership - The Last Three Years

Price
increases for seaborne hard coking
coal were achieved in most of Old Fording's markets for
the 2002 coal year.  However, excess supply resulted in average pricing for
the 2003 coal year decreasing by approximately 3% from 2002.  Demand for
hard coking coal strengthened in the last half of 2003 resulting in the
Elk Valley Coal Partnership sales volumes for the fiscal
year ended December 31, 2003 that were 24% higher than
sales volumes for the same mines for the fiscal year ended December
31, 2002.  Demand for seaborne
hard coking coal was strong in 2004.  Average realized price per tonne,
including the impact of foreign currency hedges, increased in 2004 by
approximately 14% to $73.10 per tonne over 2003, while
sales volumes remained unchanged from 2003 at 15.3 million tonnes.

In
view of the strength of the seaborne hard coking markets, the
Elk Valley Coal Partnership announced that it was proceeding with the
development of the Cheviot Creek pit using the
infrastructure of the Cardinal River mine.  In 2004,
the Partners approved $120 million of
capital spending to develop the pit, build a haul road, upgrade the plant and
acquire mining equipment with the goal to increase production to 2.8 million
tonnes per year.  It is anticipated that the full annual production rate
will be achieved in the third quarter of 2005.  In addition, the Partners
approved $30 million in capital expenditures to increase
the Fording River mine's capacity by about one million
tonnes to 10.5 million tonnes annually, with full capacity expected to be
achieved near the end of the second quarter of 2005.

Fording
Inc.'s capital expenditures, including its proportionate
share of Partnership Sustaining Capital Expenditures, were $73
million during 2004, of which $44
million was for the development of the Cheviot Creek pit.
 This is a substantial increase from capital expenditures of $12 million
for ten months in 2003.

Coal
Sales by Geographical Area

The
chart below sets forth coal sales information by geographical area for the last
three years:

Coal
        Sales by Area (millions of tonnes)2004(3)
      2003(2)
      2002(1)%
        of sales
      Tonnes
      %
        of sales
      Tonnes
      %
        of sales
      TonnesEurope
      32%
      7,993
      31%
      6,923
      34%
      4,151Japan
      23%
      5,801
      26%
      5,826
      28%
      3,443Korea
      13%
      3,237
      13%
      2,984
      20%
      2,453China
      5%
      1,287
      3%
      602
      -
      -Taiwan
      4%
      955
      4%
      1,050
      4%
      537South
        America
      8%
      1,899
      9%
      1,985
      5%
      679North
        America
      15%
      3,832
      14%
      3,214
      9%
      1,067Total
      100%
      25,004
      100%
      22,584
      100%
      12,330


Notes:

(1)

2002
sales are by Old Fording.

13

---

(2)

2003
sales include sales by Old Fording prior to February
28, 2003 and sales by the Elk Valley Coal Partnership
thereafter.

(3)

2004
sales are by the Elk Valley Coal Partnership (of which the Trust's
share is 65% to March 31, 2004 and 62% thereafter).

The
Elk Valley Coal Partnership - Mines and Neptune Terminals

The
following table sets forth the area, current production capacity, actual
production and known reserve life of the Elk Valley Coal Partnership's mines.

|                     | Hectares | Current
      Production Capacity(2) | Production(2) | Known
      Reserve Life(3)(years) | Date
      of Initial Operation
|-------------------- | -------- | ------------------------------------ | ------------- | ---------------------------------- | -------------------------------
|                     | Total    | Mined
      or to be Mined(1)        | Mine          | Plant                              | 2004                           
|Fording
      River  | 20,304   | 3,955                                | 10.0          | 9.5                                | 9.6                            
|Elkview              | 27,054   | 3,526                                | 6.0           | 7.0                                | 5.9                            
|Greenhills           | 10,964   | 2,155                                | 4.5           | 5.5                                | 4.9                            
|Coal
      Mountain  | 3,044    | 759                                  | 2.7           | 3.5                                | 2.5                            
|Line
      Creek     | 9,025    | 1,236                                | 2.5           | 3.2                                | 2.5                            
|Cardinal
      River | 12,489   | 2,343                                | 2.5           | 3.0                                | 0.4                            
|Total                | 82,877   | 13,974                               | 28.2          | 31.7                               | 25.8                           

Notes:

(1)

Represents
total hectares of coal lands where mining has or is scheduled to occur.

(2)

Million
tonnes of saleable coal.

(3)

Years
that reserves are projected to support mining at 2004 production rates, except
for Elkview which is based on expected capacity of 7.0
million tonnes.

Mining
Costs

Mining
and processing input costs such as fuel, steel, tires, labour and maintenance
parts and supplies can have a significant impact on the cost of producing
metallurgical coal.  In 2004, the Elk Valley Coal
Partnership experienced higher costs for operating supplies such as diesel fuel
and steel.  In addition, the recent growth in global mining activities has
created a demand for equipment and supplies that outpaces supply.  As a
result, future operations could be impacted if the Partnership experiences
difficulty obtaining equipment and supplies on a timely basis.  Lastly,
growth in the mining industry has created demand and competition for certain
skilled services.

Fording
River

The
Fording River mine is located 29 kilometres northeast of
Elkford, British Columbia.  It was constructed in 1969
as a three million tonne per year operation and has been operated continuously
since that time.  The Fording River mine was
contributed to the Elk Valley Coal Partnership by Fording
Inc. pursuant to the Arrangement.  Coal produced at
the Fording River mine is primarily metallurgical coal,
although a very small amount of thermal coal is also produced.  The
majority of current production is derived from the Eagle
Mountain pit.

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 as verified by the Quality
Management Institute.

Elkview

The
Elkview mine is located just outside Sparwood, British
Columbia.  It was constructed in 1969 by Kaiser
Resources Ltd. and has been operating on a nearly continuous basis for over 30
years.  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 Elkview
mine was purchased by Teck Cominco from the trustee in the
bankruptcy of Westar in 1992 and has operated continuously
since 1993.  The mine was contributed to the Elk
Valley Coal Partnership by Teck Cominco pursuant to the Arrangement.
 On December 20, 2004, the Trust announced jointly with Teck Cominco, NSC
and POSCO a proposed expansion of the Elkview Mine. See "Three-Year History
- Elkview Mine Equity Interest".



14

---



Coal
produced at the Elkview mine is primarily metallurgical
coal.  Lesser quantities of lower grade hard coking coal are also produced
and make up roughly 15% of the total production.  The majority of current
production is derived from seams in the area of Baldy and Natal
Ridge pit.

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.  It 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
bankruptcy of Westar in December 1992.

Since
1993, the Greenhills mine has operated under a joint venture agreement (the "Greenhills
Joint Venture Agreement") among Old FCL, POSCO
Canada Ltd. (POSCAN) and POSCAN's parent, 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,
the 80% interest held by Old FCL was assigned to the Elk
Valley Coal Partnership.  The mine equipment and coal preparation plant are
owned by the Elk Valley Coal Partnership and POSCAN in
proportion to their respective joint venture interests.  The
Elk Valley Coal Partnership and POSCAN 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 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.  Production
is derived from the Cougar reserve which is divided into
two distinct pits, Cougar North and Cougar
South.  Cougar North currently
produces the majority of the coal for the mine.

The
Greenhills 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 as verified by the Quality
Management Institute.

Coal
Mountain

The
Coal Mountain mine is located 30 kilometres southeast of
Sparwood, British Columbia.  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
contributed to the Elk Valley Coal Partnership by Fording
Inc. pursuant to the Arrangement.  The Coal
Mountain mine produces both metallurgical and thermal coal.

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

Line
Creek

The
Line Creek mine is located 22 kilometres north of Sparwood,
British Columbia.  The mine has operated continuously
since its start up by Crowsnest Resources Limited in 1981.
 It was acquired by the Luscar/CONSOL Joint Ventures
in 1998 and contributed to the Elk Valley Coal Partnership
by Fording Inc. pursuant to the Arrangement.



15

---



The
Line Creek mine produces both metallurgical and thermal
coal.  After taking over the management of the Line
Creek mine in 2003, the Elk Valley Coal 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 two million tonnes and, as a consequence, the workforce was
reduced by approximately 40% to 290 employees.  In response to improvements
in the metallurgical coal markets in 2004, the mine plan was altered and
production was increased to 2.5 million tonnes annually.

Cardinal
River

The
Cardinal River mine is located 42 kilometres south of
Hinton, Alberta and is comprised of the Luscar
mine and the Cheviot Creek pit.  The Luscar
mine commenced operations in 1970.  It has been owned continuously since
its start up by the Luscar/CONSOL Joint Ventures and their
predecessors.  The Luscar mine and Cheviot
Creek pit were contributed to the Elk Valley Coal
Partnership by Fording Inc. pursuant to the Arrangement.

In
March 2004, the Partners approved the
development of the Cheviot Creek pit in response to the
demand for high quality coking coal.  In total, $120
million in capital spending was approved to build a haul road, develop the pit,
refurbish the plant and acquire mining equipment in order to produce 2.8 million
tonnes on an annual basis.  All licenses and approvals have been received,
although legal proceedings are underway, challenging the issue of certain
environment authorizations.  See "Legal Proceedings - Cardinal River
Operations".  Initial coal production began in the
fourth quarter of 2004.  It is anticipated that the full annual production
rate will be achieved in the third quarter of 2005.

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.  In June of 2004, Fording Inc. and the Elk
Valley Coal Partnership entered into an agreement with the Luscar/CONSOL
Joint Ventures to assume these obligations in exchange for a cash payment.

Production
of Mines Under Prior Ownership

Prior
to being contributed to the Elk Valley Coal Partnership pursuant to the
Arrangement, the Elkview mine was operated by Teck Cominco and the Line Creek
and Cardinal River mines were operated by Luscar.

Production
at the Elkview mine was 5.5, 5.5 and 4.0 millions of tonnes of coal for the
years 2002, 2001 and 2000 respectively.  Production at the Line Creek mine
was 3.0, 2.8 and 2.6 millions of tonnes of coal for the years 2002, 2001 and
2000 respectively.  Production at the Cardinal River mine was 2.1, 3.0, and
2.7 millions of tonnes of coal for the years 2002, 2001 and 2000 respectively.

The
Elk Valley Coal Partnership - Neptune Terminals

The
Elk Valley Coal 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 on
December 31, 2026.  Shippers can access the Neptune
Terminals facilities from the Canadian National rail system
and, through interconnection, with the CPR 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 their respective
interest in, the outstanding bank indebtedness of Neptune.
 At December 31, 2004, the Elk
Valley Coal Partnership's proportionate interest in this guarantee was
approximately $10 million.  In addition, the Elk
Valley Coal Partnership's share of Neptune's asset
retirement obligations is $7 million.



16

---



NYCO

Overview

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

NYCO
- The Last Three Years

The
principal factor that has affected NYCO over the last three
years is the oversupply of its principal product, wollastonite.  NYCO
Minerals 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.

This
trend continued into 2002 and sales of industrial minerals declined as NYCO
Minerals and Minera exited lower-priced markets.  As a
result, lower sales volumes were partially offset by higher average sales
prices.  Sales of low-value wollastonite products continued to face intense
competition in 2003, 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.

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.

Throughout
this period, NYCO has worked to stabilize its position in
key markets and improve marketing, sales and distribution networks by focusing
on new and higher-value products.  Research and development focused on
those products and applications for which the unique characteristics of
wollastonite would add significant value as a replacement for competitive
materials like glass fibre, talc and mica.  The marketing initiatives also
included the development and roll out of a new strategy to more effectively
brand, position and raise awareness of NYCO Mineral's and
Minera's extensive range of wollastonite products.

Annual
sales of wollastonite totalled 82,000 tonnes in 2004, an 11% increase from the
previous year, while sales of tripoli increased by 5% to 11,300 tonnes.
 NYCO has seen a strengthening in results due to higher energy costs that
drove up prices for competing products, a lower U.S. dollar
that generated pricing advantages against the Euro and the
impact of higher bulk shipping costs on wollastonite competitors from China
and India.

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 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.

NYCO
- Mines and Processing Facilities

NYCO
Minerals

NYCO
Minerals and its predecessors have owned the Willsboro
operation since purchasing it from Interpace Corporation in
1979.  NYCO Mineral's processing plant is located in
Willsboro, New York and the mine is located 22 kilometres
west of the plant.  The processing facilities include dry processing
equipment, a surface treatment plant, warehouse space and truck and rail loadout
facilities.  The mining operation consists of the active Lewis
Pit and the permitted Oak Hill deposit located about 1.6
kilometres from the Lewis Pit.  The minesites 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.



17

---



NYCO
Mineral's primary product is wollastonite.  It is extracted using shallow
open-pit mining techniques and trucked to the Willsboro
processing plant.  In 2004, NYCO Minerals produced
52,000 tonnes of wollastonite (43,900 tonnes in 2003 and 49,500 tonnes in 2002).
 The current annual production capacity of the processing plant is 120,000
tonnes of wollastonite and the current annual production capacity of the mine is
300,000 tonnes of wollastonite ore.  The current mine plan contemplates the
production of wollastonite from this property for in excess of 30 years at 2004
production rates.  NYCO Mineral's products are
marketed through a network of distributors, agents and direct sales personnel.

NYCO
Mineral's quality management system is in compliance with the ISO
9001:2000 quality standard as verified by Intertek Systems
Certification.

Minera

Minera
was developed by a subsidiary of Old Fording and commenced
operations in 1998.  Minera's processing facilities,
truck loadout and mine are located approximately 50 kilometres northwest of Hermosillo,
Sonora, Mexico.  The processing
facilities include wet and dry processing plants, a surface treatment plant,
warehouse space and truck loadout facilities.  In addition, a warehouse and
a rail loadout facility are located in Hermosillo.
 The minesite 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's
primary product is wollastonite.  Wollastonite ore is
extracted using open-pit mining techniques for processing at the on-site
processing facilities.  In 2004, the Minera operation
produced 28,100 tonnes of wollastonite (31,200 tonnes in 2003 and 29,200 tonnes
in 2002).  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.  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 labour.

Minera's
quality management system is in compliance with the ISO
9001:2000 quality standard and the ISO 14001:1996
environmental standard as verified by the Quality
Management Institute.

American
Tripoli

American
Tripoli is a wholly owned subsidiary of NYCO Minerals.
 It was acquired by NYCO Minerals from Interpace
Corporation in 1979.  American Tripoli's primary
product is tripoli.  It is extracted using open-pit mining techniques and
trucked to American Tripoli's processing located in
Seneca, Missouri.  The processing facilities include a
processing plant and drying shed.  The minesite is located approximately 12
kilometres northwest of Seneca in Ottawa County, Oklahoma.
 The minesite is comprised of 1,168 hectares of fee simple lands of which
approximately 14 hectares are currently being mined or are scheduled for mining.

In
2004, American Tripoli produced approximately 11,200 tonnes
of tripoli (10,700 tonnes in 2003 and 12,700 tonnes in 2002).  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 2004 production rates.  American
Tripoli directly markets a variety of abrasive products to the construction and
manufacturing industries for use in buffing and polishing applications.

RESERVES
AND RESOURCES

Reserves
and resources of the Elk Valley Coal Partnership and NYCO
as at December 31, 2004, have been estimated internally by
the Elk Valley Coal Partnership's engineers and geologists in accordance with
the National Instrument, under the
supervision of C.J. McKenny, a professional geologist and
the Elk Valley Coal 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.



18

---



The
Trust is subject to the provisions of the National
Instrument with respect to the manner in which it reports 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 "C" 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
"C" to this document contains the definitions ascribed by the Canadian
Institute of Mining, Metallurgy and Petroleum Standards in "The CIM Definition
Standards on Mineral Resources and Mineral Reserves", 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 "C" 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 by the Trust
of 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.

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 price of metallurgical coal assumed in connection with the
determination of coal Reserves is approximately $53 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 coal preparation plant operations).  Coal
Resources are reported in millions of metric tonnes in the ground before
recovery through mining and without the application of recovery factors.

Geological
Setting and Mineralization

Elk
Valley Area

Some
of the oldest rock strata present are the Rundle Group limestones located on the
west bank of the Fording River.  They are in faulted contact with the
Kootenay Group to the west and in uncomfortable contact with the Rocky Mountain
Formation quartzites to the north.  The Fernie Formation shales occur
throughout the area, generally along the sides of the valleys on the lower
flanks of the mountains.  The Morissey Formation is known locally as the
"basal sandstone" of the Kootenay Group.  It is the prominent
cliff-forming marker horizon in many locations.  On the top of the Fording
River property, the top of Moose Mountain member, the Morissey Formation, is in
sharp contrast to the lowermost bed of the Mist Mountain Formation.

The
coal fields in the Elk Valley region of British Columbia
have supported coal mining for decades.  Coal is contained within the
sedimentary Mist Mountain Formation of the lower cretaceous Kootenay Group.
 The Mist Mountain sediments were involved in the mountain building
movements of the late cretaceous to early tertiary Laramide orogeny and are
approximately 500 metres thick, with the depth of burial ranging from zero to
1,500 metres.  The major structural features are north-south trending
synclines with near horizontal to steep westerly dipping thrust faults and a few
high angle normal faults.  This has allowed for the Mist Mountain sequence
to be repeated throughout the Elk Valley.



19

---



Over
13 coal seams are considered to be economic, consisting of medium to high
volatile bituminous coal that is primarily of metallurgical quality, with minor
amounts of thermal quality coal along the seam outcrops.  The coal seams
are characterized by high alginate content and are referred to as "needle"
coal.  They vary in thicknesses up to 12 metres and are generally overlain
comfortably by strata of the Elk Formation.  This formation is commonly a
succession of sandstones, shales, siltstones, mudstones, chert pebble
conglomerates and the coal seams.

Cardinal
River

The
Cheviot Creek pit is close to the western margin of the
original sedimentary basin responsible for coal deposition.  This strata
has been subjected to deformation from tectonic forces, creating either complex
faulted or folded anticlinal and synclinal structures or repeated sequences from
low angle thrust faults.  The coal bearing Luscar Group is of lower
cretaceous age and is marked at the base by the Cadomin Conglomerate, a
resistant unit easily identified in outcrops.  Overlying the Cadomin
Conglomerate is the Gladstone Formation, dominated by shales and siltstones.
 It is the equivalent to the coal bearing Gething Formation found in
northeastern British Columbia.  Above the Gladstone
Formation is the Moosebar Formation, composed of marine shales, siltstones,
carbonates and shaley coal horizons.  The overlying Gates Formation is
divided into three members; the Torrens (sandstones and torrens coal marker),
Grande Cache (siltstone, shales, coal) and Mountain Park (sandstone).  Above
the Gates Formation are the recessive marine shales of the Blackstone Formation.
 The Luscar Group of sediments in the Cheviot mine is
exposed within a broad synclinal basin in which dominant low angle thrust
faulting effectively repeats geologic successions throughout the property.

NYCO

It
is generally accepted there are two methods for the formation of commercial
deposits of wollastonite.  Both involve heat and pressure that alter
limestones.  In silica bearing limestones, silca and calcite react to form
wollastonite.  Wollastonite can also form by the
passage of highly siliceous hydrothermal solutions through limestone beds or
zones.  Heated groundwater dissolves large amounts of silicate.  Hot
silicate laden water migrates into surrounding limestone beds where the silica
precipitates and carbon dioxide is carried out of the deposit.  Wollastonite
precipitates and slowly forms characteristic wollastonite crystal structures in
what was formerly limestone.

The
Elk Valley Coal 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 Elk Valley Coal Partnership's Proven
and Probable coal Reserves at December
31, 2004.  All of the reserves are bituminous coal.



20

---



COAL
        RESERVES
        As At December 31, 2004
        (millions of tonnes)(1,3)Rank
      Proven
      Probable
      Total
      Ownership
        (%)(2)
      Calorific
        Value kJ/kg
      Sulphur
        %
        (by wt.)Metallurgical
        CoalFording
        River
      145
      112
      257
      L
        100
      32,600
      0.62%Greenhills
      91
      7
      98
      FS
        100
      32,600
      0.62%Coal
        Mountain
      27
      1
      28
      L
        100
      29,900
      0.35%Elkview
      184
      65
      249
      FS
        100
      32,200
      0.38%Line
        Creek
      17
      -
      17
      L
        100
      32,200
      0.46%Cardinal
        River
      36
      25
      61
      FS/L
        5/95
      32,700
      0.38%Total
        Metallurgical
      500
      210
      710Thermal
        CoalLine
        Creek
      3
      -
      3
      L
        100
      26,500
      0.35%Total
        Thermal
      3
      
      3


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 Elk Valley Coal Partnership - Greenhills".
 Reserve numbers are rounded and exclusive of
resources.

(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 not entirely leasehold, the ratio of the percentage
of fee simple holdings to the total holdings and the leasehold holdings to the
total holdings is presented as FS%/L%.

(3)

See
definitions in Appendix "C".

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 2004, the Partnership had all
necessary material and non-routine permits and licenses required to mine the Reserves
attributed to the above noted mines.  For information as to how the
Elk Valley Coal Partnership holds its interest in the lands in which Reserves
are situated, see "The Elk Valley Coal Partnership - Reserves and Resources
- Real Property".

The
Trust has sufficient surface rights for mining operations,
as well as the availability of power, water, mining personnel, potential
tailings storage areas and potential waste disposal areas.



22

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Measured
and Indicated Coal Resources

The
following table sets forth the Elk Valley Coal Partnership's coal Resources,
all of which are bituminous, as at December 31, 2004:

COAL
        RESOURCES
        As At December 31, 2004
        (millions of tonnes)(1,4)Rank
      Measured(4)
      Indicated(4)
      Total(4)
      Ownership(2)
      Calorific
        Value kJ/kg(4)
      Sulphur
        %
        (by wt.)(4)Metallurgical
        CoalFording
        River
      460
      194
      654
      L
      30,200
      0.62%Greenhills
      5
      325
      330
      FS
      30,200
      0.62%Coal
        Mountain
      66
      41
      107
      L
      28,600
      0.35%Elkview
      1,318
      308
      1,626
      FS
      30,200
      0.38%Line
        Creek
      59
      153
      212
      L
      30,200
      0.46%Cardinal
        River
      2
      9
      11
      FS/L
        5/95
      30,200
      0.38%Other(3)
      213
      274
      487
      L
      30,200
      0.60%Total
        Metallurgical
      2,123
      1,304
      3,427Thermal
        CoalLine
        Creek
      5
      24
      29
      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. Resources are reported exclusive of interests
of third parties except at Greenhills where Resources are reported inclusive of
POSCAN's interest.  For a description of POSCAN's interest, see "Description
of the Business - the Elk Valley Coal Partnership - Greenhills".
 Resource numbers are rounded and exclusive of resources. 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 Resources
are not entirely fee simple or not entirely leasehold, the ratio of the
percentage of fee simple holdings to the total holdings and the leasehold
holdings to the total holdings is presented as FS%/L%.

(3)

"Other"
includes non-operating coal properties, such as Elco, Mt. Duke,
Gregg River, Muskiki and Quintette.

(4)

See
definitions in Appendix "C".

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 Elk Valley Coal Partnership's Inferred
Resources for coal as at December 31, 2004, all of which
are bituminous:

INFERRED
        COAL RESOURCES
        As At December 31, 2004  (millions of tonnes)(1,3)Rank
      Inferred
        ResourcesMetallurgical
        CoalFording
        River
      2,721Greenhills
      650Coal
        Mountain
      24Elkview
      181Line
        Creek
      110Cardinal
        River
      4Other(2)
      473Total
        Metallurgical
      4,163Thermal
        CoalLine
        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.  Resources are reported exclusive of
interests of third parties except at Greenhills where Resources are reported
inclusive of POSCAN's interest.  For a description of POSCAN's
interest, see "Description of the Business - the Elk Valley Coal
Partnership - Greenhills".  Resource numbers are rounded.
Reserves are not included in Resources.  Resources
do not have demonstrated economic viability.

(2)

"Other"
includes non-operating coal properties, such as Elco, Mt
Duke, Muskiki , Gregg River and Quintette.

(3)

See
definitions in Appendix "C".

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".



23

---



Changes
in Reserves and Resources

The
following tables set forth the changes in the Elk Valley Coal Partnership's coal
Reserves and Resources during 2004.  The changes are
categorized as "production", "additions" or "deletions" to Reserves
and Resources as at December 31, 2004:





Notes:

(1)

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 Elk Valley Coal Partnership - Greenhills".
 Reserve numbers are rounded and exclusive of resources.

(2)

Coal
Resources are reported in millions of
metric tonnes in the ground before recovery through mining and without the
application of recovery factors.  Resources
are reported exclusive of interests of third parties except at Greenhills where
Resources are reported inclusive of POSCAN's interest.  For a description
of POSCAN's interest, see "Description of the Business - the Elk Valley
Coal Partnership - Greenhills".  Resource numbers are rounded.
Reserves are not included in Resources.  Resources do not have demonstrated
economic viability.

(3)

Significant
Changes to Reserves include:

Proven:
net gain of 7.4 million tonnes metallurgical and 2.1 million tonnes thermal at
Line Creek mine due to addition of two new pits (two seam pit at Burnt Ridge South).
 Addition of 1.9 million tonnes metallurgical coal at Fording
River mine; negative adjustment of 4.0 million tonnes metallurgical coal to
Elkview mine (geological revisions) .

Significant
Changes to Resources include:

Measured:
transfer of 2.9 million tonnes in situ to proven reserves at Fording
River mine;

Indicated:
Cardinal River mine - positive adjustment of 2.8 million
tonnes due to reconciliation;

Inferred:
Cardinal River mine - positive adjustment of 3.9 million
tonnes due to reconciliation.

(4)

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

(5)

See
definitions in Appendix "C".

Exploration
and Development Activities

In
2004, the Elk Valley Coal Partnership spent approximately $1.7
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 Elk Valley Coal Partnership's undeveloped properties
in 2004.

Drilling
activity in 2004 totalled 34,432 metres for exploration, development and
production planning purposes.  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 Elk Valley Coal Partnership's internal
standards.



24

---



Of
the total metres drilled, 20,453 metres represented drilling conducted at all
minesites within current pit boundaries for short to medium range planning
purposes.  The remaining 13,979 metres were drilled as part of programs
conducted by the Coal Mountain and Line
Creek mines on coal lands adjacent to those operations that were contributed to the
Elk Valley Coal Partnership by Teck Cominco and Old
Fording.  The drilling provided additional information about the quantity
and quality of coal Resources that may be available to
extend the life of the Coal Mountain and Line
Creek mines.  Further drilling programs are planned for 2005.

Real
Property

The
following chart lists significant coal rights held by the
Elk Valley Coal Partnership as at December 31, 2004:

Mineral
        Holdings
        (thousand hectares)
      Fee
        Simple
      Crown
        Lease
        and License
      TotalCoal
        British
        Columbia
        Alberta
      39
        1
      67
        49(2)
      106
        50All
        Mines and Minerals except
        Petroleum
        & Natural Gas
        British
        Columbia
      10
      -
      10Total(1)
      50
      116
      166


Notes:

(1)

Numbers
have been rounded.

(2)

The
reduction in Alberta mineral holdings from 65.8 thousand
hectares in 2003 to 49 thousand hectares in 2004, is to correct an error that
resulted in the inclusion of certain mineral holdings were to be transferred to
Luscar pursuant to the Arrangement as coal rights held by the Elk Valley Coal
Partnership as of December 31, 2003.

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.  The Elk
Valley Coal Partnership 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 approximately $4 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.

Five
of the Elk Valley Coal Partnership's six coal mines operate in British
Columbia and are therefore subject to mineral taxes.  British Columbia
mineral tax is a 2-tier tax with a minimum rate of 2% and a maximum rate of 13%.
 A minimum tax of 2% applies to operating cash flows, as defined by the
regulations.  A maximum tax rate of 13% applies to cash flows after taking
available deductions for capital expenditures and other permitted deductions.
 For a discussion of mineral taxes see Management's Discussion
and Analysis of Financial Condition and Results
of Operations for the year ended December
31, 2004 in the Trust's 2004 Annual Report.

NYCO
- 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, 2004:

INDUSTRIAL
        MINERAL RESERVES
        As At December 31, 2004 (millions of tonnes)(1,3)Minerals
      Proven(4)
      Probable(4)
      Total(4)
      Grade(2)WollastoniteNYCO
        Minerals
      5
      1
      6
      54.5%Minera
      20
      85
      105
      54.8%Total
        Wollastonite
      25
      86
      111
      -Total
        Tripoli
      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.



25

---



(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 "C".

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 2004,
Fording Inc. and its subsidiaries had all necessary permits which are required
to mine the tonnes attributed to Reserves.

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, 2004:

INDUSTRIAL
        MINERAL RESOURCES
        As At December 31, 2004
        (millions of tonnes)(1)(3)Minerals
      Measured
      Indicated
      Total
      Grade(2)WollastoniteNYCO
        Minerals
      1
      2
      3
      54.5%Minera
      -
      -
      -
      -Total
        Wollastonite
      1
      2
      3
      -Total
        Tripoli
      -
      -
      -
      -


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 rounded and 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)

See
definitions in Appendix "C".

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".



26

---



Changes
in Reserves and Resources

The
following tables set forth the changes in Fording Inc.'s
industrial mineral Reserves and Resources
during 2004.  The changes are categorized as "production", "additions"
or "deletions" to Reserves and Resources
as at December 31, 2004:

Changes
        in Reserves and Resources - Industrial Minerals
        (millions of tonnes(2,3))Reserves
      ResourcesMineral
        Type
      Proven
      Probable
      Total
      Measured
      Indicated
      TotalWollastonite(1)(U.S.A.)December
        31, 2003
      5
      1
      6
      1
      2
      2Additions
          Production (2)  Deletions (2)
      -
        (0)
        (0)
      -
        -
        -
      -
        (0)
        (0)
      -
        -
        -
      -
        -
        -
      -
        -
        -December
        31, 2004
      5
      1
      6
      1
      2
      2Wollastonite(1)(Mexico)December
        31, 2003
      20
      85
      105
      -
      -
      -Additions
          Production (2)  Deletions (2)
      -
        (0)
        -
      -
        -
        -
      -
        (0)
        -
      -
        -
        -
      -
        -
        -
      -
        -
        -December
        31, 2004
      20
      85
      105
      -
      -
      -Tripoli(1)December
        31, 2003
      2
      -
      2
      -
      -
      -Additions
          Production (2)  Deletions(2)
      -
        -
        -
      -
        -
        -
      -
        -
        -
      -
        -
        -
      -
        -
        -
      -
        -
        -December
        31, 2004
      2
      -
      2
      -
      -
      -


Notes:

(1)

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 and the numbers are rounded.

(2)

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

(3)

See
definitions in Appendix "C".

Exploration
and Development Activities

In
2004, NYCO did not conduct any exploration activities
outside of its active industrial minerals mining areas.

Real
Property

The
following chart lists significant mineral rights held by NYCO
as at December 31, 2004:

|Mineral
      Holdings
      (thousand hectares)                              | Fee
      Simple  | Crown
      Lease
      and License | Total            
|----------------------------------------------------------------------------- | ----------------- | ----------------------------------- | -----------------
|All
      Mines and Minerals
      New
      York
      Oklahoma
      Mexico | 2
      1
      - | -
      -
      9                   | 2
      1
      9
|Total                                                                         | 3                 | 9                                   | 12               



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 per hectare and are issued for six years.
 At the end of six years, they must be converted into exploitation permits
or they revert to the government.  Exploitation permits are issued for 50
years.  Annual fees for exploitation permits escalate based upon the number
of years for which that the exploitation permit has been granted and the amounts
are adjusted annually by the Mexican government.  Fees for the Minera
operation currently range from US$4.50 - $16
per hectare at current exchange rates.  Minera does
not have any exploration permits and operations are conducted entirely in
reliance on exploitation permits.



27

---



RISK
FACTORS

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, 2004 which forms part of the Trust's 2004 Annual
Report.  An investment in the Units involves numerous risks and
uncertainties and investors and potential investors are strongly encouraged to
review the aforementioned risk factors as well as the Trust's other disclosure
documents.

OTHER
INFORMATION REGARDING THE TRUST

Environment,
Health & Safety

Environmental
Protection

In
2004, to the knowledge of the Trust, neither the
Elk Valley Coal 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 Elk Valley Coal 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 upon the Trust.

To
effectively oversee the environmental programs of the Elk Valley Coal
Partnership, an internal senior management committee has been created, known as
the Environmental, Health, Safety and Risk Management
Committee ("EHSRMC").  The EHSRMC,
which includes management of both Teck Cominco and the Elk
Valley Coal Partnership, meets at least quarterly to review environmental
reports and audits from the minesites and to implement new programs and
procedures as required.

Reclamation
Activities

The
Elk Valley Coal Partnership has significant long-term liabilities relating to
mine reclamation and end-of-mine closure costs, known as asset retirement
obligations.  In addition, Fording Inc. has asset
retirement obligations in respect of NYCO and Neptune
Terminals.

The
Trust recognizes asset retirement obligations in the
period in which they are incurred if a reasonable estimate of fair value can be
determined.  The fair value of the estimated asset retirement costs is
capitalized as part of the carrying amount of the long-lived asset when incurred
and amortized to earnings over the asset's estimated useful life.
 Increases in the asset retirement obligations resulting from the passage
of time are recorded as accretion expenses.  Actual expenditures incurred
are charged against the accumulated obligation.  The asset retirement
obligation is reviewed by management annually and revised for changes in future
estimated costs and regulatory requirements.  These obligations are funded
from working capital of Fording Inc. or the Elk Valley
Coal Partnership, as the case may be, at the time the reclamation activities are
undertaken.

The
obligations 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 when 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.



28

---



The
following table presents the reconciliation of asset retirement obligations:

Millions
        of Canadian dollars
      
      As
        at December 312004
      
      2003Balance
        - beginning of year
      
      $58
      
      $55Liabilities
        incurred
      
      $12
      
      $1Liabilities
        settled
      
      ($1)
      
      ($1)Accretion
        expense
      
      $4
      
      $3Other
      
      ($5)
      
      $0Balance
        - end of year
      
      $69
      
      $58




The
total undiscounted amount of the estimated asset retirement obligations is $135
million, which using a credit adjusted risk-free rate, results in a discounted
obligation of $69 million at December
31, 2004.

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
Elk Valley Coal 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, Fording Inc. and the Elk
Valley Coal Partnership are committed to working with all employees to maintain
a safe and productive work environment.  All the Elk
Valley Coal 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.

To
effectively oversee the health and safety programs of the Elk Valley Coal
Partnership, the EHSRMC reviews health and safety reports
from the minesites to determine and implement new policies and procedures as
required.

Community
Relations

The
Trust, Fording Inc. and the Elk
Valley Coal Partnership contribute to the long term future and success of the
communities in which their employees work and live by participating 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.  Examples of these initiatives are as follows:

Sponsorship
of Olympic Skier Emily Brydon

The
Trust is proud to be one of Emily
Brydon's sponsors.  Emily Brydon is an Olympian
from Fernie, British Columbia, one of the Partnership's communities, who
recorded Canada's best woman's combined and slalom
results at the 2003 World Championships.  Ranked 12th
in the world in the downhill and a winner of a World Cup Bronze Metal, Emily is
the 2004 Canadian downhill and a winner of a World Cup Bronze Metal, Super
G and combined champion.

The
Elk Valley Coal Partnership Discovery Centre

The
Elk Valley Coal Partnership has donated $1 million to
assist the Coal Discovery Society in the creation of an
interpretive learning centre and heritage network that will illustrate and
showcase coal mining and its importance to the Elk Valley region of British
Columbia.  As well as preserving the history of the coal mining industry of
the Elk Valley, the centre will interpret modern coal mining and deliver
economic and community benefits to the Elk Valley.



29

---



Public
Libraries

The
Elk Valley Coal Partnership has contributed to the Hinton
Public Library and the Fernie Public Library.  The contribution to the
Hinton Public Library will help fund the Hinton Leisure
and Learning Centre, which will be a library program room and video conferencing
suite.

Hospital
Foundations

The
Elk Valley Coal Partnership donates funds to hospital foundations in the Crowsnest
Pass and in the Elk Valley.  The employees of the Elk Valley Coal
Partnership run a "Caring for Kids" campaign for the Alberta
Children's Hospital and support the Mining Association of British Columbia's
"Mining for Miracles" campaign for the British Columbia Children's
Hospital.

Community
Initiatives

The
Elk Valley Coal Partnership supports a variety of community initiatives, which
include: summer mine tours at the Fording River, Greenhills
and Elkview mines that are run in conjunction with the
local Chamber of Commerce; the community councils; schools and colleges; youth
sports; mine education programs during Mining Week; mine
rescue competitions; and other community events.

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
Elk Valley Coal 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 Elk
Valley Coal 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., the employment costs for that
executive will be allocated between the Trust, Fording
Inc. and the Elk Valley Coal Partnership based on the time
spent on the business and affairs of the Trust and Fording
Inc. during the year.  In addition, the agreements allow employees who
provide services to NYCO (other than
employees employed by NYCO Minerals, Minera,
American Tripoli and other
subsidiaries of Fording Inc.) to be employees of the
Elk Valley Coal Partnership and be made available to Fording
Inc. on a full time basis to provide services to NYCO on a
cost recovery basis.

The
compensation of employees of the Elk Valley Coal Partnership, including the
executives that also serve as officers of the Trust and Fording Inc., is
determined by the managing partner, and is reviewed by the Governance Committee
of Fording Inc. as part of the annual budget approval process by the Partners of
the Elk Valley Coal Partnership.

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



30

---



All
of the Elk Valley Coal 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:

Mine
      Expiry
        Date of Collective Agreement
      Productive
        Capacity
        As at December 31, 2004
        (million tonnes)Coal
        Mountain
      December
        31, 2004(1)
      2.7Line
        Creek
      May
        31, 2005
      2.5Elkview
      October
        31, 2005
      6Fording
        River
      April
        30, 2006
      10Cardinal
        River
      June
        30, 2007
      1.4Greenhills
      Non-union
      4.5


Notes:

(1)

Negotiations
currently taking place.

As
at December 31, 2004, Elk Valley Coal Partnership employed
2,744 persons, most of whom reside in Canada.  In
addition, Fording Inc., through its subsidiaries, employed
approximately 93 persons at operations in the United
States and 64 persons at operations 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.

Specialized
Skills and Knowledge

The
Elk Valley Coal Partnership requires extensive knowledge in the areas of mine
development and mineral processing.  Mine development includes all
functions necessary to economically develop the mine, extract the coal from the
earth and deliver it to the coal preparation plant.  Mineral processing
includes all functions that result in cleaning and preparing the coal for
delivery after extracting it from the mine.

Elk
Valley Coal Partnership's senior management personnel possess the necessary
skills and experience to efficiently perform these functions.  Through
their leadership, practical training is provided to employees to supplement
their formal technical training to ensure qualified candidates exist to fill
future management positions.  In order to attract individuals who possess
the necessary technical training, the Elk Valley Coal
Partnership actively participates in college and university work programs and
recruitment initiatives.

Compensation
Covenant

Certain
agreements entered into at the time of the Arrangement
state that Old Fording employees, while employed by Fording
Inc. or the Elk Valley Coal Partnership, will be provided with compensation
arrangements until the third anniversary of the Effective
Date.  In the opinion of the Directors, who were
directors of Old Fording at the time of the Arrangement,
these compensation arrangements are 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 of Control Agreements with certain members of its
senior management in connection with becoming a public company in 2001.
 Seven of the Change of Control Agreements were assumed by the
Elk Valley Coal Partnership under the Arrangement.
 The Arrangement also constituted a change in control
for the purposes the Change of Control Agreements.  If an executive who is
a party to a Change of Control 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 Change of Control 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,
was entitled to three years salary, benefits and bonuses.

As
of December 31, 2004, four executives had exercised their
Change of Control Agreements including the former President
and Chief Executive Officer of Old
Fording.  Of the three remaining Change of Control Agreements, no provision
has been accrued for the contingent liability related to Change
of Control Agreements outstanding on December 31, 2004.
 The liability is charged to earnings in the period in which the
resignation, retirement or termination occurs.  The Trust's
share of the contingent liability associated with such agreements, which is
dependent on the achievement of certain future financial results, ranges between
$5 million to $7 million.



31

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ANNUAL
AND QUARTERLY FINANCIAL INFORMATION

Annual
and quarterly financial information included in the Management
Discussion and Analysis of Financial Condition and Results
of Operations for the year ended December
31, 2004 that forms part of the Trust's 2004 Annual
Report, is incorporated by reference into this Annual
Information Form.

CAPITAL
STRUCTURE

Beneficial
interests in the Trust are divided into a single class of Units.
 The aggregate number of Units that the Trust
may issue is unlimited.  There were 48,980,479 Units
outstanding at December 31, 2004 and 48,987,438 Units outstanding at February
28, 2005.  The Units trade on both the TSX (FDG.UN) and the NYSE (FDG).

Description
of Units

Each
Unit represents an equal fractional undivided beneficial
interest in any distributions from the Trust and in any
net assets of the Trust in the event of termination or
winding-up of the Trust.  All Units
are of the same class with equal rights and privileges.  Each Unit
is transferable, entitles the holder thereof to participate equally in
distributions, including the distributions of net income and net realized
capital gains of the Trust and distributions on
liquidation, is fully paid and entitles the holder thereof to one vote at each
meeting of Unitholders for each Unit
held.  Units are currently represented by
certificates but the Trustees have authority to move to a
book-based system if such a transition is feasible.

The
Units do not represent a traditional investment and should
not be viewed by investors as "shares" in either Fording
Inc. or the Trust.  As holders of Units
in the Trust, the Unitholders will
not have the statutory rights normally associated with ownership of shares of a
corporation including, for example, the right to bring "oppression" or "derivative"
actions.

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.  The Trust
is not a trust company and is not registered under
applicable legislation governing trust companies as it does not carry on, or
intend to carry on, the business of a trust company.

Limited
Likelihood of Unitholder Liability

Effective
July 1, 2004, income trusts settled in Alberta, such as the Trust, have the
protection of limited liability afforded by the Income Trust Act
(Alberta) (the "ITLA"), in respect of any act, default, obligation or
liability of the Trust arising after the effective date of the legislation.
However, the ITLA does not preclude a claim for liability for any act, default,
obligation, or liability arising before July 1, 2004.  Ontario has passed
legislation similar to the ITLA and Quebec has legislation that provides similar
protection to unitholders.

The
Declaration of Trust provides for additional limits to the liability of the
Unitholders.  The Declaration of Trust provides that no Unitholder will be
subject to any liability in connection with the Trust or its obligations and
affairs, and in the event that a court determines 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.
 Pursuant to the Declaration of Trust, the Trust will indemnify and hold
harmless each Unitholder from any costs, damages, liabilities, expenses, charges
and losses suffered by a Unitholder resulting from or arising out of such
Unitholder not having such limited liability. The Declaration of Trust provides
that the Trustees and the Trust will make reasonable efforts to include a
provision in all contracts signed by or on behalf of the Trust to the effect
that such obligation will not be binding upon the Trustees or Unitholders
personally.

Notwithstanding
that the Declaration of Trust seeks to limit the liability of a Unitholder to
any person in connection with a holding of Units, the effectiveness of such
provisions is uncertain. Further it is not yet clear to what extent Unitholders
outside of Alberta, Ontario and Quebec benefit from the legislation that those
provinces have enacted.  Accordingly, there remains a risk that a
Unitholder could be held personally liable for obligations of the Trust (to the
extent

32

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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. Counsel to the Trust have advised that they view this
risk as remote.

Limitations
on Non-Resident Unitholders

Certain
provisions of the Tax Act require that the Trust not be established or
maintained primarily for the benefit of Non-Residents ("Non-Resident
Beneficiaries").  Accordingly, in order to comply with such provisions,
the Declaration of Trust contains restrictions on the ownership of Units by
Unitholders who are Non-Resident Beneficiaries or for the benefit of
Non-Resident Beneficiaries. The Trustees may require declarations as to the
jurisdictions in which beneficial owners of Units are resident. If the Trustees
become aware, that non-resident ownership has reached a level such that it is
prudent to implement remedial measures, or that such a situation is imminent,
the Trustees may issue a public announcement thereof and shall not accept a
subscription for Units from or issue or register a transfer of Units to a person
unless the person provides a declaration that the person is not a Non-Resident
(or, in the discretion of the Trustees, that the person is not a Non-Resident
Beneficiary).  If, notwithstanding the foregoing, the Trustees determine
that more than 49% of the Units (on either a basic or fully diluted basis) are
held by or for the benefit of Non-Resident Beneficiaries, the Trustees may send
a notice to such Unitholders, chosen in inverse order to the order of
acquisition or registration or in such other manner as the Trustees may consider
equitable and practicable, requiring them to sell their Units or a portion
thereof within a specified period of not more than 60 days. If the Unitholders
receiving such notice have not sold the specified number of Units or provided
the Trustees with satisfactory evidence that they are not Non-Residents and do
not hold Units for the benefit of Non-Resident Beneficiaries within such period,
the Trustees may on behalf of such Unitholders sell such Units, and, in the
interim, the voting and distribution rights attached to such Units shall be
suspended.  Upon such sale, the affected holders shall cease to be
Unitholders and their rights shall be limited to receiving the net proceeds of
sale upon surrender of the certificates representing their Units.

The
Trustees together with management continue to monitor the level of Non-resident
ownership of the Trust as well as the on-going debate regarding limitations on
such ownership effectively prescribed by the Tax Act.  The Trustees are
currently evaluating a number of options for dealing with Non-resident ownership
and in addition, through management and the Trust's outside advisors, are
participating in the on-going debate surrounding such restrictions.  Some
of the options being considered by the Trustees could result in the delisting of
the Units from the NYSE or otherwise restrict their liquidity. The market price
of the Units could decline in the event that the Trustees elect to undertake one
or more such measures. One of the elements of the reorganization discussed under
the heading "Three Year History - Proposed Reorganization" would, if
approved, provide an interim structural solution for dealing with Non-Resident
Ownership.

Redemption
Right

Units
are redeemable at any time on demand by the holders thereof in accordance with
the terms described below. Upon receipt of the redemption request by the Trust,
all rights to and under the Units tendered for redemption
shall be surrendered and the holder thereof shall be entitled to receive a price
per Unit (the "Redemption Price")
equal to the lesser of:

(a)

90%
of the "market price" of the Units
on the principal market on which the Units
are quoted for trading during the ten trading day period ending immediately
prior to the date on which the Units are surrendered to
the Trust for redemption (the "Redemption
Date"); and

(b)

the
"closing market price" on the
principal market on which the Units
are quoted for trading, on the Redemption Date.

For
the purposes of this calculation:

"market
price" will be an amount equal to the average of the closing price of the Units
for each of the trading days for the ten trading day reference period on which
there was a closing price on the principal exchange or market
on which the Units are quoted for trading; provided that,
if the applicable exchange or market does not provide a closing price but only
provides the highest and lowest prices of the Units traded
on a particular day, the "market price" shall be an
amount equal to the weighted average of the highest and lowest prices for each
of the trading days on which there was a trade; and provided further that, if
there was trading on the applicable exchange or market for fewer than five of
the ten trading days in the reference period, the "market
price" shall be the average of the following prices established for each of
the ten trading days: (i) the average of the last bid and
last ask prices for each day on which there was no trading; (ii)
the closing price of the Units for each day that there was
trading if the exchange or market provides a closing price; and (iii)
the average of the highest and lowest prices of the Units
for each day that there was trading, if the market provides only the highest and
lowest prices of Units traded on a particular day; and

33

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"closing
market price" shall be an amount equal to the closing price of the Units
if there was a trade on the date and the exchange or market provides a closing
price; an amount equal to the average of the highest and lowest prices of the Units
if there was trading and the exchange or other market
provides only the highest and lowest prices of Units
traded on a particular day; or the average of the last bid and last ask price of
the Units if there was no trading on the date.

The
aggregate Redemption Price payable by the Trust
in respect of any Units surrendered for redemption during
any calendar month shall be paid by cheque drawn on a Canadian bank or a trust
company in lawful money of Canada, on or before the last
day of the calendar month following the month in which the Units
were tendered for redemption, provided that the entitlement of Unitholders
to receive cash upon the redemption of their Units is
subject to the limitations that: (i) the total amount
payable by the Trust in respect of such Units
and all other Units tendered for
redemption in the same calendar month shall not exceed $50,000
(provided that the Trustees may, in their sole discretion,
waive such limitation in respect of any calendar month); (ii)
at the time such Units are tendered for redemption, the
outstanding Units shall be listed for trading or quoted on
any stock exchange or market which the Trustees consider,
in their sole discretion, provides representative fair market value prices for
the Units; and (iii) the normal
trading of the outstanding Units is not suspended or
halted on any stock exchange on which the Units are listed
(or, if not listed on a stock exchange, on any market on
which the Units are quoted for trading) on the Redemption
Date or for more than five trading days during the ten day trading period ending
on the Redemption Date.

If
a Unitholder is not entitled to receive cash upon the
redemption of Units as a result of the foregoing
limitations, then the Redemption Price for such Units
shall, subject to receipt of all necessary regulatory approvals (which the Trust
shall use commercially reasonable efforts to obtain), be paid and satisfied by
way of a distribution in specie of securities of Fording
Inc. or the Trust having a fair market value, as
determined by the Trustees, equal to the Redemption
Price of the surrendered Units for which cash is not
available. The Trust shall be entitled to all interest or
distributions paid or accrued and unpaid on such securities on or before the
date of the distribution in specie.

It
is anticipated that the redemption right will not be the primary mechanism for
holders of Units to dispose of their Units.
Securities that may be distributed in specie to Unitholders
in connection with a redemption will not be listed on any stock exchange and no
market is expected to develop in such securities. Such securities may also be
subject to an indefinite "hold period" or other resale
restrictions under applicable securities laws. As well, such securities may not
be qualified investments for trusts governed by registered retirement savings
plans, registered retirement income funds, registered education savings plans
and deferred profit sharing plans.

Declaration
of Trust

The
Trust was formed as an open-ended mutual fund trust created on February 26, 2003
pursuant to the Declaration of Trust, which provides the manner in which the
Trust will operate.

Amendments
to the Declaration of Trust

The
Declaration of
Trust may be amended from time to time if approved by at least 66 2/3% of the
votes cast at a meeting of the Unitholders called for such
purpose.

The
Trustees may, without the approval of the Unitholders,
make certain amendments to the Declaration
of Trust, including amendments:



34

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(a)

for
the purpose of ensuring continuing compliance with applicable laws (including
the Tax Act), regulations,
requirements or policies of any governmental or other authority having
jurisdiction over the Trustees or over the Trust;

(b)

deemed
necessary or advisable to ensure that the Trust has not
been established or maintained primarily for the benefit of Non-Residents;

(c)

which,
in the opinion of the Trustees, provide additional
protection or benefit for the Unitholders;

(d)

to
remove any conflicts or inconsistencies in the Declaration
of Trust or to make corrections, including the correction or rectification of
any ambiguities, defective provisions, errors, mistakes or omissions, which are,
in the opinion of the Trustees, necessary or desirable and
not prejudicial to the Unitholders; and

(e)

which,
in the opinion of the Trustees, are necessary or desirable
as a result of changes in taxation or other laws or the administration or
enforcement thereof,

provided
that the Trustees may not unilaterally amend the Declaration
of Trust if such amendment would: (i) amend the amending
provisions; (ii) amend the Unitholders'
voting rights; (iii) cause the Trust
to fail to qualify as a "mutual fund trust" under the Tax
Act or cause the Units to constitute "foreign
property" under the Tax Act.

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 acquirer to proceed either by way of a "Permitted
Bid" (defined below) or with the concurrence of the Trustees.

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.

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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.

Distribution
Policies

The
Trust

It
is the policy of the Trust to distribute the 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 of
the Trust determine that the Trust
does not have sufficient cash available to make the full amount of any
distribution, the payment of such distribution may be made in Units.

Fording
Inc.

The
Board of Directors distributes Fording Inc.'s Available
Cash to the Trust, plus an amount equal to the expenses
payable by the Trust, subject to compliance with legal and
contractual obligations, by way of interest on the Fording
Subordinated Notes, dividends or other distributions on the Fording
Common Shares and principal repayments on the Fording
Subordinated Notes.  Such distributions are made quarterly based primarily
on Fording Inc.'s expected results for the quarter, but
may take into account its expected future performance.  Subsequent
distributions may be adjusted for amounts paid in prior periods if the actual Available
Cash for the prior period is greater than or less than the expected results in
the period.  Available Cash will be determined after
provision for cash reserves, which includes the proportionate share of cash
reserves at the Partnership level.

The
Elk Valley Coal Partnership

The
Elk Valley Coal Partnership distributes to its Partners,
in proportion to their respective Distribution
Entitlements, their portion of Partnership Distributable
Cash on a monthly basis.

Distribution
History

The
following quarterly distributions were paid by the Trust
on a per Unit basis for 2004 and 2003, inclusive of the
two special distributions totalling $1.50 per Unit (paid
as part of the April 15, 2003 and July
15, 2003 distributions), that formed part of the Arrangement:

|2004                   |       | 2003                   |         
|---------------------- | ----- | ---------------------- | --------
|April
      15, 2004   | $1.00 | April
      15, 2003   | $1.00(1)
|July
      15, 2004    | $1.00 | July
      15, 2003    | $1.49(2)
|October
      15, 2004 | $1.10 | October
      15, 2003 | $1.00   
|January
      17, 2005 | $1.30 | January
      15, 2004 | $1.00   



Notes:

(1)

Includes
$0.74 per Unit on account of the special distribution.

(2)

Includes
$0.76 per Unit on account of the special distribution.

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

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



MARKETS
FOR SECURITIES

The
Units are listed and posted for trading on the TSX
under the symbol "FDG.UN" and on the NYSE under the
symbol "FDG".  The following table sets out the
trading price range and volume of the Units traded on the Toronto
and New York Stock Exchanges during the most recent financial
year ended December 31, 2004:

|          | TSX             | NYSE           
|--------- | --------------- | ---------------
|Date      | High            | Low            
|January   | $
        45.98 | $
        41.00
|February  | $
        55.34 | $
        43.95
|March     | $
        59.15 | $
        49.42
|April     | $
        58.50 | $
        50.50
|May       | $
        55.19 | $
        43.50
|June      | $
        57.36 | $
        51.90
|July      | $
        61.80 | $
        55.51
|August    | $
        65.50 | $
        55.01
|September | $
        72.95 | $
        64.24
|October   | $
        80.00 | $
        68.27
|November  | $
        92.05 | $
        70.05
|December  | $
        94.50 | $
        79.35



On
February 28, 2005, the closing trading price of the Units on the TSX and on the
NYSE was, respectively, $114.52 and US$93.49 per Unit.

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 Cominco, Westshore
and OTPP and Sherritt (acting
together) with the right to nominate one Trustee and one
Director 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 a certain minimum ownership interest in the Trust.
 The rights of both Sherritt and Westshore
to put forward nominees have terminated for this reason.  The nominee of OTPP
must be an Independent Director or an Independent
Trustee, as the case may be.  The balance of the Trustees
will be recommended for election by the Governance
Committee of the Trustees and nominated for election by
the Trustees.  The balance of Directors will be
nominated by the Governance Committee of the Board of
Directors and nominated for election by the Board of Directors.

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.



37

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The
Chairman and Chief Executive Officer is 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 Cominco or any of its affiliates, or of
the Elk Valley Coal 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.

Audit
Committee Disclosure

The
text of the Audit Committee Charter for the Trust
is located in Appendix "D" to
this Annual Information Form.  The Audit
Committee Charter for Fording Inc. can be viewed at www.fording.ca.

Principal
Accounting Fees and Services

Following
is a summary of professional services provided by the Trust's principal
auditors, PricewaterhouseCoopers LLP, during the years
ended December 31, 2003 and 2004 and the related fees:

2004
      2003Audit Fees
      
      $277,500
      $258,000Audit Related Fees
      
      $128,413
      $241,500Tax Fees
      
      $22,750
      $57,510All Other Fees
      
      $1,625
      $1,625Total
      
      $430,288
      $558,635




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 the limited
reviews of quarterly financial information.

Audit-Related
Fees

Audit
related fees include professional services rendered by PricewaterhouseCoopers
LLP in the following areas: accounting consultations; review of documents
required for debt refinancing; audits related to pension plans; compliance with
the terms of various contractual agreements; and requirements of the
Sarbanes-Oxley Act of 2002.

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 the purchase of a license to access a financial reporting and
assurance information database developed by PricewaterhouseCoopers
LLP.

Pre-approval
Policies and Procedures

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



38

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Environmental,
Health and Safety Committee

The
Board of Directors has constituted an Environmental,
Health and Safety Committee to provide oversight of Fording
Inc.'s interest in respect of these matters.

Trustees
and Directors

The
majority of the Trustees and Directors are independent.
 The Independent Trustees and
Directors meet at least once annually in camera, without management or
non-independent Trustees and Directors being present.
 The Independent Trustees and
Directors met five times in 2004.

By
agreement of the Principal Unitholders at the time of the Arrangement,
the Declaration
of Trust and the Bylaws of Fording Inc. provide for the Chair
and Chief Executive Officer of each of the Trust
and Fording Inc. to be appointed from among the Independent
Trustees and Independent Directors
respectively.  As the appointment of the Chief Executive
Officer results in the incumbent being an officer of the Trust
and Fording Inc., the Trustee or Director appointed to the
position no longer meets the technical definition of an Independent
Trustee or Director as defined in Multilateral
Instrument 52-110 - Audit Committees.  However, the Chief Executive
Officer is not an officer of the Elk Valley Coal
Partnership or of any of its subsidiaries and is not responsible for the
day-to-day management of the business of the Trust or
Fording Inc.  Accordingly, it is not necessary that the positions of Chair
and Chief Executive Officer be held by separate
individuals in order to enhance the independence of the Trustees and the Board
of Directors from management of the Trust, Fording Inc.,
its subsidiaries and the Elk Valley Coal Partnership and
its subsidiaries.

The
following is a brief biography of each of the Trustees of
the Trust and the Directors of Fording
Inc., including their municipality of residence and a description of their
principal occupation during the last five years.  The Trustees
and the Board of Directors have each determined that fixed
term limits for service should not be established.  As a group, the
individuals listed below owned directly or indirectly, or exercised control or
direction over 94,919 Units as at February
28, 2005 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
2005 Management Information Circular.

Trustees

|Dr.
      Lloyd I. Barber, C.C., S.O.M.
      Residence:
      Regina
      Beach, Saskatchewan, Canada
      Trustee:
      Fording
      Canadian Coal Trust (2003)
      Age:
      73                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dr.
      Barber is President Emeritus of the University of Regina, a position he
      has held since 1990.  From 1976 to 1990, Dr. Barber was President of
      the University of Regina.  Dr. Barber serves as a director of Teck
      Cominco Limited, CanWest Global Communications Corp. and Greystone Capital
      Management.  Dr. Barber is a Companion of the Order of Canada.
      Dr.
      Barber is not an Independent Trustee under the Declaration of Trust
      because he is a director of a Principal Unitholder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Michael
      A. Grandin
      Residence:
      Calgary,
      Alberta, Canada
      Trustee:
      Fording
      Canadian Coal Trust (2003)
      Director:
      Fording
      Inc. (2003)
      Age:
      60                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Michael
      Grandin is currently Chairman and Chief Executive Officer of each of the
      Trust and Fording Inc.  He has held each position since the
      Arrangement became effective in February 2003.  Mr. Grandin was a
      director of Old Fording, the predecessor to the Trust, from 2001 to 2003.
       In February 2004, Mr. Grandin was appointed Dean of the Haskayne
      School of Business at the University of Calgary.  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  IPSCO Inc., BNS Split Corp.,
      the Investment Dealers Association of Canada and EnCana Corporation.
      Mr.
      Grandin would qualify as an Independent Trustee under the Declaration of
      Trust except that he serves as Chief Executive Officer of the Trust and
      Fording Inc. to ensure the independence of the Trust and Fording Inc. from
      Elk Valley Coal.  Mr. Grandin is financially literate.(1)
      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.



39

---

|Michael
      S. Parrett, C.A.
      Residence:
      Aurora,
      Ontario, Canada
      Trustee:
      Fording
      Canadian Coal Trust (2003)
      Director:
      Fording
      Inc. (2003)
      Age:
      53                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Mr.
      Parrett is an independent consultant with over 23 years of 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 Pengrowth Corporation and Gabriel Resources Ltd.  Mr. Parrett is a
      Chartered Accountant.
      Mr.
      Parrett is an Independent Trustee under the Declaration of Trust and is a
      Member of the Trust's Audit and Governance Committees and Fording Inc.'s
      Audit Committee.  Mr. Parrett is financially literate.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Harry
      G. Schaefer, F.C.A.
      Residence:
      Calgary,
      Alberta, Canada
      Trustee:
      Fording
      Canadian Coal Trust (2003)
      Director:
      Fording
      Inc. (2003)
      Age:
      68                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Mr.
      Schaefer was a director of Old Fording, the predecessor to the 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.
       Mr. Schaefer has held these positions since 2003 and 1998,
      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 chair of the Alberta
      Chapter of the Institute of Corporate Directors.  Mr. Schaefer is a
      Chartered Accountant.
      Mr.
      Schaefer is an Independent Trustee under the Declaration of Trust and a
      Member of the Trust's and Fording Inc.'s Audit Committees and a member
      of Fording Inc.'s Governance Committee.  Mr. Schaefer is
      financially literate.(1)                                                                                                                                                                                                                                                                                                     
|Peter
      Valentine, F.C.A.
      Residence:
      Calgary,
      Alberta, Canada
      Trustee:
      Fording
      Canadian Coal Trust (2003)
      Age:
      68                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|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 to large sized organizations, with
      expertise in the petroleum industry and the Canadian securities practice.
       He is also a director of Livingston International Income Fund,
      Primewest Energy Trust, Superior Plus Income Fund and Resmore Trust
      Company.  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.
      Mr.
      Valentine is an Independent Trustee under the Declaration of Trust and a
      Member of the Trust's Audit and Governance Committees.  Mr.
      Valentine is financially literate.(1)



39

---



|Robert
      J. Wright, C.M., Q.C.
      Residence:
      Toronto,
      Ontario, Canada
      Trustee:
      Fording
      Canadian Coal Trust (2003)
      Age:
      72                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 Chairman 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 a Member of the Order of Canada.
      Mr.
      Wright is not an Independent Trustee under the Declaration of Trust
      because he is a director of a Principal Unitholder.                                                                                                                                                                                                    
|John
      B. Zaozirny, Q.C.
      Residence:
      Calgary,
      Alberta, Canada
      Trustee:
      Fording
      Canadian Coal Trust (2003)
      Age:
      57                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Mr.
      Zaozirny was a director of Old Fording, the predecessor to the Trust from
      1986 to 2003.  He has been counsel to McCarthy Tetrault LLP,
      Barristers and Solicitors since 1987.  He has served as Vice Chairman
      of Canaccord Capital Corporation since 1996 and is also a director of
      Acetex Corporation, Canadian Oil Sands Investments Inc., Computer
      Modelling Group, IPSCO Inc., Matrikon Inc., Middlefield Resource Funds,
      Pengrowth Corporation, Provident Energy Ltd., Titanium Corporation Inc.,
      Bankers Petroleum Inc. and TerraVest Income Fund.  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.
      Mr.
      Zaozirny is an Independent Trustee under the Declaration of Trust and a
      Chair of the Trust's Governance Committee.



Note:

(1)

Pursuant
to Multilateral Instrument 52-110 - Audit Committees, an individual is
financially literate if he or she has the ability to read and understand a set
of financial statements that presents a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and complexity of
issues that can reasonably be expected to be raised by the issuer's financial
statements.

Directors

|Michael
      A. Grandin
      Michael S. Parrett, C.A.
      Harry G. Schaefer, F.C.A.                                       
|------------------------------------------------------------------------------------------------------------------------------
|The
      biographies of these individuals are set forth above under "Biographies
      of Trustees and Directors - Trustees".





41

---





|Dawn
      L. Farrell
      Status:
      Independent
      - Member of Fording Inc.'s Environmental, Health and Safety Committee
      Residence:
      Vancouver,
      B.C., Canada
      Director:
      Fording
      Inc. (2004)
      Age:
      45                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Mrs.
      Farrell is currently Executive Vice President, Generation, BC Hydro, a
      position she has held since May 2003.  Prior to joining BC Hydro,
      Mrs. Farrell was Executive Vice President, Corporate Development for
      TransAlta Corporation.  Throughout her 17 year career at TransAlta,
      she held a number of executive positions including Executive Vice
      President, Independent Power Projects and Vice President, Energy Marketing
      and IPP Development.  Mrs. Farrell has participated on a number of
      boards, including Mount Royal College, Mount Royal College Foundation,
      Mercury Electric, Vision Quest Windelectric, TransAlta Cogeneration and
      MEGA (a joint venture between TransAlta and Gener SA).  She holds a
      Masters Degree in economics from the University of Calgary and attended
      the Advanced Management Program at Harvard University.
      Mrs.
      Farrell is an Independent Director and is a Member of Fording Inc.'s
      Environmental, Health and Safety Committee.                                                                                                                                                                                                                                                                                                       
|Dr.
      Norman B. Keevil
      Residence:
      Vancouver,
      B.C., Canada
      Director:
      Fording
      Inc. (2003)
      Age:
      67                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|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.
      Dr.
      Keevil is not an Independent Director because he is a Chairman of a
      Principal Unitholder.
      Dr.
      Keevil will not be standing for re-election in 2005.                                                                                                                                                                                                                                                                                                                                        
|Richard
      T. Mahler
      Residence:
      Vancouver,
      B.C., Canada
      Director:
      Fording
      Inc. (2003)
      Age:
      61                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|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 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 British Columbia (a provincial Crown corporation formed to
      deliver public services through public/private partnerships) and a trustee
      of Swiss Water Income Fund.  He is also a director of the Vancouver
      Board of Trade 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.
       Mr. Mahler holds an MBA.
      Mr.
      Mahler is an Independent Director and is Chair of Fording Inc.'s
      Governance Committee and a member of its Audit and Environmental, Health
      and Safety Committees.  Mr. Mahler is financially literate.(1)





42

---



|Dr.
      Thomas J. O'Neil
      Residence:
      Prescott,
      Arizona, USA
      Director:
      Fording
      Inc. (2003)
      Age:
      64                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dr.
      O'Neil was President and Chief Operating Officer for iron ore miner,
      Cleveland-Cliffs Inc., until his retirement in July 2003.  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, Puru Cooper Inc. and a past director of Hecla Mining Company
      and of Homestake Mining Company.  He was 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.
      Dr.
      O'Neil is an Independent Director and is Chair of Fording Inc.'s
      Environmental, Health and Safety and a member of its Governance Committee.
|William
      W. Stinson
      Residence:
      Toronto,
      Ontario, Canada
      Director:
      Fording
      Inc. (2003)
      Age:
      71                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Mr.
      Stinson is President of Westshore Terminals Ltd., Chairman of Westshore
      Terminals Income Fund, 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.
      Mr.
      Stinson is not an Independent Director because he is a trustee of a
      Principal Unitholder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|David
      A. Thompson
      Residence:
      Vancouver,
      B.C., Canada
      Director:
      Fording
      Inc. (2003)
      Age:
      65                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|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).
      Mr.
      Thompson is not an Independent Director because he is a director of a
      Principal Unitholder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



Note:

(1)

Pursuant
to Multilateral Instrument 52-110 - Audit Committees, an individual is
financially literate if he or she has the ability to read and understand a set
of financial statements that presents a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and complexity of
issues that can reasonably be expected to be raised by the issuer's financial
statements.

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 whose
biographical information was included in the description of the Trustees
(see "Biographies of Trustees
and Directors - Trustees"), owned directly or
indirectly, or exercised control or direction over 105,763 Units
as at February 28, 2005 representing less than 1% of the
outstanding Units.

43

---



|Michael
      A. Grandin
      Position:
      Chairman
      and Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Mr.
      Grandin's biography is set forth above under "Biographies of
      Trustees and Directors - Trustees".                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|James
      L. Popowich
      Position:
      President
      Residence:
      Calgary,
      Alberta, Canada
      Age:
      60                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Mr.
      Popowich was appointed President of the Trust and Fording Inc. effective
      April 8, 2004 and President and Chief Executive of the Elk Valley Coal
      Partnership effective March 1, 2004.  He was formerly the Executive
      Vice President of the Trust, Fording Inc. and the Elk Valley Coal
      Partnership, a position he held since the Arrangement became effective in
      February 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 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, C.A.
      Position:
      Vice
      President and Chief Financial Officer
      Residence:
      Calgary,
      Alberta, Canada
      Age:
      47                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Mr.
      Millos is the Vice President and Chief Financial Officer of the Trust,
      Fording Inc. and the Elk Valley Coal Partnership.  He has held these
      positions since June 1, 2003.  Mr. Millos was formerly the 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
      Position:
      Vice
      President, Employee Relations and Corporate Secretary
      Residence:
      Calgary,
      Alberta, Canada
      Age:
      51                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Mr.
      Jones is the Vice President, Employee Relations & Corporate Secretary
      of the Trust, Fording Inc. and the Elk Valley Coal Partnership.  He
      has held the position of Corporate Secretary since the Arrangement became
      effective in February 2003 and was appointed Vice President, Employee
      Relations in March of 2004.  Mr. Jones was Corporate Secretary of Old
      Fording from 2001 to 2003 and Manager, Employee Relations and Regulatory
      Affairs of 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 Vice Chair of the Calgary Society of Christian
      Education.                                                                                                                                                                                                                                                                           
|Kenneth
      E. Myers, C.A.
      Position:
      Treasurer
      Residence:
      Calgary,
      Alberta, Canada
      Age:
      55                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Mr.
      Myers is Treasurer of the Trust, Fording Inc. and the Elk Valley Coal
      Partnership, positions he has held since the Arrangement became effective
      in February 2003.  Mr. Myers was Treasurer of Old Fording from 2001
      to 2003 and Treasurer of 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 former director of the Financial Executives
      Institute, Calgary Chapter.  Mr. Myers is a member of the Canadian
      Institute of Chartered Accountants, the Alberta Institute of Chartered
      Accountants and the Ordre des comptables agrees du Quebec.                                                                                                                                                                                                                                                                                                         





44

---







|Mark
      D. Gow, C.A.
      Position:
      Controller
      Residence:
      Calgary,
      Alberta, Canada
      Age:
      45                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Mr.
      Gow is Controller of the Trust, Fording Inc. and the Elk Valley Coal
      Partnership, positions he has held since April 1, 2004.  Prior to
      this appointment, he served in the position of Director, Investor
      Relations of the Trust since the Arrangement became effective in February
      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
      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.



LEGAL
PROCEEDINGS

Material
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 other than the CP Rail
dispute and a potential environmental assessment of the Cheviot
project.

CP
Rail Dispute

For
information on the CP Rail Dispute, see "Description of Business - Coal
Transportation".

Cardinal
River Operations

All
licenses and approvals have been received for the Cheviot
Creek pit and the haul road to the Cardinal River mine
preparation plant.  However, a group of environmental organizations have
applied to the Federal Court seeking a further
environmental assessment of the Cheviot project and
challenging certain federal authorizations that the project has received.
 The Federal Court is expected to hear the application in June 2005.
 In addition, an individual appealed certain approvals issued by Alberta
Environment in connection with the project.  The Environmental Appeal Board
heard the appeal in mid-January and the parties are awaiting a decision.

The
Trust continues to monitor progress on these legal issues
and believes that the potential outcomes from these proceedings do not represent
a material risk to ongoing mining at the Cardinal River
mine.  However, negative decisions related to these legal issues could
impact future operations at Cardinal River.

INTEREST
OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Dr.
Norman Keevil is a Director of Fording Inc. and is also
the Chairman of Teck Cominco and one of its significant
shareholders.  As of December 31, 2004, Dr. Keevil reports his holdings in Teck
Cominco as follows: 209,440 Class A shares, 510,101
Class B subordinate voting shares and 22,715 restricted share units.  Teck
Cominco had a material interest in the achievement of synergies under the
Partnership Agreement pursuant to which Fording Inc.'s interest would be
reduced to 62% effective April 1, 2004, to 61% on April 1, 2005 and to 60%on
April 1, 2006.Teck Cominco's entitlements will increase
correspondingly over the same period.

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.



45

---





MATERIAL
CONTRACTS

The
chart briefly describes all of the material contracts of the Trust.
 Material contracts under National Instrument 51-102 - Continuous
Disclosure Obligations, are described as contracts signed out of the ordinary
course and are material to the business.  Each material contract has been
filed on SEDAR and EDGAR.

|Contract
      Name                                  | Date
      Mo/Day/Yr | Parties                                                                                                                                                                                                                                                                                                                                                                        | Consideration                                                                                                                                               | Key
      Terms                                                                                                                                 
|---------------------------------------------------- | -------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------
|Plan
      of Arrangement                            | 02/28/03             | Fording
      Inc., its Security Holders, Fording Coal Limited, 4123212 Canada Ltd.,
      Fording Canadian Coal Trust, Teck Cominco Limited, Westshore Terminals
      Income Fund, Teck-Bullmoose Coal Inc., Quintette Coal Partnership, Luscar
      Ltd, CONSOL, Sherritt International Corporation, Sherritt Coal Partnership
      II and Ontario Teachers' Pension Plan | n/a                                                                                                                                                         | Arrangement                                                                                                                                     
|Declaration
      of Trust                           | 02/26/03             | Fording
      Canadian Coal Trust                                                                                                                                                                                                                                                                                                                                              | n/a                                                                                                                                                         | Declaration
      of Trust                                                                                                                      
|Partnership
      Agreement                          | 02/26/03             | Fording
      Coal Limited, Fording Inc., Teck Cominco Limited, Quintette Coal
      Partnership and Teck-Bullmoose Coal Inc.                                                                                                                                                                                                                                                  | Consideration
      specified in Fording Contribution Agreement and Teck Cominco Contribution
      Agreement                                               | Formation
      and operation of the Elk Valley Coal Partnership.                                                                               
|Combination
      Agreement                          | 01/12/03             | Old
      Fording, Teck Cominco Limited, Westshore Terminals Income Fund, Ontario
      Teachers' Pension Plan Board and Sherritt International Corporation                                                                                                                                                                                                                    | Completion
      of the transactions comprising the Arrangement and payment of related
      expenses                                                       | Agreement
      to create the Elk Valley Coal Partnership and participate in the
      Arrangement                                              
|Met
      Coal Sale and Purchase Agreement           | 02/28/03             | Luscar
      Ltd, 1563706 Ontario Limited, CONSOL of Canada Inc., CONSOL Energy Inc.,
      CONSOL Energy Canada Ltd., Fording Inc. and the Elk Valley Coal
      Partnership                                                                                                                                                                                                  | Issuance
      of 6.4 million Units, grant of royalty and the assumption of assumed
      liabilities.  Consideration subject to working capital adjustment | Elk
      Valley Coal purchases Luscar Mine, Line Creek Mine, Cheviot Project and
      46.4% of the shares Neptune Bulk Terminals (Canada) Ltd.
|Prairie
      Operations Sale and Purchase Agreement | 02/28/03             | Fording
      Coal Limited and Sherritt Coal Acquisition Inc.                                                                                                                                                                                                                                                                                                                  | $225
      million and assumption of assumed liabilities.  Consideration subject
      to working capital adjustment                                        | Sale
      of Old Fording's Prairie Operations to Sherritt Coal Acquisition Inc.                                                                





46

---







|Contract
      Name                                             | Date
      Mo/Day/Yr | Parties                                                                                                                              | Consideration                                                                                          | Key
      Terms                                                                                            
|--------------------------------------------------------------- | -------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------
|Non-Competition
      Agreement                                 | 02/28/03             | Fording
      Inc., the Elk Valley Coal Partnership, the Trust, Luscar Ltd. Luscar
      Energy Partnership and Teck Cominco Limited | Exchange
      of covenants                                                                            | Non-Competition
      agreement in respect of the met and thermal coal markets for five years              
|Administrative
      Services Agreement                         | 02/28/03             | The
      Elk Valley Coal Partnership and the Trust                                                                                  | Provision
      of executives, personnel and services on a cost reimbursement basis                    | Provision
      of administrative services to the Trust                                                    
|Administrative
      and Industrial Minerals Services Agreement | 02/28/03             | Fording
      Inc. and the Elk Valley Coal Partnership                                                                               | Provision
      of executives, personnel and services on a cost reimbursement basis                    | Provision
      of administrative services to Fording Inc.                                                 
|Governance
      Agreement                                      | 02/28/03             | The
      Trust, Fording Inc. and Teck Cominco Limited                                                                               | Participation
      in arrangement; covenant to support arrangements described in agreement            | Nomination
      of Director and Trustee                                                                   
|Governance
      Agreement                                      | 02/28/03             | The
      Trust, Fording  Inc. and Ontario Teachers' Pension Plan Board                                                              | Participation
      in arrangement; covenant to support arrangements described in agreement            | Nomination
      of Director and Trustee                                                                   
|Fording
      Contribution Agreement                            | 02/28/03             | Fording
      Coal Limited, Fording Inc. and the Elk Valley Coal Partnership                                                         | Contribution
      of assets in consideration for the issuance of Partnership Interest                 | Contribution
      of Fording Coal Limited assets to the Elk Valley Coal Partnership                       
|Teck
      Cominco Contribution Agreement                       | 02/28/03             | Teck
      Cominco Limited, Teck-Bullmoose Coal Inc., Quintette Coal Partnership and
      the Elk Valley Coal Partnership           | Contribution
      of assets in consideration for the issuance of Partnership Interest                 | Contribution
      of Teck Cominco, Quintette and Bullmoose assets to the Elk Valley Coal
      Partnership
|Human
      Resources Agreement                                 | 02/28/03             | Fording
      Inc., Teck Cominco Limited, the Elk Valley Coal Partnership and the Elk
      Valley Coal Partnership Corporation      | Allocation
      of employment costs in respect of employees joining Elk Valley Coal
      Partnership | Specifies
      arrangements regarding employees joining the Elk Valley Coal Partnership                   
|Unitholder
      Rights Plan Agreement                          | 02/28/03             | The
      Trust and Computershare Trust Company of Canada                                                                            | n/a                                                                                                    | Customary
      Canadian unitholder rights plan                                                            
|Non-Competition
      Agreement                                 | 02/28/03             | Fording
      Inc., the Elk Valley Coal Partnership, the Trust, Luscar Ltd. Luscar
      Energy Partnership and Teck Cominco Limited | Exchange
      of covenants                                                                            | Non-Competition
      agreement in respect of the met and thermal coal markets for five years              
|Administrative
      Services Agreement                         | 02/28/03             | The
      Elk Valley Coal Partnership and the Trust                                                                                  | Provision
      of executives, personnel and services on a cost reimbursement basis                    | Provision
      of administrative services to the Trust                                                    
|Administrative
      and Industrial Minerals Services Agreement | 02/28/03             | Fording
      Inc. and the Elk Valley Coal Partnership                                                                               | Provision
      of executives, personnel and services on a cost reimbursement basis                    | Provision
      of administrative services to Fording Inc.                                                 
|Governance
      Agreement                                      | 02/28/03             | The
      Trust, Fording Inc. and Teck Cominco Limited                                                                               | Participation
      in arrangement; covenant to support arrangements described in agreement            | Nomination
      of Director and Trustee                                                                   
|Governance
      Agreement                                      | 02/28/03             | The
      Trust, Fording  Inc. and Ontario Teachers' Pension Plan Board                                                              | Participation
      in arrangement; covenant to support arrangements described in agreement            | Nomination
      of Director and Trustee                                                                   
|Fording
      Contribution Agreement                            | 02/28/03             | Fording
      Coal Limited, Fording Inc. and the Elk Valley Coal Partnership                                                         | Contribution
      of assets in consideration for the issuance of Partnership Interest                 | Contribution
      of Fording Coal Limited assets to the Elk Valley Coal Partnership                       
|Teck
      Cominco Contribution Agreement                       | 02/28/03             | Teck
      Cominco Limited, Teck-Bullmoose Coal Inc., Quintette Coal Partnership and
      the Elk Valley Coal Partnership           | Contribution
      of assets in consideration for the issuance of Partnership Interest                 | Contribution
      of Teck Cominco, Quintette and Bullmoose assets to the Elk Valley Coal
      Partnership
|Human
      Resources Agreement                                 | 02/28/03             | Fording
      Inc., Teck Cominco Limited, the Elk Valley Coal Partnership and the Elk
      Valley Coal Partnership Corporation      | Allocation
      of employment costs in respect of employees joining Elk Valley Coal
      Partnership | Specifies
      arrangements regarding employees joining the Elk Valley Coal Partnership                   
|Unitholder
      Rights Plan Agreement                          | 02/28/03             | The
      Trust and Computershare Trust Company of Canada                                                                            | n/a                                                                                                    | Customary
      Canadian unitholder rights plan                                                            



47

---





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
2005 Management Information Circular and Proxy Statement which is being prepared
for the annual and special meeting of Unitholders to be
held on May 4, 2005.  Additional financial
information in respect of the Trust is provided in its
audited financial statements for the year ended December
31, 2004 and Management's Discussion
and Analysis of Financial Condition and Results
of Operations for the year ended December
31, 2004 contained in the Trust's 2004 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 Comparative 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 recently completed 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), (c)
and (d) 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.

Additional
information regarding the Trust, Fording Inc. and the
Elk Valley Coal 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



48

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APPENDIX
"A":  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 steelmaking 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.

"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.



A-1

---



"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.



A-2

---

APPENDIX
"B":  GENERAL GLOSSARY

"Arrangement"
means the transaction involving Old Fording, Teck Cominco,
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
Elk Valley Coal Partnership was formed.

"Available
Cash" means in general, cash from operations of Fording
Inc. on a consolidated basis (including its proportionate interest in the Partnership),
before interest payable on the Fording
Subordinated Notes and changes in non-cash working capital, less:

(a)

Sustaining
Capital Expenditures;

(b)

Principal
repayments on debt obligations except on the Fording
Subordinated Notes;

(c)

the
amount allocated to cash reserves; and

(d)

expenses
and other obligations of the Trust.

"Board
of Directors" means the board of directors of Fording Inc.;

"CBCA"
means the Canada Business
Corporations Act.

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

"CPR"
mean Canadian Pacific Railway Limited

"Declaration
of Trust" means the declaration of trust dated February
26, 2003 by which the Trust was created.  The Declaration
of Trust can be viewed on SEDAR and EDGAR.

"Director"
a member of the Board of Directors of Fording Inc.

"Distributable
Cash" means all of the cash received by the Trust from Fording
Inc. and any other net cash investment income of the Trust,
less:

(a)

expenses
and other obligations of the Trust; and

(b)

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

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

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

"Elk
Valley Coal Partnership" or the "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.

"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.



B-1

---



"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 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) space
of Fording Inc.

"Independent
Trustee" means a Trustee 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 Trustee 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 Trustee
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 the
Trust.

"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.

"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.

"NSC"
means Nippon Steel Corporation.

"NYCO"
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.

B-2

---



"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.

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

"Partners"
means the partners of the Elk Valley Coal Partnership, on
December 31, 2004, being Fording Inc., Teck
Cominco and Teck Cominco's affiliates QCP
and TBCI and "Partner" means any one of the Partners.

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

"Partnership
Distributable Cash" means, in general, cash from operations of the
Partnership, before changes in non-cash working capital less:

(a)

payment
of debt obligations, if any;

(b)

Sustaining
Capital Expenditures of the Partnership; and

(c)

allocations
to a reserve for reasonably anticipated working capital and capital expenditure
requirements (provided that reasonable use will be made of the Partnership's
operating lines for working capital purposes). The amount of the allocation to
the reserve by the Partnership in any period will be determined jointly by Teck
and Fording Inc.

plus
any other amounts distributed by the Partnership to the Partners in its
discretion.

"Partnership
Sustaining Capital Expenditures" means expenditures in respect of
additions, replacements or improvements to property, plant and equipment
required to maintain the Elk Valley Coal 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 Cominco, 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
and an affiliate of Teck Cominco.

"SEDAR"
means the Canadian System for Electronic Document Analysis and Retrival.

"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.

B-3

---



"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.

"Tax
Act" means the Income Tax Act, R.S.C. 1985,
c.1 (5th Supp.), as amended.

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

"Teck
Cominco" means Teck Cominco Limited, a corporation
existing under the laws of Canada.

"Teck
Cominco Coal Partnership" means the Teck Cominco Coal Partnership which is
an affiliate of Teck Cominco and is a general partnership existing under the
laws of British Columbia.

"Trust"
means Fording Canadian Coal Trust,
an open-ended mutual fund trust created pursuant to the Declaration
of Trust and governed by the laws of Alberta.

"Trustee"
means a trustee of the Trust.

"TSX"
means the Toronto Stock Exchange.

"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.

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



B-4



---



APPENDIX
"C":  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 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.

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 Elk
Valley Coal 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".

C-1

---



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.

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.

C-2

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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.

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.

C-3

---



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.



C-4



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APPENDIX
"D":  FORDING CANADIAN COAL TRUST
AUDIT COMMITTEE CHARTER

PURPOSE

The
Audit Committee (the "Committee") is a standing committee appointed by the
Trustees to assist the Trustees in fulfilling its oversight responsibilities
with respect to financial reporting including responsibility to:

- 
- oversee
the integrity of the Trust's financial statements and financial reporting
process, including the audit process and the Trust's internal accounting
controls and procedures and compliance with related legal and regulatory
requirements;
- oversee
the qualifications and independence of the external auditors;
- oversee
the work of the Trust's financial management, internal audit function and
external auditors in these areas; and
- provide
an open avenue of communication between the external auditors, the internal
auditors, the Trustees, the board of directors of Fording Inc. and the officers
(collectively, "Management") of the Trust, Fording Inc. and the Elk Valley
Coal Partnership (the "Partnership").

In
addition, the Committee will review and/or approve any other matter specifically
delegated to the Committee by the Trustees.

COMPOSITION
AND PROCEDURES

In
addition to the procedures and powers set out in the resolution of the Trustees
establishing this Committee, the Committee will have the following composition
and procedures:

1.

Composition

The
Committee shall consist of no fewer than three members.  None of the
members of the Committee shall be an officer or employee of the Trust, Fording
Inc. or any of its subsidiaries or the Partnership or any of its subsidiaries
and each member of the Committee shall be an "Independent Trustee" (as
defined in the Declaration of Trust
establishing the Trust) and an "independent trustee" (in accordance with the
definition of "independent director" from time to time under the
requirements or guidelines for audit committee service under applicable
securities laws and the rules of any stock exchange on which the Trust's units
are listed for trading); provided that the fact that a Trustee is also a
director of Fording Inc. will not disqualify the Trustee from being a member of
the Committee provided that the Trustee would otherwise be eligible to be a
member of the Committee.  The Chair of the Board/CEO shall be an "ex
officio" member of the Committee.

2.

Appointment
and Replacement of Committee Members

Any
member of the Committee may be removed or replaced at any time by the Trustees
and shall automatically cease to be a member of the Committee upon ceasing to be
a Trustee.  The Trustees may fill vacancies on the Committee by election
from among its number.  The Trustees shall fill any vacancy if the
membership of the Committee is less than three Trustees or the Committee does
not have at least one member with accounting or related financial expertise.
 If and whenever a vacancy shall exist on the Committee, the remaining
members may exercise all its power so long as a quorum remains in office.
 Subject to the foregoing, the members of the Committee shall be elected by
the Trustees annually and each member of the Committee shall hold office as such
until the next annual meeting of unitholders after his or her election or until
his or her successor shall be duly elected and qualified.

3.

Financial
literacy

All
members of the Committee must be "financially literate" (as that term is
interpreted by the Trustees in their business judgment or as may be defined from
time to time under the requirements or guidelines for audit committee service
under securities laws and the rules of any stock exchange on which the Trust's
units are listed for trading) or must become financially literate within a
reasonable period of time after his or her appointment to the Committee.
 At least one member of the Committee must also have "accounting or
related financial expertise" as that term is defined from time to time under
the requirements or guidelines for audit committee service under applicable
securities laws and the rules of any stock exchange on which the Trust's
securities are listed for trading or, if it is not so defined, as that term is
interpreted by the Trustees in their business judgment.

D-1

---



4.

Service
on Multiple Audit Committees

If
a Committee member serves on more than three public issuer audit committees, the
Trustees must determine that such service would not impair the ability of the
member to effectively serve on the Committee and may disclose such determination
in the annual proxy statement.

5.

Separate
Executive Meetings

The
Committee shall meet at least once every quarter, and more often as warranted,
with the Chief Financial Officer(s) of the Partnership, Fording Inc. and the
Trust, the head of the internal audit function of such entities, if other than
the Chief Financial Officer, and the external auditors in separate executive
sessions to discuss any matters that the Committee or each of these groups
believes should be discussed privately.

6.

Professional
Assistance

The
Committee may retain special legal, accounting, financial or other consultants
to advise the Committee at the Trust's expense.

7.

Reliance

Absent
actual knowledge to the contrary (which shall be promptly reported to the
Trustees), each member of the Committee shall be entitled to rely on (i) the
integrity of those persons or organizations within and outside the Trust from
which it receives information, (ii) the accuracy of the financial and other
information provided to the Committee by such persons or organizations and (iii)
representations made by Management and the external auditors, as to any
information technology, internal audit and other non-audit services provided by
the external auditors to the Trust and its subsidiaries.

8.

Review
of Charter

The
Committee shall review and reassess the adequacy of this Charter at least
annually and otherwise as it deems appropriate and recommend changes to the
Trustees.  The Committee shall evaluate its performance with reference to
this Charter annually.  The Committee will approve the form of disclosure
of this Charter on the Trust's website and, where required by applicable
securities laws or regulatory requirements, in the annual proxy circular or
annual report of the Trust.

9.

Delegation

The
Committee may delegate from time to time to any person or committee of persons
any of the Committee's responsibilities that lawfully may be delegated.

10.

Reporting
to the Trustees

The
Committee shall report through the Committee Chair to the Trustees following
meetings of the Committee on matters considered by the Committee, its activities
and compliance with this Charter.

D-2

---



SPECIFIC
MANDATES OF THE COMMITTEE

The
Committee shall:

I.

In
Respect of the External Auditors

(a)

review
the performance of the external auditors who are accountable to the Committee
and the Board as the representatives of the unitholders, including the lead
partner of the independent auditor team and make recommendations to the Trustees
as to the reappointment or appointment of the external auditors of the Trust to
be proposed in the Trust's proxy statement for shareholder approval and shall
have authority to terminate the external auditors;

(b)

review
the reasons for any proposed change in the external auditors which is not
initiated by the Committee or Trustees and any other significant issues related
to the change, including the response of the incumbent auditors, and enquire as
to the qualifications of the proposed auditors before making its recommendation
to the Trustees;

(c)

approve
the terms of engagement and the compensation to be paid by the Trust to the
external auditors;

(d)

review
the independence of the external auditors, including a written report from the
external auditors respecting their independence and consideration of applicable
auditor independence standards;

(e)

approve
in advance all permitted non-audit services to be provided to the Trust or any
of its affiliates by the external auditors or any of their affiliates, subject
to any de minimus exception allowed by applicable law; the Committee may
delegate to one or more designated members of the Committee the authority to
grant pre-approvals required by this subsection;

(f)

if
the Committee approves an audit service within the scope of the engagement of
the independent auditor, such audit service shall be deemed to have been
pre-approved for purposes of this subsection;

(g)

review
the disclosure with respect to its pre-approval of audit and non-audit services
provided by the external auditors;

(h)

approve
guidelines for the hiring by the Trust of employees or former employees of the
external auditors;

(i)

review
annually a report from the external auditors in respect of their internal
quality-control procedures, any material issues raised by the most recent
internal quality-control review, or peer review of the external auditors, or by
any inquiry or investigation by governmental or professional authorities, within
the preceding five years, respecting one or more independent audits carried out
by the external auditors, and any steps taken to deal with any such issues;

(j)

review
a report describing:

(k)

all
critical accounting policies and practices to be used in the annual audit,

(l)

all
alternative treatments of financial information within generally accepted
accounting principles that have been discussed with Management, ramifications of
the use of such alternative disclosures and treatments, and the treatment
preferred by the external auditors, and

(m)

other
material written communication between the external auditors and Management,
such as any management letter or schedule of unadjusted differences;

D-3

---



(n)

review
with the external auditors and Management the general audit approach and scope
of proposed audits of the financial statements of the Trust, Fording Inc. and
its subsidiaries, the objectives, staffing, locations, co-ordination and
reliance upon Management in the audit, the overall audit plans, the audit
procedures to be used and the timing and estimated budgets of the audits;

(o)

review
the interim review engagement report of the external auditors before the release
of interim financial statements; and

(p)

discuss
with the external auditors any difficulties or disputes that arose with
Management or the internal auditors during the course of the audit, any
restrictions on the scope of activities or access to requested information and
the adequacy of Management's responses in correcting audit-related
deficiencies.

II.

In
Respect of Financial Disclosure

(a)

review
with the external auditors and Management:

(i)

the
audited financial statements and the notes and Managements' Discussion and
Analysis relating to such financial statements, the annual report, the financial
information of the Trust contained in any prospectus or information circular or
other disclosure documents or regulatory filings of the Trust and make
recommendations to the Trustees for their approval;

(ii)

the
interim financial statements and the notes and Managements' Discussion and
Analysis relating to such financial statements and approve their release to the
public;

(iii)

the
quality, appropriateness and acceptability of the Trust's accounting
principles and practices used in its financial reporting, changes in the Trust's
accounting principles or practices and the application of particular accounting
principles and disclosure practices by Management to new transactions or events;

(iv)

all
significant financial reporting issues and judgments made in connection with the
preparation of the financial statements, including the effects of alternative
methods within generally accepted accounting principles on the financial
statements and any "second opinions" sought by Management from an
independent or other audit firm or advisor with respect to the accounting
treatment of a particular item;

(v)

the
effect of regulatory and accounting initiatives on the Trust's financial
statements and other financial disclosures;

(vi)

any
reserves, accruals, provisions or estimates that may have a significant effect
upon the financial statements of the Trust;

(vii)

the
use of special purpose entities and the business purpose and economic effect of
off balance sheet transactions, arrangements, obligations, guarantees and other
relationships of the Trust and their impact on the reported financial results of
the Trust;

(viii)

any
legal matter, claim or contingency that could have a significant impact on the
financial statements, the Trust's compliance policies and any material
reports, inquiries or other correspondence received from regulators or
governmental agencies and the manner in which any such legal matter, claim or
contingency has been disclosed in the Trust's financial statements;

(ix)

review
the treatment for financial reporting purposes of any significant transactions
which are not a normal part of the Trust's operations; and

D-4

---



(x)

the
use of any "pro forma" or "adjusted" information not in accordance with
generally accepted accounting principles.

(b)

review
and resolve disagreements between Management and the external auditors regarding
financial reporting or the application of any accounting principles or
practices;

(c)

review
earnings news releases, as well as financial information and earnings guidance
provided to analysts and ratings agencies, it being understood that such
discussions may, in the discretion of the Committee, be done generally (i.e., by
discussing the types of information to be disclosed and the type of presentation
to be made) and that the Committee need not discuss in advance each earnings
release or each instance in which the Trust gives earning guidance;

(d)

establish
and monitor procedures for the receipt and treatment of complaints received by
the Trust regarding accounting, internal accounting controls or audit matters
and the anonymous submission by employees of concerns regarding questionable
accounting or auditing matters and review periodically with Management and the
internal auditors these procedures and any significant complaints received;

(e)

if
requested by the Trustees, receive from the President and the Chief Financial
Officer of the Trust a certificate certifying in respect of each annual and
interim report the matters such officers are required to certify in connection
with the filing of such reports under applicable securities laws and receive and
review disclosures made by such officers about any significant deficiencies in
the design or operation of internal controls or material weaknesses therein and
any fraud involving Management or persons who have a significant role in the
Trust's internal controls; and

(f)

review
and discuss the Trust's major financial risk exposures and the steps taken to
monitor and control such exposures, including the use of any financial
derivatives and hedging activities.

III.

In
Respect of Insurance

(a)

review
annually insurance programs relating to the Trust and its investments.

IV.

In
Respect of the Internal Audit Function

(a)

determine
the appropriate function for the Trust and oversee its processes and the terms
of compensation for any individuals engaged in such function.

V.

In
Respect of Internal Controls

(a)

review
the adequacy and effectiveness of the Trust's internal accounting and
financial controls based on recommendations from Management and the external
auditors for the improvement of accounting practices and internal controls;

(b)

review
annually a report on senior officer expenses;

(c)

oversee
compliance with internal controls; and

(d)

periodically
review and assess the Joint Code of Business Conduct in light of reports from
Management on compliance and other reports received pursuant to the
Whistleblower Hotline program and other procedures for the receipt, retention,
and treatment of complaints received by the issuer.

OVERSIGHT
FUNCTION

While
the Committee has the responsibilities and powers set forth in this Charter, it
is not the duty of the Committee to plan or conduct audits or to determine that
the Trust's financial statements are complete and accurate or are in
accordance with GAAP and applicable rules and regulations.  These are the
responsibilities of Management and the external auditors.  The Committee,
its Chair and any Committee members identified as having accounting or related
financial expertise are Trustees, appointed to the Committee to provide broad
oversight of the financial, risk and control related activities of the Trust,
and are specifically not accountable or responsible for the day to day operation
or performance of

D-5

---

such
activities.  Although the designation of a Committee member as having
accounting or related financial expertise for disclosure purposes is based on
that individual's education and experience, which that individual will bring
to bear in carrying out his or her duties on the Committee, such designation
does not impose on such person any duties, obligations or liability that are
greater than the duties, obligations and liability imposed on such person as a
member of the Committee and a Trustee in the absence of such designation.
 Rather, the role of a Committee member who is identified as having
accounting or related financial expertise, like the role of all Committee
members, is to oversee the process, not to certify or guarantee the internal or
external audit of the Trust's financial information or public disclosure.



D-6



---



Exhibit
B
Audited Consolidated Financial Statements, including consolidated balance sheets as at December 31, 2004 and 2003 and consolidated statements of income, accumulated earnings and cash flows for each of the years in the three-year period ended December 31, 2004 (including a reconciliation to US
GAAP).

| | M
      A N A G E M E N T ' S   R E P O R T | 
| | ------------------------------------------- | 

F
E B R U A R Y   2 8 ,   2 0 0 5

The
accompanying consolidated financial statements and related financial information
are the responsibility of management, 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.



| | A
      U D I T O R ' S   R E P O R T | 
| | ------------------------------------- | 

TO
THE UNITHOLDERS OF FORDING CANADIAN COAL TRUST

We
have audited the consolidated balance sheets of Fording Canadian Coal Trust as
at December 31, 2004 and 2003 and the consolidated statements of income,
accumulated earnings and cash flows for each of the years in the three-year
period ended December 31, 2004. 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, 2004
and 2003 and the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 2004 in accordance with
Canadian generally accepted accounting principles.

Comments
by Auditors for U.S. Readers on Canada - U.S. Reporting Differences

In
the United States, reporting standards for auditors require the addition of an
explanatory paragraph (following the opinion paragraph) when there is a change
in accounting principles that has a material effect on the comparability of the
Trust's financial statements, such as the change described in note 3 to the
financial statements. Our report to the unitholders dated February 28, 2004 is
expressed in accordance with Canadian reporting standards which do not require a
reference to such a change in accounting principles in the auditor's report
when the change is properly accounted for and adequately disclosed in the
financial statements.



CHARTERED
ACCOUNTANTS
CALGARY, ALBERTA, CANADA
FEBRUARY 28, 2005

2004
Annual Report |69

---

F
O R D I N G   C A N A D I A N   C O A L   T R U S
T

|CONSOLIDATED
      BALANCE SHEETS                                                                                     |                        
|--------------------------------------------------------------------------------------------------------------------- | -----------------------
|                                                                                                                      | As
      at December 31
|                                                                                                                      |                        
|(millions
      of Canadian dollars)                                                                                  | 2004                   
|ASSETS                                                                                                                |                        
|Current
      assets                                                                                                  |                        
|Cash
      and cash equivalents                                                                                       | $                      
|Accounts
      receivable                                                                                             |                        
|Inventory(note
      5)                                                                                               |                        
|Prepaid
      expenses                                                                                                |                        
|                                                                                                                      |                        
|Capital
      assets(note
      6)                                                                                    |                        
|                                                                                                                      |                        
|Goodwill                                                                                                              |                        
|                                                                                                                      |                        
|Other
      assets(note
      7)                                                                                      |                        
|                                                                                                                      | $                      
|                                                                                                                      |                        
|LIABILITIES                                                                                                           |                        
|Current
      liabilities                                                                                             |                        
|Accounts
      payable and accrued liabilities                                                                        | $                      
|Income
      taxes payable                                                                                            |                        
|Distributions
      payable                                                                                           |                        
|Current
      portion of long-term debt                                                                               |                        
|                                                                                                                      |                        
|Long-term
      debt(note
      8)                                                                                    |                        
|Other
      long-term liabilities(note
      9)                                                                       |                        
|Future
      income taxes(note
      10)                                                                              |                        
|Commitments
      and contingencies(note
      11)                                                                    |                        
|                                                                                                                      |                        
|                                                                                                                      |                        
|UNITHOLDERS'
      EQUITY(note
      12)                                                                              |                        
|Trust
      units                                                                                                     |                        
|Accumulated
      earnings                                                                                            |                        
|Accumulated
      cash distributions                                                                                  |                        
|Foreign
      currency translation adjustments                                                                        |                        
|                                                                                                                      |                        
|                                                                                                                      | $                      
|The
      accompanying notes to the consolidated financial statements are an
      integral part of these statements. |                        
|Approved
      by the Board of Trustees:                                                                              |                        
|                                                                                                                      |                        

70
| 2004
Annual Report

---

F
O R D I N G   C A N A D I A N   C O A L   T R U S
T

|CONSOLIDATED
      STATEMENTS OF INCOME AND LOSS                                                                      |                               |         |      |                               |         |                        |   |         | 
|--------------------------------------------------------------------------------------------------------------------- | ----------------------------- | ------- | ---- | ----------------------------- | ------- | ---------------------- | - | ------- | 
|                                                                                                                      | Years
      ended December 31 |        
|                                                                                                                      |                               |         |      | Restated
      (note
      3) |         | Restated(note
      3) |  
|(millions
      of Canadian dollars, except per unit amounts)                                                         | 2004                          |         | 2003 |                               | 2002    |                       
|Revenues                                                                                                              | $                             | 1,167.5 |      | $                             | 1,043.7 |                        | $ | 869.5   | 
|                                                                                                                      |                               |         |      |                               |         |                        |   |         | 
|Expenses                                                                                                              |                               |         |      |                               |         |                        |   |         | 
|Cost
      of product sold                                                                                            |                               | 454.4   |      |                               | 448.8   |                        |   | 341.5   | 
|Transportation
      and other                                                                                        |                               | 449.2   |      |                               | 384.6   |                        |   | 326.3   | 
|Selling,
      general and administration                                                                             |                               | 32.8    |      |                               | 25.9    |                        |   | 22.5    | 
|Depreciation
      and depletion                                                                                      |                               | 60.7    |      |                               | 61.3    |                        |   | 63.9    | 
|                                                                                                                      |                               | 997.1   |      |                               | 920.6   |                        |   | 754.2   | 
|Income
      from operations                                                                                          |                               | 170.4   |      |                               | 123.1   |                        |   | 115.3   | 
|                                                                                                                      |                               |         |      |                               |         |                        |   |         | 
|Other
      income (expense)                                                                                          |                               |         |      |                               |         |                        |   |         | 
|Interest
      expense                                                                                                |                               | (12.8)  |      |                               | (15.1)  |                        |   | (5.6)   | 
|Other,
      net(note
      14)                                                                                       |                               | 17.0    |      |                               | 6.1     |                        |   | (139.9) | 
|Gain
      (loss) on corporate reorganization(note
      15)                                                          |                               | (37.5)  |      |                               | 48.7    |                        |   | (11.5)  | 
|Income
      (loss) before taxes and discontinued operations                                                          |                               | 137.1   |      |                               | 162.8   |                        |   | (41.7)  | 
|Income
      tax (recovery) expense(note
      10)                                                                    |                               | (13.0)  |      |                               | 0.6     |                        |   | 49.1    | 
|Income
      (loss) before discontinued operations                                                                    |                               | 150.1   |      |                               | 162.2   |                        |   | (90.8)  | 
|Discontinued
      operations(note
      15)                                                                          |                               | -       |      |                               | 78.7    |                        |   | 18.9    | 
|Net
      income (loss)                                                                                               | $                             | 150.1   |      | $                             | 240.9   |                        | $ | (71.9)  | 
|                                                                                                                      |                               |         |      |                               |         |                        |   |         | 
|Weighted
      average number of units outstanding (millions)(note
      12)                                          |                               | 48.5    |      |                               | 47.4    |                        |   | 51.4    | 
|                                                                                                                      |                               |         |      |                               |         |                        |   |         | 
|Basic
      and diluted earnings per unit                                                                             |                               |         |      |                               |         |                        |   |         | 
|Before
      discontinued operations                                                                                  | $                             | 3.09    |      | $                             | 3.42    |                        | $ | (1.77)  | 
|Net
      income (loss)                                                                                               | $                             | 3.09    |      | $                             | 5.08    |                        | $ | (1.40)  | 
|The
      accompanying notes to the consolidated financial statements are an
      integral part of these statements. |                               |         |      |                               |         |                        |   |         | 



|CONSOLIDATED
      STATEMENTS OF ACCUMULATED EARNINGS                                                                 |                               |       |                        |   |                        |     
|--------------------------------------------------------------------------------------------------------------------- | ----------------------------- | ----- | ---------------------- | - | ---------------------- | ----
|                                                                                                                      | Years
      ended December 31 |      
|                                                                                                                      |                               |       | Restated(note
      3) |   | Restated(note
      3) |     
|(millions
      of Canadian dollars)                                                                                  | 2004                          |       | 2003                   |   |                        | 2002
|Balance
      - beginning of year                                                                                     | $                             | 190.5 |                        | $ | 300.6                  |     
|Net
      income (loss)                                                                                               |                               | 150.1 |                        |   | 240.9                  |     
|Adjustment
      for adoption of new accounting standard for asset retirement obligations(note
      3)               |                               | -     |                        |   | -                      |     
|Dividends                                                                                                             |                               | -     |                        |   | -                      |     
|Repurchase
      of units/capital stock                                                                               |                               | -     |                        |   | (351.0)                |     
|Balance
      - end of year                                                                                           | $                             | 340.6 |                        | $ | 190.5                  |     
|The
      accompanying notes to the consolidated financial statements are an
      integral part of these statements. |                               |       |                        |   |                       

2004
Annual Report |71

---

F
O R D I N G   C A N A D I A N   C O A L   T R U S
T

|CONSOLIDATED
      STATEMENTS OF CASH FLOWS                                                                           |                               |         |      |                        |         |                        |   |        | 
|--------------------------------------------------------------------------------------------------------------------- | ----------------------------- | ------- | ---- | ---------------------- | ------- | ---------------------- | - | ------ | 
|                                                                                                                      | Years
      ended December 31 |        
|                                                                                                                      |                               |         |      | Restated(note
      3) |         | Restated(note
      3) |  
|(millions
      of Canadian dollars)                                                                                  | 2004                          |         | 2003 |                        | 2002    |                       
|Operating
      activities                                                                                            |                               |         |      |                        |         |                        |   |        | 
|Net
      income (loss)                                                                                               | $                             | 150.1   |      | $                      | 240.9   |                        | $ | (71.9) | 
|Items
      not using (providing) cash:                                                                               |                               |         |      |                        |         |                        |   |        | 
|Depreciation
      and depletion                                                                                      |                               | 58.6    |      |                        | 62.3    |                        |   | 70.7   | 
|Loss
      (gain) on disposal of assets                                                                               |                               | 0.2     |      |                        | (202.8) |                        |   | 0.4    | 
|Provision
      for asset retirement obligations                                                                      |                               | 3.0     |      |                        | 2.8     |                        |   | 1.0    | 
|Future
      income taxes                                                                                             |                               | (31.3)  |      |                        | 34.3    |                        |   | 6.8    | 
|Income
      from change in inventory valuation(note
      3)                                                         |                               | (10.8)  |      |                        | -       |                        |   | -      | 
|Loss
      on reduction of interest in EVCP                                                                           |                               | 35.2    |      |                        | -       |                        |   | -      | 
|Provision
      for asset write-down(note
      14)                                                                   |                               | -       |      |                        | -       |                        |   | 140.0  | 
|Other
      items, net                                                                                                |                               | 0.3     |      |                        | 0.9     |                        |   | (6.7)  | 
|                                                                                                                      |                               | 205.3   |      |                        | 138.4   |                        |   | 140.3  | 
|Decrease
      (increase) in non-cash working capital(note
      16)                                                  |                               | 64.2    |      |                        | 35.9    |                        |   | (31.5) | 
|Cash
      from operating activities                                                                                  |                               | 269.5   |      |                        | 174.3   |                        |   | 108.8  | 
|                                                                                                                      |                               |         |      |                        |         |                        |   |        | 
|Investing
      activities                                                                                            |                               |         |      |                        |         |                        |   |        | 
|Additions
      to capital assets                                                                                     |                               | (72.8)  |      |                        | (20.4)  |                        |   | (51.5) | 
|Proceeds
      on disposal of assets                                                                                  |                               | 1.1     |      |                        | 362.8   |                        |   | 1.2    | 
|Cash
      payment for Luscar assets                                                                                  |                               | -       |      |                        | (12.3)  |                        |   | -      | 
|Other
      investing activities, net                                                                                 |                               | 12.2    |      |                        | (8.1)   |                        |   | (0.4)  | 
|Cash
      from (used in) investing activities                                                                        |                               | (59.5)  |      |                        | 322.0   |                        |   | (50.7) | 
|                                                                                                                      |                               |         |      |                        |         |                        |   |        | 
|Financing
      activities                                                                                            |                               |         |      |                        |         |                        |   |        | 
|Increase
      (decrease) in long-term debt                                                                           |                               | (99.0)  |      |                        | 165.0   |                        |   | 4.0    | 
|Increase
      (decrease) in bank indebtedness                                                                        |                               | -       |      |                        | (1.1)   |                        |   | 0.2    | 
|Issuance
      of units, net                                                                                          |                               | 100.4   |      |                        | 12.3    |                        |   | 0.7    | 
|Repurchase
      of units/capital stock                                                                               |                               | -       |      |                        | (377.1) |                        |   | (38.5) | 
|Payments
      under the Arrangement(note
      12)                                                                   |                               | -       |      |                        | (75.3)  |                        |   | -      | 
|Other
      financing activities, net                                                                                 |                               | (2.7)   |      |                        | (4.2)   |                        |   | -      | 
|Financing
      activities, before distributions                                                                      |                               | (1.3)   |      |                        | (280.4) |                        |   | (33.6) | 
|Financing
      activities related to distributions/dividends(note
      16)                                          |                               | (196.7) |      |                        | (163.4) |                        |   | (28.2) | 
|Cash
      used in financing activities                                                                               |                               | (198.0) |      |                        | (443.8) |                        |   | (61.8) | 
|Increase
      (decrease) in cash and cash equivalents                                                                |                               | 12.0    |      |                        | 52.5    |                        |   | (3.7)  | 
|                                                                                                                      |                               |         |      |                        |         |                        |   |        | 
|Cash
      and cash equivalents - beginning of year                                                                   |                               | 52.5    |      |                        | -       |                        |   | 3.7    | 
|Cash
      and cash equivalents                                                                                       | $                             | 64.5    |      | $                      | 52.5    |                        | $ | -      | 
|The
      accompanying notes to the consolidated financial statements are an
      integral part of these statements. |                               |         |      |                        |         |                        |   |        | 

72
| 2004
Annual Report

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N
O T E S   T O   C O N S O L I D A T E D   F I N A
N C I A L   S T A T E M E N T S

|1 | STRUCTURE
      OF FORDING CANADIAN COAL TRUST AND NATURE OF OPERATIONS
|- | -----------------------------------------------------------------------

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

The
Arrangement has been accounted for as a continuity of interests whereby 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 its predecessor company, Fording Inc., being the public
company existing prior to the Arrangement (Old Fording). All assets and
liabilities are recorded at historical cost.

The
Trust holds all of the shares and subordinated notes of its operating subsidiary
company, 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
Arrangement also created the Elk Valley Coal Partnership (EVCP) by combining the
metallurgical coal mining operations and assets formerly owned by Old Fording
(Fording River, Greenhills and Coal Mountain mines), Teck Cominco Limited
(Elkview mine) and the Luscar/CONSOL Joint Ventures (Line Creek and Cardinal
River mines and a 46% interest in Neptune Bulk Terminals (Canada) Ltd. in
Vancouver). At the date of the Arrangement the Corporation held a 65% interest
in EVCP. At that time, the remaining 35% interest in EVCP was held by Teck
Cominco and its affiliates.

The
agreement governing EVCP provided for an increase in Teck Cominco's interest
to a maximum of 40% to the extent that synergies from the combination of various
metallurgical coal assets contributed to EVCP exceed certain target levels. At
December 31, 2004, Teck Cominco's interest had increased to 38%, as discussed
in note 15. The change in interest resulted in a pro-rata reduction in the Trust's
share of all of the assets and liabilities of EVCP and a non-cash charge to
earnings of $37.5 million reduced by additional distribution entitlements
expected through March 31, 2006.

The
Corporation also owns a 100% interest in NYCO which, prior to the Arrangement,
was a wholly owned subsidiary of Old Fording. NYCO mines and processes
wollastonite and other industrial minerals at two operations in the United
States and one operation in Mexico.

These
financial statements reflect the results of operations and cash flows of Old
Fording for the period January 1 to February 28, 2003 and the results of
operations and cash flows of the Trust thereafter. Due to the Arrangement,
conversion into an income trust, and the change in the Trust's interest in
EVCP, certain information included in the consolidated financial statements for
prior periods may not be directly comparable.

|2 | SIGNIFICANT
      ACCOUNTING POLICIES
|- | -------------------------------------

B
A S I S   O F   P R E S E N T A T I O N

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 19.

A
significant portion of the Trust's results are from activities conducted on a
joint-venture basis. The consolidated financial statements reflect the Trust's
proportionate interest in such ventures, as disclosed in note 16. 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.

2004
Annual Report |73

---

Investments
in companies in which the Trust has significant influence over the operating,
investing and financing decisions, are accounted for using the equity method.

M
A N A G E M E N T   E S T I M A T E S

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, asset retirement obligations 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.

C
A S H   A N D   C A S H   E Q U I V A L E N T S

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

I
N V E N T O R Y

Product
and raw materials inventory are valued at the lower of average cost and net
realizable value.

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.

C
A P I T A L   A S S E T S

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, which ranges 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.

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 capitalized.
Upon commencement of production, these capitalized costs are charged to
operations on a unit of production method based upon the proven and probable
mineral reserves.

When
the net carrying value of a capital asset, less its related asset retirement
obligation net of 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. Capital assets are tested for impairment
whenever events or circumstances indicate the carrying amount may not be
recoverable.

G
O O D W I L L

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. An impairment loss would be recognized when the carrying
value of the goodwill exceeds its fair value.

R
E S E A R C H   A N D   D E V E L O P M E N T

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, at which point they are amortized over the useful life of
the asset.

74
| 2004
Annual Report

---

C
A P I T A L I Z E D   I N T E R E S T

Interest
is capitalized on major capital projects under development based on the
borrowing rate related to the project or the average cost of borrowing.

A
S S E T   R E T I R E M E N T   O B L I G A T I O N S

Asset
retirement obligations are recognized in the period in which they are incurred
if a reasonable estimate of fair value can be determined. The fair value of the
estimated asset retirement costs is capitalized as part of the carrying amount
of the long-lived asset when incurred and amortized to earnings over the asset's
estimated useful life. Increases in the asset retirement obligations resulting
from the passage of time are recorded as accretion expense. Actual expenditures
incurred are charged against the accumulated obligation. The asset retirement
obligation is reviewed by management annually and revised for changes in future
estimated costs and regulatory requirements.

F
O R E I G N   C U R R E N C Y   T R A N S L A T I O N

Foreign
currency denominated transactions are translated at the exchange rate in effect
on the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are translated into Canadian dollars at period-end exchange
rates and any gain or loss is charged to earnings, except when hedged.

The
functional currency and therefore the unit of measure of the Trust's NYCO
operations is the United States dollar. The financial statements of the Mexican
component of these operations are remeasured from Mexican pesos into United
States 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
United States dollar accounts of the NYCO operations are translated into
Canadian dollars, the reporting currency of the Trust, using the current rate
method. Assets and liabilities are 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 recorded in unitholders' equity as foreign currency
translation adjustments.

F
I N A N C I A L   I N S T R U M E N T S

The
Trust utilizes financial instruments to manage its foreign currency exposure to
changes in the U.S. dollar exchange rate. The Trust's policy is to not employ
derivative financial instruments for trading or speculative purposes.

The
Trust formally documents relationships between hedging instruments and hedged
items, as well as its risk management objective and strategy for undertaking
various hedge transactions. The effectiveness of the hedging relationship is
also formally documented and measured.

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 that was hedged.

R
E V E N U E   R E C O G N I T I O N

Sales
revenues are recognized when the risks and rewards of ownership pass to the
customer. For coal sales, this occurs when the coal is either loaded onto a
train or an ocean going vessel or when it is unloaded at the final destination,
depending on the terms of the sales contract. NYCO revenues are recognized upon
shipment to customers from the plant or warehouse.

I
N C O M E   T A X E S

The
Corporation recognizes future tax assets and liabilities based on differences
between the value of assets and liabilities in the financial statements and
their values for 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. A future tax
asset is recognized if it is more likely than not to be realized.

2004
Annual Report |75

---

S
T O C K - B A S E D   C O M P E N S A T I O N

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 the market price at the time of the grant;
therefore no compensation expense was recognized when the options were issued.

E
M P L O Y E E   F U T U R E   B E N E F I T S

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.
The expected return on plan assets is estimated based on the fair value of plan
assets. The projected benefit obligation is discounted using a market interest
rate for high quality corporate debt instruments at year-end.

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 plan assets, the amortization of
adjustments arising from pension plan amendments, and the amortization of the
amount by which the actuarial gains or losses exceed 10% of the greater of the
benefit obligation and the market related value of plan assets. The amortization
period for adjustments and net actuarial gains or losses is the expected average
remaining service lives of employees covered by the various plans.

Costs
under defined contribution pension plans are expensed when the contributions are
made.

The
costs of post-retirement benefits, other than pensions, are recognized on an
accrual basis over the estimated remaining service lives of employees.

R
E C L A S S I F I C A T I O N

Certain
prior years' figures have been reclassified to conform to the presentation
adopted in 2004.

|3 | CHANGES
      IN ACCOUNTING POLICIES
|- | ------------------------------------

A
S S E T   R E T I R E M E N T   O B L I G A T I O N S

Effective
January 1, 2004, the Trust adopted the CICA Handbook Section 3110, "Asset
Retirement Obligations", and applied the recommendations retroactively. This
standard focuses on the recognition, measurement and disclosure of legal
obligations and costs associated with the retirement of long-lived capital
assets that result from the acquisition, construction, development or normal
operation of those assets.

Previously,
the Trust accrued for reclamation costs expected to be incurred at the
completion of mining activities based on known or estimated costs on an
undiscounted unit of production basis.

As
a result of the retroactive adoption of this standard, 2002 opening accumulated
earnings increased by $9.8 million and net income decreased by $1.0 million.
2003 net income decreased by $2.3 million, capital assets increased by $39.2
million, goodwill decreased by $5.2 million, other long-term liabilities
increased by $13.0 million and future income taxes increased by $14.5 million.

G
E N E R A L L Y   A C C E P T E D   A C C O U N T I N
G   P R I N C I P L E S

CICA
Handbook Section 1100, "Generally Accepted Accounting Principles", became
effective for fiscal years beginning on or after October 1, 2003. This standard
focuses on what constitutes Canadian Generally Accepted Accounting Principles
and its primary sources. Two accounting practices have been changed to
correspond to guidance with the primary sources of generally accepted accounting
principles.

Revenues
are now reported without deductions for sales commissions and freight costs.
Commissions are included in selling, general and administration costs and
transportation and other costs are included in that caption on the consolidated
statement of income. Revenues continue to be shown net of such items as trade or
volume discounts,

76
| 2004
Annual Report

---

the
benefits or costs of foreign currency hedging activities, returns and
allowances, and claims for damaged goods. This change in classification has no
impact on earnings or cash available for distribution and the comparative
figures have been restated to conform to the presentation adopted for the
current period. Previously, revenues for certain sales transactions were
reported net of sales commissions and related transportation and other costs in
order to report net revenues on a basis consistent with the majority of sales
transactions.

Depreciation,
depletion and amortization are now included in the carrying value of inventory.
The transitional provisions of adopting this standard require prospective
application of changes in accounting policies. Accordingly, effective January 1,
2004, product and raw material inventory increased $10.8 million to include the
cost of depreciation, depletion and amortization, with the corresponding credit
included in other income. Previously, depreciation, depletion and amortization
were treated as period costs.

E
M P L O Y E E   F U T U R E   B E N E F I T S

The
Trust adopted the new disclosure recommendations of the CICA Handbook section
3461, "Employee Future Benefits", effective June 30, 2004.

|4 | DISTRIBUTABLE
      CASH
|- | ------------------------

Distributable
cash is a term defined in the Declaration of Trust and 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 the Corporation is the
principal contributor to distributable cash of the Trust. The Corporation
distributes its available cash to the Trust each quarter, which is derived from
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
distributable cash for those prior periods.

|CASH
      AVAILABLE FOR DISTRIBUTION                                    |                                   |        |                                          |   |       
|------------------------------------------------------------------------ | --------------------------------- | ------ | ---------------------------------------- | - | ------
|(millions
      of Canadian dollars)                                     | Year
      ended December 31 2004 |        | Ten
      months ended December 31 20031 |  
|Cash
      flows from operating activities                               | $                                 | 269.5  |                                          | $ | 229.6 
|Add
      (deduct):                                                      |                                   |        |                                          |   |       
|Decrease
      in non-cash working capital                               |                                   | (64.2) |                                          |   | (99.5)
|Sustaining
      capital expenditures, net                               |                                   | (25.9) |                                          |   | (8.7) 
|Capital
      lease payments                                             |                                   | (0.7)  |                                          |   | (1.3) 
|Other                                                                    |                                   | 3.5    |                                          |   | (1.2) 
|Cash
      available for distribution                                    | $                                 | 182.2  |                                          | $ | 118.9 
|Distributions
      declared and payable                                 | $                                 | 213.5  |                                          | $ | 210.3 
|1 The
      period from the formation of the Trust to December 31, 2003. |                                   |        |                                          |   |       

Available
cash generated by the Corporation and paid to the Trust is the principal source
of distributable cash paid to unitholders. Distributions declared and payable in
2004 include $18.5 million of cash available for distribution carried over from
2003. Two events unique to 2003, and which will not be repeated, provided
additional sources of cash amounts paid to unitholders; a special payment under
the Arrangement totalling $70.0 million and the cash flow benefit of the draw
down of coal product inventory to more normal operating levels contributed $39.8
million.

Distributable
cash and cash available for distribution have no standardized meaning and are
not defined by generally accepted accounting principles in Canada. Accordingly,
distributable cash and cash available for distribution as it is presented above
may not be comparable to similarly named measures presented by other trusts.

2004
Annual Report |77

---

|5 | INVENTORY
|- | ---------



|                                     |   | As
      at December 31 | 
|------------------------------------ | - | ----------------------- | 
|(millions
      of Canadian dollars) |   | 2004                    | 
|Product
      and raw materials      | $ | 77.9                    | 
|Stores
      and materials           |   | 35.1                    | 
|                                     | $ | 113.0                   | 



|6 | CAPITAL
      ASSETS
|- | --------------------



|                                         | As
      at December 31, 2004 |        
|---------------------------------------- | ----------------------------- | -------
|(millions
      of Canadian dollars)     | Cost                          |        
|Land,
      buildings and equipment      | $                             | 792.9  
|Mineral
      properties and development |                               | 412.6  
|Capital
      leases                     |                               | 1.6    
|                                         | $                             | 1,207.1



|                                         | As
      at December 31, 2003 |        
|---------------------------------------- | ----------------------------- | -------
|(millions
      of Canadian dollars)     | Cost                          |        
|Land,
      buildings and equipment      | $                             | 778.5  
|Mineral
      properties and development |                               | 443.2  
|Capital
      leases                     |                               | 4.6    
|                                         | $                             | 1,226.3

At
December 31, 2004, $60.8 million (2003 - $50.3 million) was capitalized for
reserves, equipment and coal deposits located on properties not currently being
mined, which are not being amortized. During the year, $0.9 million (2003 - nil)
of interest was capitalized for projects under construction.

|7 | OTHER
      ASSETS
|- | ------------------



|                                            | As
      at December 31 |     
|------------------------------------------- | ----------------------- | ----
|(millions
      of Canadian dollars)        |                         | 2004
|Long-term
      receivables                 | $                       | 9.6 
|Accrued
      pension benefit(note
      9) |                         | 8.2 
|Deferred
      charges                      |                         | 1.2 
|Other                                       |                         | 2.1 
|                                            | $                       | 21.1

78
| 2004
Annual Report

---

|8 | LONG-TERM
      DEBT AND BANKING FACILITIES
|- | -------------------------------------------



|LONG-TERM
      DEBT                                                                                 | As
      at December 31 |      
|---------------------------------------------------------------------------------------------------- | ----------------------- | -----
|(millions
      of Canadian dollars)                                                                 | 2004                    |      
|Bank
      debt                                                                                      |                         |      
|Term
      variable rate bank loans with interest rates varying from 5.6% to 6.3%                    | $                       | 201.0
|Other
      debt                                                                                     |                         |      
|Equipment
      financing due 2009 bearing interest at 5.1%                                          |                         | 5.2  
|Capital
      lease obligations expiring in 2005 with interest rates varying from 5.0%
      to 7.0% |                         | 0.7  
|                                                                                                     |                         | 206.9
|Less
      current portion                                                                           |                         | (1.7)
|                                                                                                     | $                       | 205.2

The
bank debt required $51.0 million to be repaid or refinanced by February 28, 2005
and the remaining $150.0 million by February 28, 2006. In February 2005, the
Corporation and EVCP refinanced their existing bank credit facilities. The new
agreement provides each entity with a five-year revolving, floating rate,
annually extendible facility. The Corporation's facility is for $400.0 million
and EVCP's facility is for $150.0 million. As a result of this refinancing,
the $51.0 million of the existing bank facility due February 28, 2005 is
considered long-term at December 31, 2004.

The
new facilities are supported by an unsecured guarantee from EVCP, limited in
recourse to any partner's interest in EVCP (other than Fording Inc.) and a
general security agreement over the assets of the Corporation including its
interest in EVCP.

At
December 31, 2004, and assuming the new bank facilities were finalized at that
time, the other uses of bank facilities and unused lines of credit are
summarized in the following table:

|                                                                    | As
      at December 31 |      
|------------------------------------------------------------------- | ----------------------- | -----
|(millions
      of Canadian dollars)                                | 2004                    |      
|Other
      use of bank facilities                                  |                         |      
|Issued
      and outstanding letters of credit and guarantee        |                         |      
|Fording
      Inc.                                                  | $                       | 0.1  
|EVCP
      (2004: 60% of $71.2 million; 2003: 65% of $31.6 million) |                         | 42.7 
|                                                                    | $                       | 42.8 
|Unused
      lines of credit                                        |                         |      
|Fording
      Inc.                                                  | $                       | 198.9
|EVCP
      (2004: 60% of $78.8 million; 2003: 65% of $88.3 million) |                         | 47.3 
|                                                                    | $                       | 246.2

2004
Annual Report |79

---

|9 | OTHER
      LONG-TERM LIABILITIES
|- | ---------------------------------



|                                                 | As
      at December 31 |     
|------------------------------------------------ | ----------------------- | ----
|(millions
      of Canadian dollars)             | 2004                    |     
|Asset
      retirement obligations(note
      3) | $                       | 68.9
|Pension
      and other post-retirement benefits |                         | 21.4
|Other,
      net                                 |                         | 1.6 
|                                                 | $                       | 91.9

A
s s e t   r e t i r e m e n t   o b l i g a t i o n s

Asset
retirement obligations are based on known or estimated costs to reclaim all
disturbed sites to meet existing regulatory standards. The estimated 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 as 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. These obligations are funded
from cash from general resources at the time reclamation work is completed.

The
following table presents the reconciliation of asset retirement obligations:

|                                     | As
      at December 31 |      
|------------------------------------ | ----------------------- | -----
|(millions
      of Canadian dollars) | 2004                    |      
|Balance
      - beginning of year    | $                       | 58.1 
|Liabilities
      incurred           |                         | 12.3 
|Liabilities
      settled            |                         | (1.1)
|Accretion
      expense              |                         | 4.2  
|Other                                |                         | (4.6)
|Balance
      - end of year          | $                       | 68.9 

Asset
retirement obligations and costs are periodically reviewed by management and are
revised for changes in future estimated costs and regulatory requirements. The
total undiscounted amount of the estimated obligation is $135.1 million, which
using a credit adjusted risk-free rate, results in a discounted obligation of
$68.9 million at December 31, 2004.

P
e n s i o n   a n d   o t h e r   p o s t - r e t
i r e m e n t   b e n e f i t   o b l i g a t i o n s

|                                     | As
      at December 31 |     
|------------------------------------ | ----------------------- | ----
|(millions
      of Canadian dollars) | 2004                    |     
|Pensions                             | $                       | 9.2 
|Other
      post-retirement benefits |                         | 12.2
|                                     | $                       | 21.4

Substantially
all employees participate in either a defined benefit or defined contribution
pension plan.

There
are several defined contribution plans which provide for some matching by the
employees. Two of these plans are for the Trust's NYCO operations in the
United States, and the remaining relate to the Elk Valley Coal

80
| 2004
Annual Report

---

operations.
The cost of these plans for the year ended December 31, 2004 was $2.4 million
(2003 - $1.9 million; 2002 - $1.3 million), which includes the employer
contributions and payments to third-party service providers.

There
are six defined benefit plans, all of which are non-contributory. Three of these
plans are for the Trust's Elk Valley Coal operations while the other three
relate to the NYCO operations in the United States. The benefits are determined
using two alternative methodologies depending on the plan. Under the "best
average pay plan" the pension benefit is determined by applying a formula to
the best average earnings over a given period. Under the "flat benefit", the
pension benefit is a fixed dollar amount per month for each year of service. The
defined benefit plan liabilities have been updated to reflect actuarial economic
assumptions at December 31, 2004.

Five
of the defined benefit plans had actuarial valuations completed as at December
31, 2003 and one plan was completed at December 31, 2002. Under the applicable
legislation, actuarial valuations are to be completed on a three-year cycle in
Canada, and annually in the United States. The purpose of the actuarial
valuation is to confirm the actuarial liability relating to members in the plan
and establish the contributions that are required to be made in order to fund
the plan from the date of the actuarial valuation to the effective date of the
next actuarial valuation.

Annual
contributions are made on the basis of not less than the minimum amounts
required by legislation. Contributions are expected to be $5.2 million for the
year ending December 31, 2005.

Defined
benefit pension expense includes the following components:

|                                                                           | As
      at December 31 |       
|-------------------------------------------------------------------------- | ----------------------- | ------
|(millions
      of Canadian dollars)                                       | 2004                    |       
|Current
      service cost of benefits earned by employees in the period   | $                       | 4.6   
|Interest
      cost on projected benefit obligation                        |                         | 8.1   
|Actual
      return on pension fund assets                                 |                         | (12.7)
|Difference
      between actual and expected rate of return on plan assets |                         | 5.8   
|Amortization
      of actuarial gains                                      |                         | 0.6   
|Amortization
      of past service costs                                   |                         | 0.8   
|Other                                                                      |                         | -     
|Net
      pension expense                                                  | $                       | 7.2   

The
"corridor approach" is used to account for defined benefit pension plans.
This allows for the deferral and amortization of certain actuarial gains or
losses and past service costs. If this methodology was not employed, the
following expense would represent the net pension expense on the income
statement:

|                                                                                                              | As
      at December 31 |      
|------------------------------------------------------------------------------------------------------------- | ----------------------- | -----
|(millions
      of Canadian dollars)                                                                          |                         | 2004 
|Net
      pension expense above                                                                               | $                       | 7.2  
|Amounts
      deferred for later recognition:                                                                 |                         |      
|Difference
      between expected and actual return on plan assets                                            |                         | (5.8)
|Amortization
      of past service costs                                                                      |                         | (0.8)
|Difference
      between amortization of actuarial losses (gains) and actuarial losses
      (gains) incurred |                         | 21.1 
|Adjusted
      net pension expense                                                                            | $                       | 21.7 

2004
Annual Report|81

---

Information
about the defined benefit pension plans, in aggregate, is as follows:

|                                                    | Years
      ended December 31 |       
|--------------------------------------------------- | ----------------------------- | ------
|(millions
      of Canadian dollars)                | 2004                          |       
|                                                    |                               |       
|Changes
      in benefit obligations                |                               |       
|Benefit
      obligations - beginning of year       | $                             | 118.1 
|Actuarial
      revaluation                         |                               | 10.0  
|Current
      service cost                          |                               | 4.6   
|Interest
      cost                                 |                               | 8.1   
|Benefits
      paid                                 |                               | (5.3) 
|Decrease
      in discount rate                     |                               | 10.6  
|Changes
      resulting from the Arrangement        |                               | -     
|Other                                               |                               | (6.3) 
|Benefit
      obligations - end of year             |                               | 139.8 
|                                                    |                               |       
|Change
      in fund assets                         |                               |       
|Fair
      value of fund assets - beginning of year |                               | 101.4 
|Actual
      return on fund assets                  |                               | 12.7  
|Employer
      contributions                        |                               | 9.4   
|Benefits
      paid                                 |                               | (5.3) 
|Changes
      resulting from the Arrangement        |                               | -     
|Other                                               |                               | (5.6) 
|Fair
      value of fund assets - end of year       |                               | 112.6 
|                                                    |                               |       
|Funded
      status - plan deficit                  |                               | (27.2)
|Unamortized
      prior service cost                |                               | 2.0   
|Unamortized
      net actuarial loss                |                               | 24.2  
|Accrued
      benefit liability                     | $                             | (1.0) 
|                                                    |                               |       
|Represented
      by:                               |                               |       
|Accrued
      benefit assets(note
      7)          | $                             | 8.2   
|Accrued
      pension liability                     |                               | (9.2) 
|                                                    | $                             | (1.0) 

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:

|                                     | As
      at December 31 |        
|------------------------------------ | ----------------------- | -------
|(millions
      of Canadian dollars) | 2004                    |        
|Benefit
      obligation             | $                       | (130.5)
|Fair
      value of fund assets      |                         | 101.0  
|Funded
      status - plan deficit   | $                       | (29.5) 

82
|2004
Annual Report

---

Pension
fund assets consist of the following investments based on fair market values:

|                                               | As
      at December 31 |      
|---------------------------------------------- | ----------------------- | -----
|(millions
      of Canadian dollars)           | 2004                    |      
|Cash
      and cash equivalents                | $                       | 6.5  
|Fixed
      income                             |                         | 34.9 
|Canadian
      equity                          |                         | 37.5 
|U.S.
      equity                              |                         | 21.9 
|European,
      Australian and Far East equity |                         | 11.8 
|                                               | $                       | 112.6

Included
in the above defined benefit assets are investments in related parties which are
0.6% of the total fair market value at December 31, 2004.

Actuarial
assumptions used to calculate the defined benefit pension expense and benefit
obligations and post-retirement benefit expense and obligations are:

|                                                           | Years
      ended December 31 | 
|---------------------------------------------------------- | ----------------------------- | 
|                                                           | 2004                          | 
|Discount
      rate for plan expense                       | 6.5%                          | 
|Discount
      rate for plan obligations                   | 6.0%                          | 
|Projected
      future salary increases                    | 4.0%                          | 
|Expected
      rate of return on fund assets               | 6.5%                          | 
|Projected
      health care increases:                     |                               | 
|Provincial                                                 | 3.0%                          | 
|Extended
      care                                        | 10.0%                         | 
|Assumed
      health care cost trend rate*                 | 10.0%
      to 5.0%           | 
|*Ultimate
      trend rate expected to be achieved in 2014 |                               | 

In
addition to pension benefits, other post-retirement benefits including
health-care and life-insurance benefits are provided for retired employees.
These benefits are unfunded. For the year ended December 31, 2004, the net costs
of post-retirement benefits that are included in selling, general and
administrative expense amounted to:

|                                                     |   | Years
      ended December 31 |  |  
|---------------------------------------------------- | - | ----------------------------- |  | -
|(millions
      of Canadian dollars)                 |   | 2004                          |  |  
|Current
      service costs                          | $ | 0.7                           |  | $
|Interest
      costs on projected benefit obligation |   | 0.9                           |  |  
|Changes
      to post-retirement benefits available  |   | -                             |  |  
|Changes
      resulting from the Arrangement         |   | -                             |  |  
|                                                     | $ | 1.6                           |  | $

S
e n s i t i v i t i e s

A
one percentage point change in health care costs would have the following impact
on the components of other post-retirement benefit obligations:

|(millions
      of Canadian dollars)                         | 1%
      increase |     | 1%
      decrease |  
|------------------------------------------------------------ | ----------------- | --- | ----------------- | -
|Increase
      (decrease) in total service and interest cost | $                 | 0.1 |                   | $
|Increase
      (decrease) in benefit obligation              | $                 | 0.6 |                   | $

2004
Annual Report |83

---

|10 | INCOME
      TAXES
|-- | ------------------

Income
tax expense is made up of the following components:

|                                                   | Years
      ended December 31 |       
|-------------------------------------------------- | ----------------------------- | ------
|(millions
      of Canadian dollars)               | 2004                          |       
|Current
      income taxes:                        |                               |       
|Canadian
      income taxes                        | $                             | 2.6   
|Provincial
      mineral taxes and Crown royalties |                               | 11.7  
|Foreign
      income taxes                         |                               | 4.0   
|                                                   |                               | 18.3  
|Future
      income tax (recovery)                 |                               | (31.3)
|Total
      income taxes                           | $                             | (13.0)

The
following table reconciles the income tax expense calculated using statutory tax
rates to the actual income tax expense:

|                                                                                                             | Years
      ended December 31 |       
|------------------------------------------------------------------------------------------------------------ | ----------------------------- | ------
|(millions
      of Canadian dollars)                                                                         | 2004                          |       
|Expected
      income tax expense at Canadian statutory tax rate of 40.5% (2003 -
      40.6%; 2002 - 42.7%) | $                             | 55.5  
|Increase
      (decrease) in taxes resulting from:                                                           |                               |       
|Loss
      on reduction of interest in EVCP                                                                  |                               | 15.2  
|Provision
      for asset write-down                                                                         |                               | -     
|Mineral
      taxes                                                                                          |                               | 11.7  
|Resource
      allowance                                                                                     |                               | (14.8)
|Reduction
      in tax rate                                                                                  |                               | -     
|Trust
      distributions                                                                                    |                               | (79.3)
|Losses
      not tax affected                                                                                |                               | 0.9   
|Large
      corporation tax                                                                                  |                               | 2.7   
|Foreign
      tax rate differentials                                                                         |                               | (1.0) 
|Other                                                                                                        |                               | (3.9) 
|Income
      tax expense                                                                                     | $                             | (13.0)

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

|                                                           | As
      at December 31 |      
|---------------------------------------------------------- | ----------------------- | -----
|(millions
      of Canadian dollars)                       | 2004                    |      
|Future
      income tax assets                             |                         |      
|Liabilities
      carrying value in excess of tax basis    | $                       | 6.4  
|Asset
      retirement obligations                         |                         | 25.0 
|Canadian
      tax loss carry forwards                     |                         | 35.1 
|Other                                                      |                         | 8.6  
|Future
      income tax assets                             |                         | 75.1 
|Future
      income tax liabilities                        |                         |      
|Capital
      assets carrying value in excess of tax basis |                         | 237.2
|Other                                                      |                         | 18.3 
|Future
      income tax liabilities                        |                         | 255.5
|Net
      long-term future income tax liability            | $                       | 180.4

84
| 2004
Annual Report

---

As
at December 31, 2004 Canadian income tax loss carry forwards total $226.8
million and expire in the years 2010 and 2011. For future income tax purposes,
these losses were off-set by $140.1 million of accrued taxable income
contributed by EVCP. The Corporation has recorded a future tax asset of $35.1
million to reflect the benefit of the remaining loss carry forwards on the basis
that they are more likely than not to be realized in future periods.

A
foreign subsidiary has income tax loss carry forwards of $47.2 million, which
expire in the years 2008 through 2010. No future tax asset has been recorded for
the loss carry forwards on the basis that they are not likely to be realized in
future periods.

|11 | COMMITMENTS
      AND CONTINGENCIES
|-- | -----------------------------------

F
o r e i g n   e x c h a n g e   f o r w a r d   c
o n t r a c t s

To
manage exposure to currency fluctuations, foreign exchange forward contracts are
used to fix the rate at which certain future anticipated flows of U.S. dollars
are exchanged into Canadian dollars. The following table summarizes the
Corporation's outstanding hedged positions at December 31, 2004.

|     |  | Amount
      Hedged(millions
      of U.S. dollars) |     |                    |  
|---- |  | --------------------------------------------------- | --- | ------------------ | -
|     |  | Elk
      Valley Coal                               |     | Fording
      Inc. |  
|Year |  | 100%                                                |     | 60%                |  
|2005 |  | $                                                   | 355 |                    | $
|2006 |  |                                                     | 95  |                    |  
|2007 |  |                                                     | -   |                    |  
|     |  | $                                                   | 450 |                    | $

At
December 31, 2004, the Trust's portion of unrealized gains on foreign exchange
forward contracts was $116.2 million (2003 - $124.1 million; 2002 - unrealized
loss of $111.3 million) based on the U.S. / Canadian dollar exchange rate of
U.S.$0.83. The Trust's portion of realized gains on foreign exchange included
in revenues in 2004 was $82.7 million (2003 - $41.4 million; 2002 - realized
loss of $83.5 million).

L
e a s e s

EVCP
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.
dollars and at December 31, 2004 the Trust's portion of these minimum payments
is as follows:

|(millions
      of dollars) | U.S.
      $ |     | CDN
      $ |   | Total
      CDN$ Equivalent | 
|--------------------------- | ------------ | --- | ----------- | - | --------------------------- | 
|2005                        | $            | 1.5 |             | $ | 10.0                        | 
|2006                        |              | 1.5 |             |   | 2.9                         | 
|2007                        |              | 1.5 |             |   | 0.7                         | 
|2008                        |              | 1.5 |             |   | 0.7                         | 
|2009
      and thereafter   |              | 1.7 |             |   | 0.3                         | 
|                            | $            | 7.7 |             | $ | 14.6                        | 

U.S.
dollar commitments have been translated to the Canadian dollar equivalent at the
year-end U.S. / Canadian dollar exchange rate of U.S.$0.83.

C
r e d i t   r i s k   m a n a g e m e n t

Export-coal
sales represent the principal component of EVCP's revenues. Coal is sold under
contract or in the spot market to approximately 60 customers worldwide, which
are primarily steel producers. Coal sales are contracted in U.S. dollars and
terms of payment vary from three to 60 days. To manage its credit risk, EVCP
obtains,

2004
Annual Report |85

---

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, directly and through its interest in EVCP, is exposed to credit losses in
the event of non-performance by counterparties to financial instruments.
However, the Trust and EVCP deal 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.

F
a i r   v a l u e s

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 $205.2 million at December 31, 2004 is
considered to be a reasonable estimate of fair value due to the floating
interest rate of the debt.

The
book value of unitholders' equity of $282.0 million at December 31, 2004 is
stated at historical amounts. The fair market value of the Trust's outstanding
units, or its market capitalization, was $4.5 billion based on the number of
units outstanding and the closing price of units traded on the Toronto Stock
Exchange on the same date.

S
e c u r i t i z a t i o n   o f   r e c e i v a b l e s

EVCP
has entered into an agreement, allowing it to sell on a non-recourse basis
certain of its U.S. dollar 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 receivable,
EVCP assigns ownership of the receivable and its interest in any applicable
trade credit insurance coverage. Deductibles under the insurance policy are the
responsibility of EVCP. The cost of the discounting is recorded as other
expense. The Trust's share of receivables sold in 2004 amounted to U.S.$189.1
million (2003 - U.S.$264.3 million). The Trust's portion of accounts
receivable sold and outstanding under this agreement as at December 31, 2004
amounted to U.S.$13.9 million (2003 - U.S.$24.4 million).

E
l k v i e w   P a r t n e r s h i p

A
letter of intent has been entered into between EVCP, Nippon Steel Corporation (NSC)
and POSCO which contemplates that NSC and POSCO will each acquire a 2.5% equity
interest in the Elkview mine for proceeds of U.S.$25 million. Closing of the
transaction is subject to board approvals, due diligence, the negotiation and
settlement of binding agreements and other customary conditions.

W
e s t b o u n d   r a i l   r a t e s

Rail
service to the five mines located in the Elk Valley is provided by the Canadian
Pacific Railway Company (CPR). Service to the Fording River, Greenhills and Coal
Mountain mines is provided pursuant to an agreement expiring March 31, 2007. The
agreement provides for rail rates to be adjusted annually based on the rail
rates paid by the Elkview and Line Creek mines. The agreements for rail service
to the Elkview and Line Creek mines expired March 31, 2004 and Elk Valley Coal
and CPR disagree on the manner in which freight rates for coal shipped to west
coast ports from the five mines is to be determined. Legal proceedings in
relation to the dispute have been initiated by CPR in both the Alberta Courts
and before the Canadian Transportation Agency. In January 2005, Elk Valley Coal
and CPR agreed to engage in a confidential non-binding mediation process to
attempt to resolve the dispute; discussions are ongoing at the time of this
report.

As
at December 31, 2004, a reasonable provision for rail rates has been accrued.

CPR
has stated that the dispute is not expected to adversely affect the shipment of
coal from the Elk Valley mines. Regardless of the outcome of the dispute, future
rail rates charged to Elk Valley Coal are expected to increase in 2005 as
compared to 2004.

C
a r d i n a l   R i v e r   o p e r a t i o n s

All
licenses and approvals have been received for the Cheviot Creek pit and the
haulroad at the Cardinal River operations. A number of environmental
organizations have applied to the Federal Court seeking a further

86
| 2004
Annual Report

---

environmental
assessment of the project and challenging certain federal authorizations that
the project has received. The Federal Court is expected to hear the applications
in June 2005. In addition, an individual appealed certain approvals issued by
Alberta Environment in connection with the project. The Environmental Appeal
Board heard the appeal in mid-January and the parties are awaiting a decision.

While
unanticipated, negative decisions related to these legal issues could impact
future operations at the site, EVCP continues to monitor progress on these legal
issues, and does not expect that outcomes from these proceedings represent a
material risk to the ongoing mining of the Cheviot Creek pit.

C
h a n g e   o f   c o n t r o l   a g r e e m e n
t s

Old
Fording entered into Change of Control Agreements (agreements) with certain
members of its senior management in connection with becoming a public company in
2001. Seven of the agreements were assumed by EVCP under the Arrangement. The
Arrangement also constituted a change in control for the purposes of the
agreements. If an executive who is a party to an 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 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.

As
of December 31, 2004, four executives had exercised their agreements including
the former President and Chief Executive Officer of Old Fording. Of the three
remaining agreements, one has been extended to permit the executive to be
entitled to the severance benefits if the executive resigns or is terminated
without cause prior to March 1, 2009. No provision has been accrued for the
contingent liability related to the agreements that were outstanding on December
31, 2004. The liability is charged to earnings in the period in which the
resignation, retirement or termination occurs. The Trust's share of the
contingent liability, which is dependent on the achievement of certain future
financial results, ranges between $5.0 million to $7.0 million. Compensation
expense related to these agreements of $6.9 million (2003 - $2.9 million) was
recorded in selling, general and administration expenses during 2004.

N
e p t u n e   T e r m i n a l s   g u a r a n t e e / a s s
e t   r e t i r e m e n t   o b l i g a t i o n s

By
virtue of its ownership in Neptune Terminals EVCP is required to guarantee its
share of bank indebtedness of the terminal. The Trust's proportionate share of
the guarantee was $10.3 million. The Trust's share of Neptune Terminal's
asset retirement obligation was $6.9 million at December 31, 2004.

O
t h e r

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 to be material.

|12 | UNITHOLDERS'
      EQUITY
|-- | -------------------------

A
u t h o r i z e d

The
Trust has an unlimited number of units authorized for issuance pursuant to the
Declaration of Trust. The units represent a beneficial interest in the Trust.
All 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 units. Trust
units are redeemable at the option of the unitholder at a price that is the
lesser of 90% of the average closing price of the 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.

2004
Annual Report |87

---

T
r u s t   u n i t s

|(millions
      of units and Canadian dollars)      | Units |  | Shares |  | Amount |       
|--------------------------------------------------- | ----- |  | ------ |  | ------ | ------
|Balance
      at December 31, 2002                  | -     |  | 50.7   |  | $      | 122.4 
|Shares
      issued under stock option plans        | -     |  | 0.1    |  |        | 0.5   
|Shares
      repurchased as part of the Arrangement | -     |  | (10.7) |  |        | (26.0)
|Small
      non-board lot shares repurchased        | -     |  | (0.1)  |  |        | (0.1) 
|Units
      exchanged for shares of the Corporation | 40.0  |  | (40.0) |  |        | -     
|Units
      issued for Luscar/Consol assets         | 6.4   |  | -      |  |        | 224.0 
|Units
      issued on exercise of options           | 0.5   |  | -      |  |        | 11.8  
|Payments
      arising under the Arrangement        | -     |  | -      |  |        | (75.3)
|Balance
      at December 31, 2003                  | 46.9  |  | -      |  |        | 257.3 
|Units
      issued on exercise of options           | 0.1   |  | -      |  |        | 0.8   
|Units
      issued pursuant to units offering       | 2.0   |  | -      |  |        | 99.0  
|Other                                               | -     |  | -      |  |        | 0.6   
|Balance
      at December 31, 2004                  | 49.0  |  | -      |  | $      | 357.7 

In
April 2004, the Trust issued 2.0 million units from treasury at $52.50 per unit.
The units offering provided net proceeds of $99.0 million, which was used to
repay a portion of long-term bank debt.

The
following transactions occurred as a result of the Arrangement in 2003:

- Repurchase
    and cancellation of 10.7 million Old Fording shares at $35.00 per share for
    a total consideration of $375.0 million. Capital stock was charged $26.0
    million for the average carrying value for the shares redeemed and the
    remaining $349.0 million was charged to retained earnings.
- Repurchase
    and cancellation of 0.1 million Old Fording small non-board lot shares at
    $33.33 per share for a total consideration of $2.1 million. Capital stock
    was charged $0.1 million for the average carrying value and retained
    earnings were charged with the remaining $2.0 million.
- Exchange
    of 40.0 million shares of Old Fording for an equivalent number of units of
    the Trust.
- Issuance
    of 6.4 million units at $35.00 per unit in partial consideration for the
    metallurgical coal assets from the Luscar/CONSOL joint ventures.
- Payments
    in aggregate, of $75.3 million were made to Sherritt, OTPP, Teck Cominco,
    Westshore Terminals and CONSOL under the Arrangement.

A
c c u m u l a t e d   c a s h   d i s t r i b u t i o n s

|(millions
      of Canadian dollars)                                    | Year
      ended December 31 2004 |       | Ten
      months ended December 31 20031 |  
|----------------------------------------------------------------------- | --------------------------------- | ----- | ---------------------------------------- | -
|Opening
      accumulated cash distributions                            | $                                 | 210.3 |                                          | $
|Distributions
      declared and payable                                |                                   | 213.5 |                                          |  
|Closing
      accumulated cash distributions                            | $                                 | 423.8 |                                          | $
|1 The
      period from the formation of the Trust to December 31, 2003 |                                   |       |                                          |  

Accumulated
cash distributions exceed accumulated earnings of the Trust. Further, payments
to unitholders' from cash available for distribution have exceeded net income.
If this situation remains unchanged, unitholders equity will continue to decline
from present levels. In addition, the Arrangement that occurred in 2003 resulted
in the assets and liabilities of the Trust being recorded at the historical net
book values recorded by Old Fording. At

88
| 2004
Annual Report

---

the
time of the Arrangement, the market capitalization of the Trust was $1.4 billion
and its net book value was $300.0 million. If the assets had been revalued at
that time, the relative impact of cash distributions on unitholders' equity
would not be as significant.

F
o r e i g n   c u r r e n c y   t r a n s l a t i o
n   a d j u s t m e n t s

|                                                                           | As
      at December 31 |      
|-------------------------------------------------------------------------- | ----------------------- | -----
|(millions
      of Canadian dollars)                                       | 2004                    |      
|Balance
      - beginning of year                                          | $                       | 13.4 
|Change
      in foreign currency translation rates on foreign subsidiaries |                         | (5.9)
|Balance
      - end of year                                                | $                       | 7.5  

E
a r n i n g s   p e r   u n i t

In
calculating diluted earnings per unit, net income remains unchanged from the
basic earnings per unit calculation and the number of units 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. The weighted average number of units outstanding in 2004
for purposes of calculating earnings per unit on a basic and fully diluted basis
was 48.5 million units (2003 - 47.4 million; 2002 - 51.4 million).

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

|13 | UNIT-BASED
      COMPENSATION
|-- | -----------------------------

The
Trust has three unit-based compensation arrangements, including an exchange
option plan, an employee unit purchase plan and a unit equivalent plan for
Trustees and Directors. Certain exchange options also have accompanying unit
appreciation rights. These plans resulted in compensation expense of $2.3
million in 2004 (2003 - $0.9 million; 2002 - $3.4 million).

E
x c h a n g e   O p t i o n   P l a n

Under
the Arrangement, all options to purchase common shares of Old Fording were
exchanged for options to purchase units of the Trust under the exchange option
plan. The Trust has not granted any options since its formation.

|                                  | Unit
      Options |  | Stock
      Options                   |       | Directors
      Options |          
|--------------------------------- | ------------------ |  | ------------------------------------- | ----- | ----------------------- | ---------
|                                  | Number             |  | Weighted
      Average Exercise Price |       | Number                  |          
|Options
      - Jan. 1, 2003      | -                  |  | $                                     | -     |                         | 695,188  
|Exchanged
      for unit options  | 713,210            |  |                                       | 18.35 |                         | (633,210)
|Exercised                         | (624,498)          |  |                                       | 18.93 |                         | (41,769) 
|Cancelled
      or expired        | (3,394)            |  |                                       | 6.78  |                         | (20,209) 
|Outstanding
      - Dec. 31, 2003 | 85,318             |  |                                       | 14.56 |                         | -        
|Exercised                         | (34,386)           |  |                                       | 16.19 |                         | -        
|Cancelled
      or expired        | (2,985)            |  |                                       | 7.84  |                         | -        
|Outstanding
      - Dec. 31, 2004 | 47,947             |  | $                                     | 13.81 |                         | -        

2004
Annual Report |89

---

At
December 31, 2004, the details of options outstanding, all of which are
exercisable, were as follows:

|Range
      of Exercise Prices |               | Number
      Outstanding and Exercisable |        | Weighted
      Average Remaining Contractual Life |     | Weighted
      Average Exercise Price |  
|------------------------------ | ------------- | ---------------------------------------- | ------ | ------------------------------------------------- | --- | ------------------------------------- | -
|$                              | 7
      - 10  |                                          | 22,972 |                                                   | 4.0 |                                       | $
|                               | 11
      - 13 |                                          | 14,405 |                                                   | 2.9 |                                       |  
|                               | 18
      - 28 |                                          | 10,570 |                                                   | 7.3 |                                       |  
|$                              | 7
      - 28  |                                          | 47,947 |                                                   | 4.4 |                                       | $

E
m p l o y e e   U n i t   P u r c h a s e   P l a
n

An
employee unit purchase plan is in place whereby contributions by employees of
the Corporation and EVCP are used to purchase units of the Trust on the open
market for the employee. The cost of the plan is included in the compensation
expense, and is recognized over a one-year vesting period.

The
plan allows all employees to contribute up to 6% of their base earnings while
the employer contributes $1 for every $3 contributed by the employee.

The
total number of units purchased on behalf of the employees, including the
employer's contributions, was 32,619 units (2003 - 62,910 units; 2002 -
134,693 units) with the Trust's portion costing $0.3 million (2003 - $0.3
million; 2002 - $1.3 million).

U
n i t   E q u i v a l e n t   P l a n

A
unit equivalent plan is in place for Trustees and Directors. Trustees and
Directors receive a portion of their compensation in unit equivalents. The unit
equivalents are granted at fair market value, which is determined using the
five-day weighted average trading price of a unit immediately preceding the
award date and vest over a one-year period. There were 7,856 units awarded
during the year (2003 - 20,790 units). The total charge to income for the year
was $2.0 million (2003 - $0.6 million) and included the cost of vested unit
equivalents and any changes in the fair value of the units during the year.

|14 | OTHER,
      NET
|-- | ----------------



|                                                  | Years
      ended December 31 |     
|------------------------------------------------- | ----------------------------- | ----
|(millions
      of Canadian dollars)              | 2004                          |     
|Interest
      and investment income              | $                             | 3.1 
|Change
      in inventory valuation(note
      3) |                               | 10.8
|Provision
      for asset write-down              |                               | -   
|Other                                             |                               | 3.1 
|                                                  | $                             | 17.0

P
r o v i s i o n   f o r   a s s e t   w r i t e -
d o w n

In
2002, Old Fording assessed the recoverability of its investment in the NYCO
operations in Mexico following a history of operating losses and uncertainty
around future improvement. The projected undiscounted future net cash flows of
these assets were less than the carrying value. Accordingly, a provision for
asset impairment of $140.0 million was recorded. Estimates of undiscounted
future net cash flows are subject to significant uncertainties and assumptions,
therefore actual results could vary significantly from such estimates. The
excess of tax basis over net book value created by the write-down was not
recognized. The only tax effect recognized on the write-down was the reversal of
a $2.8 million future tax liability associated with related assets recorded in
Canada. The write-down has been reflected in the asset balance of the NYCO
segment in note 18.

90
| 2004
Annual Report

---

|15 | GAIN
      (LOSS) ON CORPORATE REORGANIZATION
|-- | ---------------------------------------------



|                                                                          | Years
      ended December 31 |       
|------------------------------------------------------------------------- | ----------------------------- | ------
|(millions
      of Canadian dollars)                                      | 2004                          |       
|Corporate
      reorganization                                            |                               |       
|Reduction
      of interest in EVCP                                       | $                             | (37.5)
|Gain
      on sale of interest in EVCP                                    |                               | -     
|Reorganization
      costs related to the Arrangement                     |                               | -     
|                                                                          | $                             | (37.5)
|Discontinued
      operations                                             |                               |       
|Gain
      on sale of assets, net of taxes (2003 - $56.3)                 | $                             | -     
|Earnings
      prior to disposal, net of taxes (2003 - $1.4; 2002 - $6.0) |                               | -     
|                                                                          | $                             | -     

R
e d u c t i o n   o f   i n t e r e s t   i
n   E V C P

EVCP
was initially owned 65% by the Trust and 35% by Teck Cominco, the Managing
Partner. The agreement governing EVCP provided for an increase in Teck Cominco's
interest to a maximum of 40% to the extent that synergies from the combination
of various metallurgical coal assets contributed to EVCP exceed certain target
levels. The June 2004 report of an independent expert engaged by the partners
concluded that sufficient synergies had been realized to increase Teck Cominco's
interest to 40%.

The
Trust and Teck Cominco agreed that substantial synergies were achieved. As a
result, the partners agreed that the Trust's distribution entitlement was
reduced to 62% effective April 1, 2004, and will be reduced to 61% on April 1,
2005, and 60% on April 1, 2006, as the benefits of synergies flow through to
unitholders. Teck Cominco's entitlements will increase correspondingly over
the same period.

A
net $37.5 million non-cash charge to earnings was recorded in the second quarter
of 2004 to account for the entire 5% reduction of the Trust's interest in EVCP.
This charge was reduced by an estimate of cash to be received for the additional
distribution entitlements of 2% for the year ended March 31, 2005 and 1% for the
year ended March 31, 2006. These additional distribution entitlements will be
included in cash available for distribution over the next two years.

Results
of operations commencing with the second quarter of 2004 reflect the Trust's
60% interest in EVCP, while results from February 28, 2003 to March 31, 2004
include the 65% interest.

G
a i n   o n   s a l e   o f   i n t e r
e s t   i n   E V C P

During
2003, the Corporation contributed its metallurgical coal assets, which included
Old Fording's interests in its three mines and the metallurgical coal assets
purchased from the Luscar/CONSOL joint ventures, and the liabilities and
obligations related to these assets, in exchange for a 65% interest in EVCP and
$125.0 million as part of the Arrangement. This transaction resulted in a $70.7
million gain to the Trust.

The
Trust incurred costs of $22.0 million in 2003 and $11.5 million in 2002 related
to the Arrangement.

D
i s c o n t i n u e d   o p e r a t i o n s

During
2003, the Prairie assets of Old Fording were sold 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 of the assets beyond
current levels of up to 5% of gross revenue from such expansion. This sale
resulted in a $132.3 million gain, before taxes of $56.3 million. These assets
have been classified as discontinued operations.

The
income net of taxes from these operations for 2003 prior to the sale was $2.7
million and $18.9 million in 2002.

2004
Annual Report |91

---

During
2002 the Corporation expensed $8.2 million of capitalized costs relating to a
proposed power project. Due to the state of economic and environmental
uncertainties in the power industry the future recovery of the project costs was
uncertain. This project is part of discontinued operations in 2002.

|16 | SUPPLEMENTAL
      INFORMATION
|-- | ------------------------------

C
h a n g e s   i n   n o n - c a s h   w o r k i n
g   c a p i t a l

|                                                   | Years
      ended December 31 |      
|-------------------------------------------------- | ----------------------------- | -----
|(millions
      of Canadian dollars)               | 2004                          |      
|Decrease
      (increase) in current assets        |                               |      
|Accounts
      receivable                          | $                             | (6.2)
|Inventory                                          |                               | 18.6 
|Prepaid
      expenses                             |                               | (0.9)
|                                                   |                               |      
|Increase
      (decrease) in current liabilities   |                               |      
|Accounts
      payable, excluding capital accruals |                               | 47.2 
|Other                                              |                               | 5.5  
|                                                   | $                             | 64.2 

F
i n a n c i n g   a c t i v i t i e s   r e l a t e
d   to  
d i s t r i b u t i o n s   a n d   d i v i d e n d s

|                                        | Years
      ended December 31 |        
|--------------------------------------- | ----------------------------- | -------
|(millions
      of Canadian dollars)    | 2004                          |        
|Distributions
      declared            | $                             | (213.5)
|Dividends
      declared                |                               | -      
|Increase
      in distributions payable |                               | 16.8   
|Distributions
      or dividends paid   | $                             | (196.7)

I
n t e r e s t   i n   j o i n t   v e n t u r e s

A
portion of the Corporation'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 financial statements include the
Corporation's proportionate share of joint venture activities as follows but
do not include results from discontinued operations that were conducted through
joint ventures.

|                                               | Years
      ended December 31 |        
|---------------------------------------------- | ----------------------------- | -------
|(millions
      of Canadian dollars)           | 2004                          |        
|Revenues                                       | $                             | 1,089.7
|Operating
      and other expenses             |                               | 930.2  
|Net
      income                               | $                             | 159.5  
|                                               |                               |        
|Current
      assets                           | $                             | 224.1  
|Long-term
      assets                         |                               | 559.3  
|Current
      liabilities                      |                               | 127.2  
|Long-term
      obligations                    |                               | 93.1   
|                                               |                               |        
|Cash
      from operating activities           |                               | 263.0  
|Cash
      used in (from) financing activities |                               | (60.6) 
|Cash
      used in investing activities        |                               | (161.1)

92
| 2004
Annual Report

---

C
a s h   t r a n s a c t i o n s

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

|                                     | Years
      ended December 31 |     
|------------------------------------ | ----------------------------- | ----
|(millions
      of Canadian dollars) | 2004                          |     
|Income
      taxes paid              | $                             | 21.1
|Interest
      paid                  | $                             | 13.3



|17 | RELATED
      PARTY TRANSACTIONS
|-- | --------------------------------

Subsequent
to the Arrangement, EVCP entered into an agreement with its Managing Partner for
the provision of certain management services in the ordinary course of business.
EVCP also sells coal to the Managing Partner at market prices. The Trust's
share of related party revenues for 2004 were $3.1 million (2003 - $1.8
million). Cost of sales included $0.7 million (2003 - $0.8 million) and
selling, general and administrative expense included $0.3 million (2003 - $0.1
million). Also, EVCP accepted the transfer of the Quintette mine assets and
purchased certain other assets of the Managing Partner related to the Quintette
mine on December 31, 2004. The purchased assets were aquired at fair market
value, and the Trust's share of the cost was $1.3 million. The transfer of
Quintette mine assets, including the real property, coal leases, permits and
licenses was provided for in the Arrangement and was to occur when the Managing
Partner had completed the reclamation of the mine site. EVCP agreed to an
earlier transfer of the Quintette mine assets before reclamation was completed
in return for an agreement by the Managing Partner to complete the reclamation
and provide EVCP with an indemnity against any liability arising from the early
transfer. Related party receivables and payables with the Managing Partner were
$0.4 million and $0.2 million respectively at December 31, 2004.

EVCP
makes shipments of coal through Neptune Terminals in the normal course of
operations, on a cost of service basis. The Trust's share of these costs are
included in transportation and other costs and totalled $8.7 million during 2004
(2003 - $8.3 million). Related party receivables and payables related to this
entity were $0.2 million and $2.0 million respectively at December 31, 2004.

2004
Annual Report |93

---

|18 | SEGMENT
      INFORMATION
|-- | -------------------------



|                                                   | Elk
      Valley Coal |         | NYCO |   | Corporate |  | Total |        
|-------------------------------------------------- | --------------------- | ------- | ---- | - | --------- |  | ----- | -------
|(millions
      of Canadian dollars)               | 2004                  |         | 2003 |   | 2002      |  | 2004  |        
|Earnings                                           |                       |         |      |   |           |  |       |        
|Revenues                                           |                       |         |      |   |           |  |       |        
|Canada
      domestic                              | $                     | 42.0    |      | $ | 37.3      |  | $     | 40.5   
|Canada
      export                                |                       | 1,076.4 |      |   | 958.3     |  |       | 773.3  
|Foreign                                            |                       | -       |      |   | -         |  |       | -      
|                                                   |                       | 1,118.4 |      |   | 995.6     |  |       | 813.8  
|Cost
      of product sold                         |                       | (428.2) |      |   | (422.0)   |  |       | (310.7)
|Transportation
      and other                     |                       | (442.2) |      |   | (378.4)   |  |       | (318.4)
|Selling,
      general and administration          |                       | (20.3)  |      |   | (14.9)    |  |       | (8.6)  
|Depreciation
      and depletion                   |                       | (53.0)  |      |   | (53.0)    |  |       | (51.6) 
|Income
      (loss) from operations                |                       | 174.7   |      |   | 127.3     |  |       | 124.5  
|Interest
      expense                             |                       | (1.1)   |      |   | (2.1)     |  |       | -      
|Other
      income (expense)                       |                       | 12.3    |      |   | 1.8       |  |       | 0.1    
|Corporate
      reorganization                     |                       | -       |      |   | -         |  |       | -      
|Income
      taxes (expense) recovery              |                       | 15.4    |      |   | 1.8       |  |       | (49.0) 
|Income
      (loss) before discontinued operations | $                     | 201.3   |      | $ | 128.8     |  | $     | 75.6   
|                                                   |                       |         |      |   |           |  |       |        
|Assets
      Employed                              |                       |         |      |   |           |  |       |        
|Canadian                                           | $                     | 785.9   |      | $ | 853.9     |  | $     | 656.8  
|Foreign                                            |                       | -       |      |   | -         |  |       | -      
|Total                                              | $                     | 785.9   |      | $ | 853.9     |  | $     | 656.8  
|                                                   |                       |         |      |   |           |  |       |        
|Capital
      Expenditures                         |                       |         |      |   |           |  |       |        
|Canadian                                           | $                     | 71.6    |      | $ | 11.0      |  | $     | 30.6   
|Foreign                                            |                       | -       |      |   | -         |  |       | -      
|Total                                              | $                     | 71.6    |      | $ | 11.0      |  | $     | 30.6   

94
| 2004
Annual Report

---

The
Trust had two operating segments at the end of 2004, Elk Valley Coal, and NYCO.

Elk
Valley Coal's principle activities are the mining and processing of
metallurgical coal for export. Subsequent to February 28, 2003, this segment
represents the Trust's indirect 65% interest in EVCP until April 1, 2004, and
60% interest thereafter. Prior to February 28, 2003, this segment was referred
to as the Mountain Operations and consisted of three mines: Fording River,
Greenhills and Coal Mountain.

NYCO
mines and processes wollastonite and other industrial minerals at two operations
in the United States and one operation in Mexico.

Corporate
costs, hedging gains and losses, and other items recorded in the Corporation but
related to a particular segment are included in that segment as appropriate.

Prior
to February 28, 2003, Old Fording had a third operating segment. The Prairie
Operations primarily mined thermal coal for mine-mouth power plants and
collected royalties from third-party mining at Old Fording's mineral reserves.
This operating segment was sold as part of the Arrangement and results have been
reflected as discontinued operations for comparative purposes.

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.
Information by segment is provided in the above table.

The
accounting policies used in these operating segments are the same as those
described in the summary of significant accounting policies in note 2. Total
assets and additions to capital assets related to discontinued operations are
included in corporate and other.

The
number of customers who account for greater than 10% of revenues are as follows:

|                                                                                                     | Years
      ended December 31 | 
|---------------------------------------------------------------------------------------------------- | ----------------------------- | 
|                                                                                                     | 2004                          | 
|Number
      of customers contributing greater than 10% of metallurgical coal segment
      revenues | 1                             | 
|%
      of revenue from these customers                                                              | 10.2%                         | 

E
c o n o m i c   d e p e n d e n c e

Substantially
all of EVCP's export coal is transported to customers and port facilities by
one rail company for which there are limited alternatives. Most of the EVCP's
export sales were loaded through one port facility, for which there are limited
cost-effective alternatives. The cost of securing additional facilities and
services of this nature would significantly increase transportation and other
costs. In addition, interruption of rail or port

2004
Annual Report |95

---

services
would significantly limit EVCP's ability to operate. To the extent that
alternative sources of transportation and port services could be found, it would
increase transportation and other costs.

|19 | 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 sheets.
There are no material differences on the consolidated statements of cash flows.
Certain additional disclosures as required under U.S. GAAP have not been
provided as permitted by the rules of the Securities and Exchange Commission
(SEC).

A
)   D e r i v a t i v e   i n s t r u m e n t s  
a n d   h e d g i n g

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 Corporation 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.

B
)   S t a r t - u p   c o s t s

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.

C
)   E m p l o y e e   f u t u r e   b e n e f i t
s

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

D
)   C o m p r e h e n s i v e   i n c o m e

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.

E
)   A s s e t   r e t i r e m e n t   o b l i g a
t i o n s

In
June 2001, FASB issued Statement No. 143, "Accounting for Asset Retirement
Obligations" (FAS 143). In January 2004 the Trust adopted CICA Handbook
Section 3110, "Asset Retirement Obligations", which brings Canadian GAAP
substantially in line with U.S. standards. However, the Trust adopted FAS 143
for the year beginning January 1, 2003, thus net income and balance sheets
adjustments were required under U.S. GAAP to recognize the cumulative effect of
the application of the standard.

Certain
2003 comparative figures, with regards to FAS 143 have been restated to reflect
changes in the cumulative effect of the application of FAS 143 and goodwill. The
change corrects the retroactive application of accounting for asset retirement
obligations. This results in a decrease in goodwill of $5.7 million and a
decrease in the cumulative effect of the application of FAS 143 for the same
amount.

96
| 2004
Annual Report

---

F
)   S t o c k - b a s e d   c o m p e n s a t i o n

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. Options to purchase units in the Trust and, prior to the
reorganization, options to purchase shares in Old Fording had a different
intrinsic value before and after going public. Canadian GAAP does not require
revaluation of these options. The additional expense required under U.S. GAAP
increases other paid in equity.

G
)   J o i n t   v e n t u r e s

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 16. There are no material
differences between the information in note 16 prepared under Canadian GAAP and
U.S. GAAP.

H
)   D i s c l o s u r e   o f   G u a r a n t e e
s

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.

I
)   V a r i a b l e   i n t e r e s t   e n t i t
i e s

FIN
46, "Consolidation of Variable Interest Entities," provides guidance for
applying consolidation principles to certain entities that are subject to
control on a basis other than ownership of voting interests. FIN 46 is effective
for fiscal years beginning on or after January 1, 2004. The Trust has evaluated
the principles within the guidance for this standard and determined that there
are no implications to the reporting practises of the Trust.

2004
Annual Report |97

---

J
)   C o n s o l i d a t e d   S t a t e m e n t  
o f   C a s h   F l o w s

Under
U.S. GAAP, separate subtotals within operating, financing and investment
activities would not be presented.

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

|                                                                                                                                                        |     | Years
      ended December 31 |       
|------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ----------------------------- | ------
|(millions
      of Canadian dollars)                                                                                                                    | REF | 2004                          |       
|Net
      income (loss) - Canadian GAAP                                                                                                                 |     | $                             | 150.1 
|Increased
      (decreased) by                                                                                                                          |     |                               |       
|Derivative
      instruments - foreign exchange forward contracts                                                                                       | A   |                               | (27.5)
|Start-up
      costs                                                                                                                                    | B   |                               | (3.9) 
|Stock-based
      compensation expense                                                                                                                  | F   |                               | -     
|Accretion
      expense                                                                                                                                 | E   |                               | -     
|Depreciation
      expense                                                                                                                              | E   |                               | -     
|Income
      tax (expense) recovery on the above items                                                                                                  |     |                               | 12.7  
|Income
      (loss) before cumulative effect of the application of FAS 143                                                                              |     |                               | 131.4 
|Cumulative
      effect of the application of FAS 143 net of tax of $4.6 million                                                                        | E   |                               | -     
|Net
      income (loss) - United States GAAP                                                                                                            |     | $                             | 131.4 
|                                                                                                                                                        |     |                               |       
|Other
      comprehensive income                                                                                                                        |     |                               |       
|Pension
      costs net of tax of $2.5 million (2003 - $0.6; 2002 - $3.5)                                                                               | C   | $                             | (3.7) 
|Unrealized
      gain (loss) on derivative instruments - foreign exchange forward
      contracts net of tax of $7.9 million(2003 - $36.7; 2003 - $2.6) | A   |                               | 11.7  
|Foreign
      currency translation adjustments                                                                                                          | D   |                               | 5.9   
|Comprehensive
      income (loss)                                                                                                                       |     | $                             | 145.3 
|Basis
      and diluted earnings (loss) per share                                                                                                       |     | $                             | 3.00  

98
| 2004
Annual Report

---

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

|                                                                  |     | As
      at December 31 |      
|----------------------------------------------------------------- | --- | ----------------------- | -----
|(millions
      of Canadian dollars)                              | REF | 2004                    |      
|Assets                                                            |     |                         |      
|Current
      assets                                              |     |                         |      
|Derivative
      instruments - foreign exchange forward contracts | A   | $                       | 85.6 
|Non-current
      assets                                          |     |                         |      
|Capital
      assets                                              | B/E |                         | (3.9)
|Derivative
      instruments - foreign exchange forward contracts | A   |                         | 30.8 
|Total
      assets                                                |     | $                       | 112.5
|Liabilities
      and unitholders' equity                         |     |                         |      
|Deferred
      liabilities                                        |     |                         |      
|Pension
      liability                                           | C   |                         | 13.4 
|Deferred
      income tax liability                               |     |                         | 40.2 
|                                                                  |     |                         | 53.6 
|Unitholders'
      equity                                         |     |                         |      
|Other
      paid-in capital                                       | F   |                         | -    
|Foreign
      currency translation adjustments                    | D   |                         | (7.5)
|Accumulated
      other comprehensive income                      | D   |                         | 51.5 
|Accumulated
      earnings                                        |     |                         | 14.9 
|                                                                  |     |                         | 58.9 
|Total
      liabilities and unitholders' equity                   |     | $                       | 112.5

2004
Annual Report |99

---



---



Exhibit
C
2004 Management Discussion and Analysis.

F O R D I N
G   C A N A D I A N   C O A L   T R U S T

Management'sdiscussionand
analysis

|T
      A B L E   O F   C O N T E N T S
|---------------------------------------

Overview

PAGE
33



Strategy
and Key Performance Indicators

PAGE
35



Results
of Operations

PAGE
36



Summary
of Quarterly Results

PAGE
47



Outlook

PAGE
48



Liquidity
and Capital Results

PAGE
53



Other
Information

PAGE
56



Critical
Accounting Estimates

PAGE
57



Financial
and Other Instruments

PAGE
59



Risks
and Uncertainties

PAGE
60



2004
Annual Report |29

---

Forward-looking

This
annual report, including management's discussion and analysis, contains
forward-looking information within the meaning of the United States Private
Securities Litigation Reform Act of 1995 relating, but not limited to, Fording
Canadian Coal Trust's (the Trust) expectations, intentions, plans and beliefs.
Forwardlooking information can often be identified by forwardlooking 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 and exchange rates; 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 in
respect to the use 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 pressures 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 labour stoppages and severe weather
conditions; the demand for and availability of rail, port andother
transportation services; 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 and transportation 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 on pages 60 to 68 and
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 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 that affect this
information.

30
| 2004
Annual Report

---

| | MANAGEMENT'S
      DISCUSSION AND ANALYSIS
| | ------------------------------------------

THIS
management's discussion and analysis, dated March 2, 2005, 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 Plan of
Arrangement (Arrangement) that established the Trust has been accounted for as a
continuity of interests whereby 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 company,
Fording Inc., being the public company existing prior to the Arrangement (Old
Fording). All assets and liabilities are recorded at historical cost. These
financial statements reflect the results of operations and cash flows of Old
Fording to February 28, 2003 and the results of operations and cash flows of the
Trust thereafter. The Trust has accounted for its interest in Elk Valley Coal as
a joint venture, using the proportionate consolidation method of accounting. Due
to the conversion into an income trust, the resulting change in assets, and the
reduction of the Trust's interest in Elk Valley Coal, which is discussed
below, certain information included in the consolidated financial statements for
prior periods may not be directly comparable to information subsequent to that
date.

The
information in this management's discussion and analysis should be read
together with the Consolidated Financial Statements, the notes thereto and other
public disclosures of the Trust and Old Fording. Additional information relating
to the Trust, including the Trust's annual information form, is available on
SEDAR at www.sedar.com. 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 19 to the Consolidated Financial Statements.

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.

N
O N - G A A P     F I N A N C I A L    
M E A S U R E S

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, distributable cash and net income before
unusual items, future income taxes 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, which have
been applied on a consistent basis, because we believe that they facilitate the
understanding of the results of our operations and financial position.

F
O R D I N G     C A N A D I A N     C O
A L     T R U S T

The
Fording Canadian Coal Trust is an open-ended mutual fund trust created pursuant
to a declaration of trust and governed by the laws of Alberta. The Trust was
established in connection with the Arrangement that became effective on February
28, 2003. It 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 does not carry on any active business. Through its wholly owned operating
subsidiary, Fording Inc., the Trust holds a 62% interest in the metallurgical
coal operations owned by Elk Valley Coal Partnership and a 100%

2004
Annual Report |31

---

interest
in the industrial mineral operations owned by the NYCO companies. The Trust uses
the cash it receives from these investments to make quarterly distributions to
its unitholders.

At
the time of the Arrangement, the Trust had a 65% interest in Elk Valley Coal.
The partnership agreement permitted Teck Cominco to increase its interest in Elk
Valley Coal by achieving a certain level of synergies considered to the
advantage of the partners through its management of the partnership assets. Teck
Cominco achieved the synergy objectives and the partners agreed that the Trust's
interest would be reduced to 62% effective April 1, 2004 and will be reduced to
61% on April 1, 2005, and to 60% on April 1, 2006.

The
Trust has accounted for the entire 5% reduction in its interest in Elk Valley
Coal in its financial results effective April 1, 2004. The estimated additional
distribution entitlements of 2% for the year ended March 31, 2005 and 1% for the
year ended March 31, 2006 will be included in cash available for distribution
over the period ending March 31, 2006.

References
to "we" and "our" in management's discussion and analysis are to the
Trust and Fording Inc., and their consolidated interest in Elk Valley Coal and
NYCO as the context requires.

E
L K     V A L L E Y     C O A L

Elk
Valley Coal is a general partnership between Fording Inc. and affiliates of Teck
Cominco. Teck Cominco is the managing partner of Elk Valley Coal and is
responsible for managing its business and affairs. Our consolidated financial
statements reflect our proportionate interest in Elk Valley Coal.

Elk
Valley Coal is the second largest supplier of seaborne hard coking coal in the
world, with approximately 20% of the global market in 2004. Hard coking coal is
a type of metallurgical coal that is used primarily for making coke by
integrated steel mills, which accounts for approximately 60% of worldwide steel
production. The seaborne hard coking coal market is characterized 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
comparatively low cost of seaborne transportation.

Elk
Valley Coal has six operating mines. It owns the Fording River, Coal Mountain,
Elkview and Line Creek mines and an 80% interest in a joint venture which
operates the Greenhills mine, all of which are located in the Elk Valley region
of southeast British Columbia, and the Cardinal River mine in west central
Alberta. Elk Valley Coal also owns numerous other properties, including the coal
preparation plant and coal resources at the former Quintette mine and other coal
resources in northeast British Columbia as well as a 46% interest in Neptune
Terminals in Vancouver, British Columbia.

Elk
Valley Coal accounted for 96% of the Trust's revenues in 2004. Our results
pertaining to Elk Valley Coal consist of our interest in the operations of the
Fording River, Greenhills, Coal Mountain, Elkview, Line Creek and Cardinal River
mines as well as corporate costs related to these operations. This also includes
hedging gains and losses, and mineral taxes that are recorded in Fording Inc.
but attributable to Elk Valley Coal's earnings.

N
Y C O

NYCO
consists of subsidiaries of Fording Inc. that own wollastonite mining operations
in New York State and Mexico and a tripoli mining operation in Missouri. NYCO is
the world's leading producer of wollastonite.

Wollastonite
is an industrial mineral that is used in the manufacture of automotive
composites, adhesives and sealants, metallurgical fluxes, friction material,
paints and corrosion-resistant coatings, fire-resistant construction wallboard,
cement-based products and ceramics. Tripoli is an industrial mineral that is
used primarily in buffing and polishing applications.

NYCO
accounted for 4% of the Trust's revenues in 2004.

32
| 2004
Annual Report

---

Overview

| | HIGHLIGHTS
| | ----------



|SUMMARY                                                                                               |      |         |      |   |         |  |   |        | 
|----------------------------------------------------------------------------------------------------- | ---- | ------- | ---- | - | ------- |  | - | ------ | 
|(millions
      of dollars, except per unit amounts)                                                  | 2004 |         | 2003 |   | 2002    | 
|Revenues                                                                                              | $    | 1,167.5 |      | $ | 1,043.7 |  | $ | 869.5  | 
|                                                                                                      |      |         |      |   |         |  |   |        | 
|Income
      from operations                                                                          |      | 170.4   |      |   | 123.1   |  |   | 115.3  | 
|                                                                                                      |      |         |      |   |         |  |   |        | 
|Net
      income (loss)                                                                               |      | 150.1   |      |   | 240.9   |  |   | (71.9) | 
|                                                                                                      |      |         |      |   |         |  |   |        | 
|Add/subtract
      unusual items, future taxes and discontinued operations, net of income
      taxes |      |         |      |   |         |  |   |        | 
|Loss
      (gain) on corporate reorganization                                                         |      | 37.5    |      |   | (48.7)  |  |   | 11.5   | 
|Change
      in inventory valuation                                                                   |      | (10.8)  |      |   | -       |  |   | -      | 
|Future
      income tax (recovery) expense                                                            |      | (31.3)  |      |   | (22.0)  |  |   | 6.8    | 
|Provision
      for asset write-down                                                                  |      | -       |      |   | -       |  |   | 140.0  | 
|Net
      income (loss) from discontinued operations                                                  |      | -       |      |   | (78.7)  |  |   | (18.9) | 
|Net
      income before unusual items, future income taxes and discontinued
      operations          | $    | 145.5   |      | $ | 91.5    |  | $ | 67.5   | 
|                                                                                                      |      |         |      |   |         |  |   |        | 
|Basic
      and diluted earnings (loss) per unit:                                                     |      |         |      |   |         |  |   |        | 
|Net
      income (loss)                                                                               | $    | 3.09    |      | $ | 5.08    |  | $ | (1.40) | 
|Net
      income (loss) before discontinued operations                                                |      | 3.09    |      |   | 3.42    |  |   | (1.77) | 
|Net
      income before unusual items, future income taxes and discontinued
      operations          |      | 3.00    |      |   | 1.93    |  |   | 1.31   | 
|                                                                                                      |      |         |      |   |         |  |   |        | 
|Cash
      distributions / dividends declared per unit1                                               |      | 4.40    |      |   | 4.49    |  |   | 0.55   | 
|                                                                                                      |      |         |      |   |         |  |   |        | 
|Total
      assets                                                                                    |      | 968.2   |      |   | 999.4   |  |   | 909.4  | 
|                                                                                                      |      |         |      |   |         |  |   |        | 
|Total
      long-term debt                                                                            |      | 205.2   |      |   | 306.6   |  |   | 135.0  | 
|Coal
      sales(millions
      of tonnes)                                                            |      | 15.3    |      |   | 15.3    |  |   | 12.3   | 
|Wollastonite
      sales(thousands
      of tonnes)                                                   |      | 82.0    |      |   | 75.0    |  |   | 84.0   | 
|1  
      2002 includes dividends from Old Fording                                                    |      |         |      |   |         |  |   |        | 



Metallurgical
coal prices increased in 2004 due to the growth of the worldwide steel industry,
creating strong demand at a time when existing coal productive capacity was
constrained due to various operational issues and little additional coal supply
was available. This was caused primarily by the continued growth of China as an
importer of seaborne hard coking coal (compared to prior years when it was a net
exporter), the high production rates of European and Japanese steel mills and
the absence of significant new coal supply emerging quickly enough to

2004
Annual Report|33

---



meet
new demand. These factors caused unprecedented market shortages for
metallurgical coal throughout 2004, which created the potential for historic
high prices for the 2005 coal year.

Our
revenues from operations in 2004 increased 12% from the prior year to nearly
$1.2 billion. Contributing significantly to these results were higher coal
prices resulting from improved coal markets. Realized Canadian dollar coal
prices increased due to higher U.S. dollar coal prices and gains on foreign
currency hedges, despite a stronger Canadian dollar. Higher revenues were
partially reduced by higher cost of product sold, transportation and other
costs, and selling, general and administration expenses. Income from operations
increased 38% to $170 million in 2004 from $123 million in 2003. Net income was
$150 million in 2004, a decrease from $241 million in 2003, in which net income
included gains from a number of unusual items, future income taxes and
discontinued operations.

Total
assets remained roughly the same over the three years as there were no major
transactions that impacted assets other than the Arrangement. In 2003, the
Arrangement resulted in the Trust disposing of the prairie thermal coal assets
and decreasing our overall interest in the three Fording mines while adding an
interest in the additional mines gained through the Arrangement. Variances in
total long-term debt were caused by the increase in 2003 for purposes of the
Arrangement and the decrease in 2004 from proceeds of the equity issue.

Management
believes that net income before unusual items, future taxes and discontinued
operations represents a more comparable measure of our earnings from ongoing
operations than net income. We believe this measure facilitates the
understanding of the results of our operations and financial position. In 2004
and 2003, results included unusual items related to the formation of the Trust,
which had a pronounced effect on the comparability of our results. These items
increased net income by $5 million to $150 million in 2004 and provided $149
million of 2003 net income, which was $241 million. Favourable adjustments in
2004 for future income taxes and changes related to new accounting rules that
affected the valuation of inventory were offset somewhat by the reduction from
the change of the Trust's interest in Elk Valley Coal arising from the
achievement of synergies from the Arrangement. Gains on the reorganization into
the Trust and the sale of discontinued operations combined with a positive
adjustment for future income taxes impacted net income in 2003.

| | CASH
      AVAILABLE FOR DISTRIBUTION
| | -------------------------------------

|"One
      of the goals of the Arrangement was to unlock the value of the cash flows
      generated by Elk Valley Coal and NYCO."
|----------------------------------------------------------------------------------------------------------------------------------

One
of the goals of the Arrangement was to unlock the value of the cash flows
generated by Elk Valley Coal and NYCO. 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 primary
contributor to distributable cash of the Trust.

For
2004, cash available for distribution was $182 million, or $3.82 per unit based
on the number of outstanding units at the end of each quarter. This is an
increase of 53% over 2003, our first year as a Trust, in which cash available
for distribution was $119 million or $2.53 per unit for the ten months ended
December 31, 2003. This contributed to total distributions paid of $214 million
or $4.40 per unit in 2004 as compared with $210 million or $4.49 per unit in
2003. Two additional sources contributed cash amounts to payments to unitholders
in 2003: a special distribution of $70 million or $1.50 per unit as part of

34 |2004
Annual Report

---

the
Arrangement and a cash flow benefit from a reduction of coal inventories
contributed a total of $40 million or $0.85 per unit to cash paid or payable to
unitholders. Available cash carried over by Fording Inc. from 2003 was nearly
$19 million. In 2002, dividends of $28 million or $0.55 per share were paid to
shareholders of Old Fording.

|CASH
      AVAILABLE FOR DISTRIBUTION                                    |                                   |        |                                         |   |        | 
|------------------------------------------------------------------------ | --------------------------------- | ------ | --------------------------------------- | - | ------ | 
|(millions
      of dollars)                                              | Year
      ended December 31 2004 |        | 10
      months ended December 31 20031 |  
|Cash
      flows from operating activities                               | $                                 | 269.5  |                                         | $ | 229.6  | 
|                                                                         |                                   |        |                                         |   |        | 
|Add/deduct:                                                              |                                   |        |                                         |   |        | 
|Decrease
      in non-cash working capital                               |                                   | (64.2) |                                         |   | (99.5) | 
|Sustaining
      capital expenditures                                    |                                   | (25.9) |                                         |   | (8.7)  | 
|Capital
      lease payments                                             |                                   | (0.7)  |                                         |   | (1.3)  | 
|Other                                                                    |                                   | 3.5    |                                         |   | (1.2)  | 
|Cash
      reserve                                                       |                                   | -      |                                         |   | -      | 
|Cash
      available for distribution                                    | $                                 | 182.2  |                                         | $ | 118.9  | 
|Distributions
      declared and payable                                 | $                                 | 213.5  |                                         | $ | 210.3  | 
|1 The
      period from the formation of the Trust to December 31, 2003. |                                   |        |                                         |   |        | 

Strategy
and Key Performance Indicators

| | STRATEGY
| | --------

|"We're
      dedicated to delivering strong unitholder distributions over the
      long-term."
|-----------------------------------------------------------------------------------------------

Our
overall goal is to provide strong unitholder distributions over the long-term.
We accomplish this through the returns provided by our investments in Elk Valley
Coal and NYCO, driven by their business strategies. Their strategy is to
maintain solid, long-term customer relationships and efficient management of
operations in order to grow the business, thereby increasing cash flows from
operations. To implement this, they focus on minimizing costs, utilizing
existing assets efficiently and carefully managing the market risk while
prudently growing capacity.

Strategic
priorities for both Elk Valley Coal and NYCO include:

- Developing
    the resource base to capitalize on opportunities for further growth;
- Expanding
    reserves to provide a long-term supply to the market;
- Controlling
    costs through a strong focus on efficient operations;
- Managing
    the business through price cycles;
- Strengthening
    relationships with existing customers;
- Diversifying
    the customer base to strengthen market position;
- Managing
    environmental performance to meet regulatory and public responsibilities;
    and
- Maintaining
    a strong focus on employee safety.

| | KEY
      PERFORMANCE INDICATORS
| | --------------------------------

Key
performance indicators relate to those things that Elk Valley Coal and NYCO can
directly affect. Low cost operations and continuous improvement initiatives are
both crucial indicators of their ability to provide long-term

2004
Annual Report |35

---

value.
Operations are measured by unit costs per tonne, plant yield and strip ratios.
Continuous improvement initiatives are measured by mine and plant productivity
gains and the ability to expand at opportune times. Sound environmental
performance is demonstrated by controlling the impact of activities through
practices and complying with applicable laws and regulations. Monitoring and
assessing accidents and incidents provide ways to improve safety performance.
These key performance indicators are continuously reviewed and monitored, as
they are critical to the success of Elk Valley Coal's and NYCO's strategies
for the future.

Increased
sales revenues combined with efficient management of costs have an immediate
impact on net income from operations. Being recognized as a valued supplier to
customers and strengthening relationships with employees and communities are
important aspects of the business for Elk Valley Coal and NYCO. However, it is
the continuous focus on improving operations in the context of effective
long-term mine plans that is key to the development of resources and ultimately,
the profitability of the Trust.

Results
of Operations

The
financial results and financial statements of the Trust reflect the results of
operations and cash flows of Old Fording to February 28, 2003 and the Trust's
results of operations and cash flows thereafter. The financial results and
financial position of the Trust include our indirect 60% interest in Elk Valley
Coal and our 100% interest in NYCO. Due to the conversion into an income trust
in 2003, the resulting change in assets effective February 28, 2003 and the
reduction in our interest in Elk Valley Coal effective April 1, 2004, certain
information for prior periods may not be directly comparable to information
subsequent to that date. The corporate costs reflect general and administration
expenses not allocated to specific business segments. Our interest in Elk Valley
Coal accounts for the majority of our revenues, income from operations and net
income.

| | 2004
      COMPARED WITH 2003
| | -----------------------------

E
L K   V A L L E Y   C O A L

Our
metallurgical coal operations are conducted through our investment in Elk Valley
Coal. Our interest in its operations continues to have the most influence on our
financial results and financial position. These operations accounted for 96% of
revenues in 2004, and 96% and 95% of revenues in 2003 and 2002, respectively.

|VOLUMES
      AND PRICES                                | 2004 |       | 2003 |   | 2002  | 
|------------------------------------------------------- | ---- | ----- | ---- | - | ----- | 
|Coal
      production(millions
      of tonnes)         |      | 15.2  |      |   | 14.4  | 
|Coal
      sales(millions
      of tonnes)              |      | 15.3  |      |   | 15.3  | 
|Average
      U.S.$ coal price(per
      tonne)         | $    | 52.20 |      | $ | 44.50 | 
|Average
      CDN$ coal price(per
      tonne)1         | $    | 73.10 |      | $ | 64.60 | 
|1
      Includes the effects of foreign currency hedges |      |       |      |   |       | 



|OPERATING
      RESULTS                   |      |         |      |   |       |  |   |       | 
|----------------------------------------- | ---- | ------- | ---- | - | ----- |  | - | ----- | 
|(millions
      of dollars)               | 2004 |         | 2003 |   | 2002  | 
|Revenues                                  | $    | 1,118.4 |      | $ | 995.6 |  | $ | 813.8 | 
|Cost
      of product sold                |      | 428.2   |      |   | 422.0 |  |   | 310.7 | 
|Transportation
      and other            |      | 442.2   |      |   | 378.4 |  |   | 318.4 | 
|Selling,
      general and administration |      | 20.3    |      |   | 14.9  |  |   | 8.6   | 
|Depreciation,
      depletion             |      | 53.0    |      |   | 53.0  |  |   | 51.6  | 
|Income
      from operations              | $    | 174.7   |      | $ | 127.3 |  | $ | 124.5 | 

36 |
2004
Annual Report

---



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 (PCI) 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 Elk Valley Coal's
coal is hard coking coal. Historically only 5% to 10% of its production has been
sold as thermal coal to industrial users or as pulverized coal for injection to
steel mills.

Coal
markets in 2004 were characterized by the continuation of the tight supply and
demand balance experienced in late 2003. Demand for coking coal strengthened
with the growth in global steel production, driven largely by a continued
increase in net imports of seaborne hard coking coal by China and the high
production rates of European and Japanese steel mills. This imbalance was
further accentuated by stress on existing infrastructure to produce and
transport new supplies of coal. This was combined with declining producer coal
inventories, partially caused by production and delivery issues at some mines in
Australia, the United States and Canada. As a result, 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.

|"Nearly
      all of Elk Valley Coal's production is hard coking coal, which forms
      high-strength, high-quality coke."
|---------------------------------------------------------------------------------------------------------------------------

Elk
Valley Coal is the second largest supplier of seaborne hard coking coal in the
world, with approximately 20% of the global market in 2004. 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.

While
Elk Valley Coal's sales volumes increased 9% in 2004, the Trust's share of
total sales volumes was unchanged from 2003. This is due to the reduction in the
Trust's interest in Elk Valley Coal and the associated increase in Teck
Cominco's interest that resulted from the attainment of synergies.

The
12% increase in revenues in 2004 was due to higher coal prices driven by this
strengthening in global demand. On a calendar-year basis, the U.S. dollar price
of coal increased 17% in 2004 over 2003. The impact of higher U.S. dollar prices
and foreign exchange hedging gains was partially offset by a higher effective
U.S. / Canadian dollar exchange rate, resulting in a 13% increase in average
Canadian dollar coal sales prices in 2004.

Almost
all sales are free on board (FOB) to west coast posts. A certain portion is
cost, insurance and freight (CIF). Elk Valley Coal pays the freight costs on CIF
shipments, which are added to the sale price. Higher ocean freight rates paid in
2004 were passed on to customers purchasing the coal, increasing revenues
slightly as compared to 2003. As these charges also proportionately increase
transportation and other costs, there is no net impact to income from
operations.

2004
Annual Report |37

---



Almost
all of Elk Valley Coal's coal sales are denominated in U.S. dollars, and the
U.S. dollar weakened against many currencies in 2004, including the Canadian
dollar. A weaker U.S. dollar reduces the amount Elk Valley Coal receives for its
coal in Canadian dollar terms, serving to reduce revenues, net income and cash
available for distribution. However, approximately 65% of the 2004 U.S. dollar
exposure was hedged at about U.S.$0.68 cents, resulting in gains on the hedge
contracts of $83 million, which helped offset the impact of the weakening U.S.
dollar. The current outstanding foreign exchange forward contracts for the years
2005 through 2007 cover a smaller proportion of expected U.S. dollar revenues
and can be found in note 11 to the consolidated financial statements.

|COAL
      SALES BY REGION |      |  |      |  |      | 
|-------------------------- | ---- |  | ---- |  | ---- | 
|(percent)                  | 2004 |  | 2003 |  | 2002 | 
|Asia                       | 45   |  | 46   |  | 52   | 
|Europe                     | 32   |  | 31   |  | 34   | 
|North
      America        | 15   |  | 14   |  | 9    | 
|South
      America        | 8    |  | 9    |  | 5    | 

|"Diversification
      has reduced the risk of sales volume variability by accessing new markets
      and customers for coal."
|-------------------------------------------------------------------------------------------------------------------------------

One
of Elk Valley Coal's underlying strategies has been to diversify its customer
base. It currently sells coal into most of the steel producing regions of the
world serviced by seaborne coking coal, and continues to broaden its customer
base. Diversification over time has reduced the risk of variability of sales
volumes by increasing the number of customers served and accessing new markets
for coal, thereby allowing Elk Valley Coal to raise its production levels.
Diversification has also helped support coal sales volumes when certain markets
have experienced depressed local or regional economic activity.

Sales
to Chinese steel mills by Elk Valley Coal began in 2003 and continued to grow in
2004. 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 of Elk Valley Coal's other markets.

Elk
Valley Coal currently sells the majority of its coal through three-year
evergreen contracts. The provisions of most of these contracts provide for the
sale of a fixed volume each year, with prices determined annually, and
multi-year termination notice periods. Evergreen contracts reduce some of the
risk associated with sales and production volumes by providing a firm level of
sales from year to year.

Historically,
less than 10% of Elk Valley Coal's sales have been in the spot market. For the
2005 coal year, all expected production is required to meet existing contracts.

38 |
2004
Annual Report

---

HowElk
Valley CoalMines

Elk
Valley Coal's operations employ conventional open-pit mining techniques using
large trucks and shovels. 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.

Mine
Operations

|"Key
      variables related to mining coal are carefully long-term operations."
|--------------------------------------------------------------------------------

Movement
of rock overburden and the extraction of raw coal constitute a significant
portion of the unit cost of product sold because considerably more rock must be
blasted and moved than there is coal to transport to the coal 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 average volume of rock that must be moved for each tonne
    managed with a of clean coal produced and can vary from period to period
    around a long-term trend. A lower strip ratio normally reduces the unit cost
    of product sold. view to mine However, changing technology and the use of
    larger equipment may reduce mining costs, which could make higher strip
    ratios economic in the future and, in essence, increase recoverable coal.
- 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 mining and processing inputs, 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, employee levels, fleet size, haul distance and
    equipment capacity, reduces the unit cost of product sold.

Plant
Operations

Coal
preparation plant processing includes the washing and drying of coal for sale.
Washing coal removes impurities such as rock and ash. 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 raw coal being
    processed and the amount of ash included in the raw coal delivered by the
    mine operations. In the cleaning process, ash in the raw coal is removed to
    acceptable levels for the 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 overall employee levels.

2004
Annual Report |39

---

C
o s t   o f   P r o d u c t   S o l d

|                                                      |   | 2004  |  |   | 2003  |  |   | 2002  | 
|----------------------------------------------------- | - | ----- |  | - | ----- |  | - | ----- | 
|Coal
      sales(millions
      of tonnes)            |   | 15.3  |  |   | 15.3  |  |   | 12.3  | 
|Coal
      production(millions
      of tonnes)       |   | 15.2  |  |   | 14.4  |  |   | 13.3  | 
|Cost
      of product sold(millions
      of dollars) | $ | 428.2 |  | $ | 422.0 |  | $ | 310.7 | 
|Cost
      of product sold(per
      tonne)           | $ | 28.00 |  | $ | 27.50 |  | $ | 25.30 | 

The
cost of product sold includes expenses to move overburden and extract and clean
coal for delivery to the port. It also includes other expenses such as
engineering, exploration and the administration of the minesite.

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. The combined cost of product sold and transportation and
other costs of Elk Valley Coal have generally compared favourably with
competitors in the United States.

|MINE
      OPERATING STATISTICS                                             | 2004  |  | 2003  |  | 2002  | 
|--------------------------------------------------------------------------- | ----- |  | ----- |  | ----- | 
|Total
      material moved(millions
      of bank cubic metres)             | 144.2 |  | 135.8 |  | 122.5 | 
|Strip
      ratio(bank
      cubic metres per tonne of clean coal produced) | 8.0   |  | 8.4   |  | 8.2   | 
|Haul
      distance(kilometres
      per haul)                              | 2.7   |  | 2.7   |  | 3.0   | 
|Mine
      productivity(bank
      cubic metres per 8-hour manshift)        | 384.8 |  | 373.4 |  | 406.3 | 



|PLANT
      OPERATING STATISTICS                                                  | 2004 |  | 2003 |  | 2002 | 
|--------------------------------------------------------------------------------- | ---- |  | ---- |  | ---- | 
|Coal
      production, net(millions
      of tonnes)                              | 15.2 |  | 14.4 |  | 13.3 | 
|Yield(percent)                                                                    | 67   |  | 69   |  | 68   | 
|Plant
      productivity(tonnes
      of clean coal produced per 8-hour manshift) | 42.6 |  | 39.6 |  | 44.0 | 

Elk
Valley Coal's current five-year integrated production plan covering all of its
producing properties was developed to maximize cash flows while maintaining our
infrastructure over the longer term. Overall, the operating results for its
mines in 2004 demonstrated noticeable improvements in several areas.

Cost
of product sold increased slightly over 2003 levels as a result of higher
maintenance and mining costs. Unit cost of product sold increased by 2% due to
higher mining and processing input costs as well as the



40
| 2004
Annual Report

---

|"The
      current five-year integrated production plan was developed to maximize
      cash flows while maintaining our infrastructure over the longer term."
|--------------------------------------------------------------------------------------------------------------------------------------------------------------

decision
to mine additional overburden during shutdowns to accelerate future coal
release.

Higher
steel prices for the year resulted in increasing costs for a number of
steel-based products used to maintain the processing plants and mining equipment
fleets. Also, higher crude oil prices translated into higher diesel costs, which
represent a significant component of mine operating cost. These two factors
combined with rising supply costs added pressure to cost of product sold in
2004.

The
movement of additional overburden in anticipation of increased future production
requirements increased 8% versus the previous period, resulting in additional
mining costs in the period. By accelerating the movement of overburden in 2004,
additional raw coal will become available for processing in the future. This
will allow Elk Valley Coal to maximize coal production and capitalize on higher
prices expected in 2005.

The
impact of increased cost was partially offset by higher mine and plant
productivity and a lower total strip ratio. The mines achieved higher
productivity levels in 2004, moving 6% more material as compared with the
previous year. The mines continued to operate at high capacity during the normal
shutdown months to meet sales commitments.

T
r a n s p o r t a t i o n   a n d   O t h e r   C
o s t s

|                                                          |   | 2004  |  |   | 2003  |  |   | 2002  | 
|--------------------------------------------------------- | - | ----- |  | - | ----- |  | - | ----- | 
|Sales
      volumes(millions
      of tonnes)             |   | 15.3  |  |   | 15.3  |  |   | 12.3  | 
|Transportation
      and other(millions
      of dollars) | $ | 442.2 |  | $ | 378.4 |  | $ | 318.4 | 
|Transportation
      and other(per
      tonne)           | $ | 28.90 |  | $ | 24.70 |  | $ | 25.90 | 

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, ocean freight 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 Elk Valley Coal's 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, which is reflected in the sales price charged by
Elk Valley Coal. Total transportation and other costs fluctuate with variances
in coal sales volumes and the cost of transportation services and, accordingly,
rose 17% in total as compared with 2003.

The
usual terms of seaborne coal sales result in customers taking possession of the
coal once it is loaded onto the vessels at the port. Elk Valley Coal's
customers typically arrange and pay for ocean freight and off loading from
vessels. In some cases, Elk Valley Coal pays these costs and includes the
charges in the sales price. Higher ocean freight rates increased transportation
and other costs in 2004.

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, which primarily originates
in the eastern United States, normally has an ocean transportation advantage
over Canada and Australia into Europe and eastern South America. In turn,
Australian producers have a rail freight advantage over Canada as a result of
being located

2004
Annual Report|41

---

closer
to port facilities and having lower transportation and other costs. The
potential impact of rising coal prices on port and rail costs could affect Elk
Valley Coal's transportation and other costs and overall competitiveness to
other producers in the future.

|"A
      portion of port rates is tied to the change in the Canadian dollar price
      of coal-year sales."
|------------------------------------------------------------------------------------------------------------

Transportation
and other costs per tonne were up 17% in 2004, largely due to higher port rates
combined with a contingency provision for disputed rail rates. A portion of Elk
Valley Coal's port rates are tied to the increase in the Canadian dollar price
of coal before taking into account any hedging gains or losses.

In
addition, Elk Valley Coal is accruing a reasonable provision for potentially
higher rail costs relating to a contract dispute with Canadian Pacific Railway
Company (CPR), the exclusive rail service provider for the shipment of coal from
the five Elk Valley mines to the ports in Vancouver. Legal proceedings have been
initiated in both the Alberta Courts and the Canadian Transportation Agency. In
January 2005, Elk Valley Coal and CPR agreed to engage in a confidential
non-binding mediation process to attempt to resolve the dispute; discussions are
ongoing at the time of this report.

Total
demurrage charges were $22 million in 2004, of which our share was $13 million.
Higher demurrage charges were largely due to difficulties experienced with rail
shipments resulting in low inventories at the ports and significant delays with
vessel loading during the first quarter.

O
t h e r   E l k   V a l l e y   C o a
l   C o s t s

Selling,
general and administration costs include costs of marketing products,
commissions on sales and certain corporate costs not allocated to the mine
operations. These costs increased by 36% in 2004 due mainly to a $7 million
charge for severance benefits pursuant to change in control agreements with
certain former senior executive employees.

S
i g n i f i c a n t   D e v e l o p m e n t s   i
n   2 0 0 4

In
2004, Elk Valley Coal received approval from the Trust and Teck Cominco, its two
owners, to proceed with the development of the Cheviot Creek pit at the Cardinal
River operations, which is expected to cost $120 million. All licenses and
approvals have been received, and the first coal was produced in the fourth
quarter. Development of the pit is progressing towards its target production
level of 2.8 million tonnes annually; however increased activity in the global
mining industry is resulting in delays in deliveries of equipment from
manufacturers. While some delays have occurred, it is anticipated that the full
annual production rate will be achieved as anticipated during the third quarter
of 2005. The Trust's share of annual production from this project is 1.7
million tonnes at a cost of $72 million, of which $46 million was spent in 2004.

Plant
expansion commenced at the Fording River operations in the fourth quarter of
2004. Approximately $18 million will be spent to expand processing capacity by
1.0 million tonnes to 10.5 million tonnes of coal per year, the majority of
which will be spent in 2005. With plant expansion underway, the remaining
capital will be spent to increase the mine capacity by the end of the second
quarter of 2005 in order to utilize plant capacity. It will cost us
approximately $11 million to increase our share of production by 0.6 million
tonnes from this project.

In
December, Elk Valley Coal entered into letters of intent with POSCO and Nippon
Steel Company, two major steel producers, which contemplate 10-year sales
contracts covering an aggregate of 4.9 million tonnes per year for 2005,
increasing to 6.3 million tonnes per year for the 2007 coal year onwards. In
addition, each company will acquire a 2.5% equity investment in the Elkview mine
for aggregate proceeds of U.S.$50 million. The equity investment will be used to
increase the annual production capacity of the Elkview mine by 1.0 million
tonnes to 7.0 million tonnes of coal by the end of 2007, of which our share is
approximately 4.0 million tonnes. The transactions, which are subject to due
diligence, the negotiation and settlement of binding agreements and other
customary conditions, are expected to be completed during the second

42
| 2004
Annual Report

---

quarter
of 2005 with expansion proceeding thereafter. The completion of this transaction
is expected to result in a pre-tax gain of approximately $25 million on closing.

N
Y C O

|VOLUMES
      AND PRICES                         |   | 2004 |  |   | 2003 |  |   | 2002 | 
|------------------------------------------------ | - | ---- |  | - | ---- |  | - | ---- | 
|Sales(thousands
      of tonnes)                 |   | 82   |  |   | 75   |  |   | 84   | 
|Average
      sales price(U.S.$
      per tonne) | $ | 425  |  | $ | 429  |  | $ | 373  | 



|OPERATING
      RESULTS                   |   |      |  |   |      |  |   |       | 
|----------------------------------------- | - | ---- |  | - | ---- |  | - | ----- | 
|(millions
      of dollars)               |   | 2004 |  |   | 2003 |  |   | 2002  | 
|Revenues                                  | $ | 49.1 |  | $ | 48.1 |  | $ | 55.7  | 
|Cost
      of product sold                |   | 26.2 |  |   | 26.8 |  |   | 30.8  | 
|Transportation
      and other            |   | 7.0  |  |   | 6.2  |  |   | 7.9   | 
|Selling,
      general and administration |   | 5.2  |  |   | 5.6  |  |   | 6.7   | 
|Depreciation
      and depletion          |   | 5.0  |  |   | 5.7  |  |   | 10.7  | 
|Income
      (loss) from operations       | $ | 5.7  |  | $ | 3.8  |  | $ | (0.4) | 

|"Increased
      sales volumes, new product development and lower cost of product sold
      contributed to improved
|--------------------------------------------------------------------------------------------------------------------

NYCO
consists of subsidiaries of Fording Inc. that own wollastonite mining operations
in New York State and Mexico and a tripoli mining operation in Missouri. NYCO is
the world's leading producer of wollastonite, a specialized industrial mineral
mined using open-pit methods and processed 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 NYCO accounted for 4%
of our revenues in 2004, and 4% and 5% of our revenues in 2003 and 2002,
respectively.

Sales
of low-value wollastonite products continued to face intenseresults in 2004." competition
in 2004, but sales of high-value products for the automotive and industrial
coatings industries increased. Income from NYCO increased 50% from the previous
year to $6 million for 2004. Increased sales volumes, new product development
and lower cost of product sold were the main contributing factors, partially
offset by a higher U.S. / Canadian exchange rate compared to 2003. NYCO will
continue to focus on mid- and high-value products, and it is active in
identifying new products and applications.

C
O R P O R A T E

|CORPORATE
      COSTS                     |   |      |  |   |      |  |   |      | 
|----------------------------------------- | - | ---- |  | - | ---- |  | - | ---- | 
|(millions
      of dollars)               |   | 2004 |  |   | 2003 |  |   | 2002 | 
|Selling,
      general and administration |   | 7.3  |  |   | 5.4  |  |   | 7.2  | 
|Depreciation,
      depletion             |   | 2.7  |  |   | 2.6  |  |   | 1.6  | 
|Loss
      from operations                | $ | 10.0 |  | $ | 8.0  |  | $ | 8.8  | 

2004
Annual Report|43

---

Corporate
costs include general and administration expenses not allocated to specific
business segments, and depreciation on corporate assets. Selling, general and
administration expenses increased nearly $2 million to $7 million in 2004. This
was primarily due to the re-evaluation of trust unit equivalents to reflect the
increase in market value of the units granted to Directors and Trustees as part
of their compensation.

O
t h e r   I n c o m e   a n d   E x p e n s e s

Interest
expense decreased almost $2 million to $13 million during 2004 mainly due to the
$99 million reduction in debt from the proceeds of our equity issue in April
2004 and nearly $1 million of interest capitalized as part of the Cheviot Creek
pit expansion at Cardinal River operations.

Other
income and expense includes interest and investment income as well as
miscellaneous income and expenses. New accounting rules that affected the
valuation of inventories resulted in a change in accounting practices that was
adopted in 2004, resulting in unusual income of $11 million, related to the
inclusion of depreciation and depletion in the valuation of product inventories
on hand at the start of the year. Other income in 2003 includes $5 million of
interest earned on income tax reassessments.

I
n c o m e   T a x e s

|INCOME
      TAXES                                 |   |        |  |   |        |  |   |      | 
|-------------------------------------------------- | - | ------ |  | - | ------ |  | - | ---- | 
|(millions
      of dollars)                        |   | 2004   |  |   | 2003   |  |   | 2002 | 
|Current
      income taxes:                        |   |        |  |   |        |  |   |      | 
|Canadian
      income taxes                        | $ | 2.6    |  | $ | 5.7    |  | $ | 20.7 | 
|Provincial
      mineral taxes and Crown royalties |   | 11.7   |  |   | 14.6   |  |   | 21.3 | 
|Foreign
      income taxes                         |   | 4.0    |  |   | 2.3    |  |   | 0.3  | 
|                                                   |   | 18.3   |  |   | 22.6   |  |   | 42.3 | 
|Future
      income tax (recovery)                 |   | (31.3) |  |   | (22.0) |  |   | 6.8  | 
|Total
      income taxes (recovery)                | $ | (13.0) |  | $ | 0.6    |  | $ | 49.1 | 

Total
income taxes consist primarily of British Columbia mineral taxes and Alberta
Crown royalties on the cash flows of Elk Valley Coal and, to a lesser extent,
income tax related to NYCO, as well as applicable federal and provincial income
taxes.

Five
of Elk Valley Coal's six mines operate in British Columbia and are therefore
subject to B.C. mineral taxes. British Columbia mineral tax is a two-tier tax
with a minimum rate of 2% and a maximum rate of 13%. A minimum tax of 2% applies
to operating cash flows as defined by regulations. A maximum tax rate of 13%
applies to cash flows after taking available deductions for capital expenditures
and other permitted deductions. While cash flows from Elk Valley Coal increased
in 2004, mineral taxes and Crown royalties were lower due to higher capital
expenditures.

The
future income tax recovery in 2004 arose from the recognition of the benefit of
net operating losses of Fording Inc. With the settlement of coal sales contracts
for the 2005 coal year at significantly higher prices, management expects that
the benefit of these loss carry forwards is likely to be realized. The recovery
in 2003 resulted from the enactment of lower income tax rates.

With
current expectations of high prices for the 2005 coal year, management
anticipates a future tax liability will be accrued in 2005. This is more fully
explained on page 53 in the 'Outlook' section.

F
O U R T H   Q U A R T E R   2 0 0 4

Revenues
of $324 million were 5% higher than the fourth quarter of 2003 mainly on the
strength of higher coal sales prices, partially offset by lower volumes and a
higher Canadian dollar. Cost of product sold decreased 12% to $115 million from
$130 million in the fourth quarter of 2003 because of lower coal sales volumes,
but rose on a per tonne basis mainly due to higher maintenance, and mining and
processing input costs. Transportation

44 |
2004
Annual Report

---

and
other costs increased 9% to $127 million from $117 million in the fourth quarter
of 2003 largely on higher rail and port costs for Elk Valley Coal.

Income
from operations increased to $57 million during the fourth quarter compared with
$37 million during the same period in 2003. Net income was $85 million in the
fourth quarter, nearly triple the $31 million in 2003 due to a future income tax
recovery to reflect the benefit of net tax operating losses of Fording Inc. Net
income before unusual items, future income taxes and discontinued operations was
$57 million in the fourth quarter of 2004 compared with $27 million in 2003.
Cash available for distribution was $62 million, or $1.26 per unit. The
distribution declared for the quarter totalled $64 million, or $1.30 per unit.

O
p e r a t i o n s

Fourth
quarter revenues benefited from higher prices for the 2004 coal year, offset
slightly by a higher effective U.S. / Canadian dollar exchange rate. Income from
Elk Valley Coal increased 55% in the fourth quarter to $61 million due primarily
to an increase in the average Canadian dollar sales price, offset by lower sales
volumes and higher transportation costs. Sales volumes decreased in the fourth
quarter of 2004 compared with 2003 as a result of two factors: the reduction in
the Trust's interest in Elk Valley Coal and the reduction of high inventory
levels in the fourth quarter of 2003. Unit cost of product sold increased 6% in
the fourth quarter largely due to higher maintenance costs and costs for mining
and processing inputs. Transportation and other costs increased to $126 million
in the fourth quarter, up 9% over the same period in 2003. Higher rail and port
rates combined with a contingency provision for disputed rail rates were the
major contributors to the year-over-year increase.

Income
from NYCO decreased in the fourth quarter due to a higher proportion of
low-value wollastonite products sales combined with the impact of the weakening
U.S. dollar. These factors contributed to a loss from operations compared with
the $1 million of income from operations realized in the fourth quarter of 2003.

O
t h e r

Investing
activities during the fourth quarter included capital expenditures of $27
million, of which approximately $12 million were sustaining and the balance was
for development and start-up costs related to the Cheviot Creek pit at Cardinal
River operations and plant expansion at Fording River operations. The major
financing activity was payment of distributions of $54 million. In the fourth
quarter, Fording Inc. entered into an additional $180 million of foreign
exchange forward contracts for the 2005 and 2006 years. Our realized gains on
foreign exchange included in revenues were $36 million compared with $19 million
in 2003.

| | 2003
      COMPARED WITH 2002
| | -----------------------------

|"Coal sales in 2003
      increased due to stronger demand for Canadian metallurgical coal."
|--------------------------------------------------------------------------------------------

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 2003 results of
operations for ten months as the Trust plus two months as Old Fording compared
with 12 months as Old Fording for 2002.

Prior to February 28, 2003, Old
Fording owned 100% of the Fording River and Coal Mountain mines, and 80% of the
Greenhills mine with POSCO Canada 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, which owns six producing mines consisting of
Fording River, Greenhills (80%), Coal Mountain, Elkview, Line Creek and Cardinal
River. This change in asset mix had an impact on the comparability of the
operating and financial results of the metallurgical coal operations for 2003
with those for 2002.

2004
Annual Report|45

---

Total
revenues in 2003 were up 21% from the prior year due to a 24% increase in coal
sales volumes resulting from increased demand in 2003 for Canadian metallurgical
coal. 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.

In
2003, cost of product sold increased over 2002 as a result of the higher sales
volumes, the change in asset mix and the reduced interest in the three Old
Fording mines that occurred with the Arrangement. Transportation and other costs
decreased on a per unit basis 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.

Net
income in 2003 of $241 million was also impacted by significant gains, net of
related expenses, resulting from the formation of the Trust and other aspects of
the Arrangement as well as selling, general and administration expenses and
interest on bank debt. The net loss of $72 million in 2002 resulted from a $140
million write-down of the value of the Mexico operations after several years of
operating losses. Net income before unusual items, future taxes and discontinued
operations increased 50% from 2002. This improvement reflects that, as an income
trust, we have lower income taxes than as a common share corporation.

E
L K   V A L L E Y   C O A L

Revenues
and sales volumes were up 22% and 24%, respectively, in 2003 compared with the
prior year. Coal sales volumes increased due to stronger demand in 2003 and the
benefits of the interest in the six mines owned by Elk Valley Coal in contrast
to the three mines owned by Old Fording in 2002. U.S. dollar coal prices
declined about 5% for the coal year commencing April 1, 2003, and 4% on a
calendar-year basis. The impact of lower U.S. dollar prices and the stronger
Canadian dollar was largely mitigated by foreign exchange hedging gains,
resulting in a 2% reduction in average Canadian dollar sales prices from 2002.

Cost
of product sold increased 36% as a result of the higher sales volumes and a 9%
increase in unit cost of product sold. This increase reflected the change in
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. 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, offset somewhat by
shorter haul distances and a slightly better production yield from coal
preparation plants.

Total
transportation and other costs rose 19% due to higher sales volumes, but
decreased 5% on a per unit basis.

Selling,
general and administration expenses 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 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 primarily due to higher
production volumes.

N
Y C O

NYCO
experienced reduced sales volumes, largely due to the global oversupply of
wollastonite. Offsetting this to some degree were lower unit costs and an
increase in the average sales price, which was primarily a result of its product
mix and the focus on the mid- and high-value market. The improved income from
operations for the year was mainly due to lower depreciation and depletion
expense, caused by the impact of the write-down of the Mexico operation during
the fourth quarter of 2002.

C
O R P O R AT E

Selling,
general and administration expenses in 2003 decreased 25% compared with the
prior year. 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

46
| 2004
Annual Report

---

corporate
costs were allocated to the various operations compared with the prior year. Net
interest expense increased to $13 million in 2003 from $5 million in 2002 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.

I
n c o m e   T a x e s

Income
taxes for 2003 included current income taxes related to the two-month period
prior to the conversion into an income trust. Canadian current income taxes
decreased in 2003 from the prior year primarily as a result of the conversion
into the Trust. The 2003 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.

The
impact of a lower average realized mineral tax rate resulted in a decline in
mineral taxes in 2003 despite higher operating cash flows from the metallurgical
coal operations.

Summary
of Quarterly Results

Our
quarterly results over the past two years are indicative of the variability of
Elk Valley Coal's and NYCO's businesses. Net income before unusual items,
future income taxes and discontinued operations is influenced largely by the
results of Elk Valley Coal. Its results 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.

|COAL
      STATISTICS                                                                                   | 2004 |       | 2003 |  
|------------------------------------------------------------------------------------------------------- | ---- | ----- | ---- | -
|                                                                                                        |      | Q42   |      |  
|Production
      volume(millions
      of tonnes)                                                       |      | 4.1   |      |  
|Sales
      volume(millions
      of tonnes)                                                            |      | 4.0   |      |  
|Average
      U.S.$ prices(per
      tonne)                                                             | $    | 57.30 |      | $
|Average
      CDN$ prices(per
      tonne)1                                                             | $    | 79.30 |      | $
|                                                                                                        |      |       |      |  
|Cost
      of product sold(per
      tonne)                                                             | $    | 27.30 |      | $
|Transportation
      and other(per
      tonne)                                                         | $    | 31.70 |      | $
|1
      Includes the effects of foreign currency hedges                                                 |      |       |      |  
|2
      The Trust's interest in Elk Valley Coal decreased to 60% from 65% for
      accounting purposes |      |       |      |  

U.S.
dollar coal prices typically change during the second quarter of the year
because most of the coal business is contracted on a coal-year basis that
commences April 1. As coal is typically sold in U.S. dollars, Elk Valley Coal
has 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 existing foreign currency
hedge contracts.

Coal
sales are typically contracted under evergreen agreements with fixed volumes for
which prices are determined each year. However, within the year, the timing of
coal sales is largely dependent on the customer who determines when the coal
will be loaded onto vessels and, therefore, recognized as revenues. It is also
common to see sales volumes from one coal year carried over into the next. This
can affect the average realized coal price for the second quarter of the fiscal
year. Quarterly 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 transportation or production 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.
Transportation and other costs can change based on the timing of rate
negotiations and the price of coal products.

2004
Annual Report |47

---

|(millions
      of dollars, except per unit amounts)                                                                                                     | 2004 |       | 2003 |    
|-------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ----- | ---- | ---
|                                                                                                                                                         | Q42  |       |      | Q32
|Revenue                                                                                                                                                  | $    | 324.3 |      | $  
|                                                                                                                                                         |      |       |      |    
|Income
      from operations                                                                                                                             |      | 57.1  |      |    
|                                                                                                                                                         |      |       |      |    
|Net
      income (loss)                                                                                                                                  |      | 85.4  |      |    
|Net
      income (loss) before discontinued operations                                                                                                   |      | 85.4  |      |    
|Net
      income before unusual items, future income taxes and discontinued
      operations                                                             |      | 57.0  |      |    
|                                                                                                                                                         |      |       |      |    
|Basic
      and diluted earnings per unit:                                                                                                               |      |       |      |    
|Net
      income                                                                                                                                         |      | 1.74  |      |    
|Net
      income per unit before discontinued operations                                                                                                 |      | 1.74  |      |    
|Net
      income per unit before unusual items, future income taxes anddiscontinued
      operations                                                     |      | 1.16  |      |    
|                                                                                                                                                         |      |       |      |    
|Cash
      distributions / dividendsdeclared
      per unit1                                                                                             |      | 1.30  |      |    
|1
      The Trust was formed February 28, 2003. Cash available for distribution
      for the first quarter only reflected one month as an income trust.
|2
      The Trust's interest in Elk Valley Coal decreased to 60% from 65% for
      accounting purposes.                                                

Outlook

The
following discussion generally highlights our expectation that improved results
will be achieved in 2005. Due to continued strong demand from the global steel
industry, the current tight markets for metallurgical coal are expected to
continue through 2005 and likely into 2006. Contracted coal prices will rise
significantly from 2004 levels and sales and production of coal are expected to
increase and be at or near capacity. Elk Valley Coal will continue to focus on
increasing capacity and production, and expects to increase metallurgical coal
production capacity to 28 million tonnes annually by the end of 2005, while
targeting a coal sales volume that exceeds 27 million tonnes. The Trust's
share of this sales target is approximately 16 million tonnes in 2005. With the
growth in global mining activities, higher mining and processing input costs are
expected to continue through 2005.

|"We
      expect that improved results will be achieved in 2005 through higher coal
      sales and prices."
|------------------------------------------------------------------------------------------------------------

We
estimate that Elk Valley Coal's 2005 capital plans will requireapproximately $100 million in capital requirements from the Trust, which will be
spent primarily at the Cardinal River, Elkview and Fording River operations. Elk
Valley Coal intends to focus on additional expansion thereafter to further
increase capacity to approximately30
million tonnes by the end of 2007. Elk Valley Coal will work withthe
railways in order to obtain rail capacity for future expansion.

We
will continue to advance our strategy of building long-term unitholder value
through efficient management of the Trust and prudent capital investment. This
strategy combined with the robust coal markets are expected to provide strong
returns in 2005. However, as a result of coal-year pricing and carryover
impacts, we expect better results in the last half as compared with the first
half of 2005.

48 |
2004
Annual Report

---

| | ELK
      VALLEY COAL
| | ---------------------

C
O K I N G   C O A L   M A R K E T S

|"Demand
      for seaborne coking coal continues to strengthen in global coal markets."
|---------------------------------------------------------------------------------------

Hard
coking coal markets continue to remain very tight due to the strong demand from
the global steel industry in the face of limited new supply. 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 inventories of coal
are low. Over the past few years, China has reversed its position from a net
exporter of hard coking coal to a net importer, and at the same time has reduced
exports of coke to the steel industry. Indications are that traded coke supplies
are not sufficient to meet high demand. The global steel industry has responded
by planning significant additions to future domestic coke production capacity to
replace lost Chinese coke imports, which will increase the demand for hard
coking coal from producers such as Elk Valley Coal.
International crude steel production is anticipated to remain strong going
forward. A trend is emerging for steel producers to enter into longer-term
contracts or purchase interests in coal producers in order to secure additional
supplies of hard coking coal to meet their future needs. Higher coal prices are
serving to attract new production supply to the market.

In
addition to Elk Valley Coal's planned production increases, other
smaller-scale Canadian producers started production of metallurgical coals and
made their first shipments in 2004. Producers in the United States are also
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, and several have announced mine expansion plans in the
past six months. Australian producers have also announced plans for capacity
increases. The inability to bring on additional supply is aggravated by the fact
that logistics chains in major exporting nations, including Canada, are strained
and will require expansion. The global increase in mining has also resulted in
significant lead-time on the delivery of large mining equipment and supplies.

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

- Domestic
    production of coking coal in Europe is declining.
- Economic
    growth is driving demand for steel in China, and steel mills around the
    world are running at high capacity to meet global demand, further fuelling
    strong demand for seaborne coking coal.
- Australian
    producers are experiencing delays in transporting coal to customers due to
    port infrastructure constraints.

While
supply and demand for seaborne hard coking coal is difficult to predict over the
long-term, these factors and continued strong demand indicate that it may be one
to two years time before the market can be brought back into balance. Management
believes that the current tight markets will continue through 2005 and likely
into 2006. Realizing the cyclical nature of the metallurgical coal industry and
the expectation that new supply will eventually influence market dynamics,
expansion must be managed with an understanding of future variability in sales
prices. If a significant event occurred in the global metallurgical coal market
to cause a decrease in demand, an oversupply of coal could occur. As a result,
prices could decrease and new supply may no longer be required.

C
O A L   P R I C E S

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 anticipated supply and demand balance for coal at the time negotiations
are completed. Given the current tight supply in coal markets, coal sales
agreements covering virtually all of Elk Valley Coal's expected production
have been concluded for the 2005 coal year.

2004
Annual Report|49

---



Coal
prices for the 2005 coal year are the highest ever experienced. The majority of
Elk Valley Coal's sales of metallurgical and other coal for the 2005 coal year
beginning April 1, 2005 have been priced at an average of U.S.$122 per tonne on
an FOB west coast port equivalent basis. This represents a 130% increase from
the average U.S.$53 price realized during the 2004 coal year.

|"Given
      the current tight supply situation in our coal markets, coal sales
      agreements covering virtually all of Elk Valley Coal's expected
      production have been concluded for the 2005 year."
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Substantially
all of Elk Valley Coal's hard coking coal contracts for the 2005 coal year are
priced at an average of U.S.$125 per tonne on an FOB west coast port equivalent
basis. A small portion of 2005 calendar year sales are based on contracts that
are not on the April 1 to March 31 coal-year cycle. Sales for calendar year 2005
also include some sales priced at 2004 coal-year prices with approximately six
weeks of carryover of 2004 pricing to satisfy the commitments to customers for
the 2004 coal year. In addition, some contracts include additional amounts for
ocean freight and small volumes of PCI and thermal coal are sold for less than
the hard coking coal price. Taking these factors into account, the weighted
average price of 2005 calendar year sales for all coal is expected to be
slightly over U.S.$100 per tonne, nearly double the average price of U.S.$52 per
tonne obtained in 2004.

C
O A L   S A L E S   A N D   P R O D U C T I O N

Higher
coal sales resulted in lower clean coal inventory levels by the end of 2004,
with the majority of the inventory located at the port. With the continuing high
demand of seaborne hard coking coal and sales commitments by Elk Valley Coal,
mines are expected to operate at or near full capacity to meet sales forecasts
in 2005.

Some
variation in quarterly coal sales should be expected, as the timing of shipments
is not necessarily uniform. Coal sales volumes during the first quarter of 2005
are expected to be lower than those for the balance of the year. Should weather
related problems affect rail service, port shipments or mining activities,
delayed sales and higher transportation and other costs could significantly
impact the operating results, net income and cash available for distribution in
the first quarter of 2005.

Coal
is typically sold on a coal-year basis, usually commencing April 1. 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 the
strong demand for vessels across a number of commodity sectors, which affects
vessel availability and timing.

Production
levels will also vary from quarter to quarter. Shutdowns will be taken at the
mines at various times throughout the year in order to provide for employee
vacations and planned maintenance requirements.

F
U T U R E   C O A L   D E V E L O P M E N T

Current
and anticipated market conditions for coal products have caused Elk Valley Coal
to review and evaluate expansion projects. The development of the Cheviot Creek
pit at Cardinal River operations was the first project

50
| 2004
Annual Report

---

to
be undertaken in response to the high market demand for metallurgical coal.
There are also a number of projects that can increase overall production of Elk
Valley Coal, which will entail capital expenditures that are far less than those
required for new mine development.

Elk
Valley Coal is progressing with incremental growth opportunities at existing
mines to increase annual production to 30 million tonnes by the end of 2007. The
potential exists to add a further 5 million tonnes beyond that by using existing
assets, reserves and infrastructure if market conditions warrant such
development, an approach exemplified by the brownfield expansion of the Cheviot
Creek pit at Cardinal River operations this past year.

C
O S T   O F   P R O D U C T   S O L D

|"Efforts
      to identify additional value improvements will continue as a normal part
      of optimizing mining operations over the long-term."
|--------------------------------------------------------------------------------------------------------------------------------------------------

Elk
Valley Coal continues to pursue activities to lower the cost of product sold
such as the integration of operations in areas such as marketing,
transportation, administration, site operations and sustaining and expansion
capital expenditures.

Such
efforts to identify additional value improvements will continue as a normal part
of optimizing its mining operations over the long-term. These include:
rationalizing production to reduce costs; adopting best practices across all
minesites; coordinating purchasing and inventories of parts and stores; lowering
product inventories; optimizing the use of stockpiles at the port and by
coordinating rail and port services; and economies of scale relating to
transportation management and administrative functions.

Mining
and processing input costs such as fuel, steel, tires, labour andmaintenance parts and supplies can have a significant impact to cost of product
sold. Recent increases in prices for petroleum products and for commodities in
general have resulted in increasing cost pressures that can be expected to
continue through 2005. In addition, the recent growth in global mining
activities has created a demand for mining equipment and tires that outpaces
supply. As a result, future operations could be impacted if Elk Valley Coal has
trouble obtaining equipment, tires and other supplies on a timely basis. Lastly,
costs have increased as the growth in the mining industry has created demand and
competition for certain skilled services.

T
R A N S P O R T A T I O N   A N D   O T H E R   C
O S T S

Transportation
and other costs include the costs of shipping coal by rail to port facilities
and customers, ocean freight, and the cost of handling and loading coal onto
vessels at the ports. The rail systems servicing the mines are being pressed to
meet the capacity requirements of all industries shipping westbound to
Vancouver. Going forward, Elk Valley Coal's ability to substantially increase
coal sales from the Elk Valley will require additional rail capacity.

Rail
service to the five mines located in the Elk Valley is provided by the Canadian
Pacific Railway Company (CPR). Service to the Fording River, Greenhills and Coal
Mountain mines is provided pursuant to an agreement expiring March 31, 2007. The
agreement provides for rail rates to be adjusted annually based on the rail
rates paid by the Elkview and Line Creek mines. The agreements for rail service
to the Elkview and Line Creek mines expired March 31, 2004 and Elk Valley Coal
and CPR disagree on the manner in which freight rates for coal shipped to west
coast ports from the five mines is to be determined. Legal proceedings in
relation to the dispute have been initiated by CPR in both the Alberta Courts
and before the Canadian Transportation Agency. In January 2005, Elk Valley Coal
and CPR agreed to engage in a confidential non-binding mediation process to
attempt to resolve the dispute; discussions are ongoing at the time of this
report.

CPR
has stated that the dispute is not expected to adversely affect the shipment of
coal from the Elk Valley mines. Regardless of the outcome of the dispute, future
rail rates charged to Elk Valley Coal are expected to increase in 2005 as
compared to 2004.

2004
Annual Report|51

---

A
portion of port costs move with changes in the Canadian dollar price of coal and
accordingly, will increase when higher coal prices come into effect in the
second quarter of 2005. Demurrage charges for vessel waiting times could be
incurred if poor weather conditions hamper mining operations and the movement of
coal to port.

Taking
these factors into account, transportation and other costs are expected to
increase in 2005 from 2004 levels.

C
O L L E C T I V E   A G R E E M E N T S

Collective
agreements covering production and maintenance employees at three of Elk Valley
Coal's mines will expire prior to the end of 2005. The collective agreement at
the Coal Mountain operations expired on December 31, 2004, and those at Line
Creek and Elkview operations expire at the end of May and October 2005,
respectively. The agreement at Fording River operations expires in 2006 while
Cardinal River's agreement expires in 2007.

Should
agreements not be reached at one or more of these operations, work stoppages may
occur that could have a material adverse effect on cash available for
distribution to unitholders.

C
A R D I N A L   R I V E R   O P E R AT I O N S

All
licenses and approvals have been received for the Cheviot Creek pit and the
haulroad at the Cardinal River operations. A number of environmental
organizations have applied to the Federal Court seeking a further environmental
assessment of the project and challenging certain federal authorizations that
the project has received. The Federal Court is expected to hear the applications
in June 2005. In addition, an individual appealed certain approvals issued by
Alberta Environment in connection with the project. The Environmental Appeal
Board heard the appeal in mid-January and the parties are awaiting a decision.

While
unanticipated, negative decisions related to these legal issues could impact
future operations at the site. Elk Valley Coal continues to monitor progress on
these legal issues.

|"Our
      share of sustaining capital expenditure requirements is expected to
      average over $40 million per year for the next few years."
|-----------------------------------------------------------------------------------------------------------------------------------------------

C
A P I T A L   E X P E N D I T U R E S

The
Trust's share of capital expenditures for 2005 will be approximately $100
million of which approximately $65 million will be for expansion purposes and
$35 million for sustaining operations. The Trust's planned capital
expenditures are expected to be financed with a combination of debt and
available cash flows, and may have an impact on distributions to unitholders. In
addition, equity from the proposed investment by Nippon Steel and POSCO is
expected to be utilized by Elk Valley Coal to finance expansion at Elkview.

Sustaining
capital expenditures are expected to average approximately $40 million per year
for the next few years as older equipment is replaced and mine infrastructure is
maintained. Replacing older mining equipment and maintaining plant and mine
infrastructure is intended to preserve the productive capacity of Elk Valley
Coal's mines, which should benefit the Trust in the future from sustained
productivity and reduced maintenance costs.

M
I N E R A L   T A X E S

The
current maximum mineral tax rate in British Columbia is 13%. Provided that coal
prices remain high, we anticipate that Elk Valley Coal will approach the maximum
mineral tax rate at the majority of its British Columbia mines over the next few
years. The tax rate applicable to the mines and the periods in which the maximum
rate will apply depends on such factors as cash flow generated by a mine,
capital expenditures, and available deductions.

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

52 |
2004
Annual Report

---

| | NYCO
| | ----

Earnings
of this segment are expected to increase in 2005 as compared to 2004 levels.
This is due to improved sales volumes combined with higher average U.S. dollar
sales prices, offset somewhat by 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 NYCO's
markets, and its success with new targeted sales applications.

| | INCOME
      TAX
| | ----------------

The
Trust's primary source of taxable income is generated from its investment in
Fording Inc. in the form of interest on the subordinated debt and dividends.
Offsetting this income for income tax purposes are the distributions declared to
unitholders in the year. Fording Inc.'s taxable position is primarily
dependant upon the taxable income allocated to it from its interest in Elk
Valley Coal and whether this allocated amount exceeds interest incurred on the
subordinated notes owing to the Trust and its general and administrative
expenses. In addition, Fording currently has available limited tax loss carry
forwards, in part resulting from the Arrangement and also as a result of Elk
Valley Coal having a January 31 taxation year-end.

With
the current expectations for 2005 of a weighted average coal price in excess of
U.S.$100 per tonne and Fording's interest in Elk Valley Coal sales volumes
expected to exceed 16 million tonnes, Fording anticipates that a future tax
liability will be accrued in 2005. With Elk Valley Coal's fiscal year-end
being January 31, one month after the Trust's, there is a timing difference
between the recognition of income and the payment of taxes. As a result of this
timing difference, the Trust intends to withhold an amount equal to the
estimated future tax liability from cash otherwise available for distribution so
that future unitholders do not bear the cash effect of the deferred timing of
the payment of income taxes.

Should
price and volumes remain high, Fording Inc.'s liability for income tax in
future years may become more significant as available loss carry forwards will
be fully utilized and the amount of deductible interest and general and
administrative expenses of Fording Inc. will be insufficient to offset all of
its taxable income. Although higher revenues and income result in an increase in
taxes, it provides an additional net benefit to unitholders.

On
March 2, 2005, the Trust announced that it would ask unitholders to provide
conditional approval of a two-step reorganization of the Trust and its
subsidiaries. The first step would result in the creation of a flow-through
structure which would effectively see distributions from Elk Valley Coal taxed
at the unitholder level. This step, together with strong coal prices and sales
volumes, would result in higher distributions to unitholders. In addition, the
Trust believes that completion of the first step will provide it with a
competitive advantage if it decides to offer units in order to finance future
expansions and investments or to pay down indebtedness. The second step, if
undertaken, would be a transaction whereby the Trust would acquire a direct
interest in Elk Valley Coal.

Liquidity
and Capital Resources

| | SOURCES
      AND USE OF CASH
| | -----------------------------

We
anticipate that Elk Valley Coal and NYCO 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 productive capacity and to fund
planned growth and development activities.

2004
Annual Report|
53

---

|SUMMARY
      OF CASH FLOWS                         |                               |         |  |   |         |  |   |        | 
|--------------------------------------------------- | ----------------------------- | ------- |  | - | ------- |  | - | ------ | 
|                                                    | Years
      ended December 31 |        
|(millions
      of dollars)                         |                               | 2004    |  |   | 2003    |  |   | 2002   | 
|Operating
      activities                          | $                             | 269.5   |  | $ | 174.3   |  | $ | 108.8  | 
|Investing
      activities                          |                               | (59.5)  |  |   | 322.0   |  |   | (50.7) | 
|Financing
      activities, excluding distributions |                               | (1.3)   |  |   | (280.4) |  |   | (33.6) | 
|Increase
      in cash before distributions         |                               | 208.7   |  |   | 215.9   |  |   | 24.5   | 
|Distributions
      / dividends to unitholders      |                               | (196.7) |  |   | (163.4) |  |   | (28.2) | 
|Increase
      (decrease) in cash                   |                               | 12.0    |  |   | 52.5    |  |   | (3.7)  | 
|Cash
      - beginning of year                      |                               | 52.5    |  |   | -       |  |   | 3.7    | 
|Cash
      - end of year                            | $                             | 64.5    |  | $ | 52.5    |  | $ | -      | 

At
the end of 2004, we held cash and cash equivalents of $65 million, which was
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 $64 million
to unitholders in January 2005.

|"Cash
      flows from operating activities are the primary generator of cash
      available for distribution, and are largely influenced by the results of
      our metallurgical coal operations."
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 Elk Valley Coal. Fluctuations in the price
of metallurgical coal can also impact cash flows from operating activities and
liquidity. Cash flows from operating activities were $270 million in 2004, up
$95 million from the prior year on the strength of improved results for Elk
Valley Coal. NYCO contributed approximately $9 million and $7 million to cash
flows from operating activities in 2004 and 2003, respectively. Cash flows from
operating activities historically have been sufficient to meet our normal
working capital needs and sustaining capital expenditure requirements, debt
service obligations and distributions to unitholders.

Cash
flows from operations includes changes in working capital that can fluctuate
from period to period. In 2004, accounts receivable increased due mainly to a
lower amount of receivables sold for financing purposes compared with 2003.
Inventories decreased due mainly to the reduction of raw coal stockpiles.
Accounts payable were up mainly due to the accrual related to the dispute over
rail rates. In 2003, results from Elk Valley Coal and a decrease in working
capital in 2003 were the main contributors to cash flows from operating
activities, offset in part by reorganization costs.

Investing
activities included capital expenditures of $73 million in 2004. This increase
from the $20 million spent in 2003 reflected a greater level of development
activity to expand capacity and production as well as higher sustaining capital
requirements at the mines in order to upgrade equipment, accelerate coal release
and achieve productivity gains. Approximately $27 million was categorized as
sustaining in nature, which is deducted to determine cash available for
distribution. The remaining $46 million included expenditures for development
and start-up costs related to the Cheviot Creek pit at Cardinal River operations
and plant expansion at Fording River operations. In 2003, capital expenditures
were $20 million of which approximately $9 million were sustaining in nature.
The remainder included expenditures for costs at the prairie thermal coal
operations prior to their sale as part of the Arrangement and to increase Elk
Valley Coal's interest in properties located adjacent to the Fording River
mine.

For
2004, the major financing activities were the payment of distributions to
unitholders of $214 million, net of the fourth quarter distribution of $64
million that was payable at year-end and the units offering that raised net
proceeds of $99 million, which were used to repay bank debt. The financing
activities in 2003 were mainly related to the Arrangement and the payment of
distributions to unitholders.

54
| 2004
Annual Report

---

Our
contractual obligations are identified in the following table:

|PAYMENTS
      DUE BY PERIOD                                 |   |         |  |   |                        |  |   |                   |  |   |                   |  |   |                     | 
|------------------------------------------------------------ | - | ------- |  | - | ---------------------- |  | - | ----------------- |  | - | ----------------- |  | - | ------------------- | 
|(millions
      of dollars)                                  |   | Total   |  |   | Less
      than 1 Year |  |   | 1
      - 3 Years |  |   | 4
      - 5 Years |  |   | After
      5 Years | 
|Foreign
      exchange forward contracts                     | $ | 782.6   |  | $ | 601.4                  |  | $ | 181.2             |  | $ | -                 |  | $ | -                   | 
|Long-term
      debt                                         |   | 201.0   |  |   | -                      |  |   | -                 |  |   | 201.0             |  |   | -                   | 
|Capital
      lease obligations                              |   | 5.9     |  |   | 1.7                    |  |   | 2.6               |  |   | 1.6               |  |   | -                   | 
|Operating
      leases                                       |   | 18.0    |  |   | 10.4                   |  |   | 4.7               |  |   | 1.7               |  |   | 1.1                 | 
|Purchase
      obligations                                   |   | 56.1    |  |   | 55.8                   |  |   | 0.3               |  |   | -                 |  |   | -                   | 
|Pension
      and other post-retirement funding requirements |   | 88.1    |  |   | 8.4                    |  |   | 17.5              |  |   | 16.0              |  |   | 46.3                | 
|Asset
      retirement obligations                           |   | 221.4   |  |   | 6.9                    |  |   | 13.1              |  |   | 7.0               |  |   | 194.4               | 
|Total
      obligations                                      | $ | 1,373.1 |  | $ | 684.6                  |  | $ | 219.4             |  | $ | 227.3             |  | $ | 241.8               | 

Obligations
under foreign exchange forward contracts are normally fulfilled by delivering
U.S. dollars generated from coal sales. The Trust and Elk Valley Coal's hedge
positions are less than the amount of U.S. dollars expected from future coal
sales to ensure an adequate future flow of U.S. dollars to cover the obligations
under contract.

|"...we
      expect sufficient cash flows from operating activities will be available
      to meet our obligations as they become due."
|----------------------------------------------------------------------------------------------------------------------------------------

Anticipated
payments for pension and other post-retirement benefit funding requirements
cover the period 2005 through 2013.

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

Sustaining
capital expenditures are the investments in areas such as mining equipment, and
mine and plant infrastructure that are necessary to maintain the current
productive capacity of 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 are deducted when we determine cash
available for distribution. Actual expenditures may vary by a considerable
amount in any given year.

Expansion
capital expenditures are generally made in order to substantially increase the
productive capacity of operations and to develop or acquire new mineral bodies,
and would include new mines. Expansion capital expenditures generally require
financing from sources other than cash flows from operating activities.
Commitments for expansion capital, including the development of the Cheviot
Creek pit and expansion at Fording River, are expected to be financed with a
combination of debt from existing or replacement facilities and available cash
flows, and may have an impact on distributions to unitholders. In addition,
equity from the proposed investment in the Elkview mine by POSCO and Nippon
Steel is expected to be utilized to finance expansion at Elkview.

As
part of the Arrangement, Fording and Elk Valley Coal entered into a $540 million
credit facility with a syndicate of lenders comprised mainly of Canadian banks.
The facility provided Fording with $300 million of term bridge financing to
meets its commitments under the Arrangement and revolving, annually extendable
operating lines of credit of $120 million each for Fording and Elk Valley Coal,
to manage their day-to-day operating credit requirements. At December 31, 2004
Fording Inc. had $201 million of term bridge debt outstanding under this
facility, which required the repayment or refinancing of $51 million by February
28, 2005 and the remaining $150 million by February 28, 2006. At December 31,
2004 Elk Valley Coal had utilized $71 million of its operating facility for
letters of credit or letters of guarantee, leaving unused lines of credit of $49
million. Fording Inc. had utilized $0.1 million of its operating facility for a
letter of guarantee. Utilization rates were based on bankers' acceptances or
Canadian prime rates and were subject to interest rate movements and certain
financial ratios.

In
February 2005, Fording Inc. and Elk Valley Coal refinanced their existing bank
credit facilities with substantially the same banking syndicate. The new
agreement provides each entity with a five-year revolving, floating rate,
annually

2004
Annual Report|55

---

extendible
facility, which can be drawn in either Canadian or equivalent U.S. dollars.
Fording Inc.'s facility is for $400 million and Elk Valley Coal's facility
is for $150 million. As a result of this refinancing, the $51 million of the
bank bridge financing due February 28, 2005 is considered long-term at December
31, 2004. The $400 million Fording facility would be utilized first to refinance
the full amount of the outstanding term debt of $201 million. The unutilized
line would be available for general corporate purposes, including the funding of
Fording's interest in proposed expansions. The Elk Valley Coal's $150
million facility would be utilized for general operating purposes.

The
bank loan facilities include provisions that may restrict the Trust's 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 facility of Fording Inc. precludes 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 and cash flow
coverage, as well as covenants that restrict the disposition of certain core
mining assets. Fording Inc. and Elk Valley Coal are currently in compliance with
the loan covenant provisions of the new agreement.

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 flows from prior
periods. Fording Inc. may use, up to a specified limit, 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 funding
would only be undertaken on a temporary basis to manage the short-term timing
vagaries inherent in our cash flows.

The
new facilities are supported by an unsecured guarantee from Elk Valley Coal,
limited in recourse to any partner's interest in Elk Valley Coal (other than
Fording Inc.) and a general security agreement over the assets of Fording Inc.,
including its interest in Elk Valley Coal.

Neptune
Terminal's shareholder agreement requires that Elk Valley Coal guarantee its
share of outstanding bank indebtedness. At December 31, 2004, the Trust's
proportionate share of this guarantee was $10 million.

Other
Information

| | 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 transfer of
the insurance and sale of the accounts receivable from coal sales at Elk Valley
Coal's discretion, subject to a maximum amount outstanding at any one time of
U.S.$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, 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 to shorten the period of time during which foreign exchange
rate movements will impact the Canadian dollar value of the accounts
receivables.

Export
trade credit insurance is transferred with the accounts receivable sold to the
buyer. The risk to Elk Valley Coal of the 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.

56 |
2004
Annual Report

---

| | TRANSACTIONS
      WITH RELATED PARTIES
| | ---------------------------------------

Subsequent
to the Arrangement, Elk Valley Coal entered into an arrangement with Teck
Cominco, its managing partner, for the provision of certain management services
at prevailing market terms. Elk Valley Coal also sells coal to the managing
partner at prevailing market terms. Related party revenues for 2004 were $3
million (2003: $2 million) to the Trust. Our share of related party expenses
included in selling, general and administrative and cost of sales for 2004 was
$1 million. Related party receivables and payables were $0.4 million and $0.2
million respectively to the Trust.

Elk
Valley Coal also ships coal through Neptune Terminals in the normal course of
operations, on a cost of service basis. These costs are included in
transportation and other costs and totalled $9 million for the Trust during 2004
(2003 - $8 million). Our share of related party receivables and payables related
to this entity was approximately one-quarter of a million dollars and $2 million
respectively at December 31, 2004. Our proportionate share of asset retirement
obligations of Neptune Terminals was $7 million.

Elk
Valley Coal accepted the transfer of the Quintette mine assets and purchased
certain other assets of Teck Cominco related to the Quintette mine on December
31, 2004. The transfer of the Quintette mine assets, including the real
property, coal leases, permits and licenses was provided for in the Arrangement
and was to occur when Teck Cominco had completed the reclamation of the mine
site. Elk Valley Coal agreed to an earlier transfer of the Quintette mine assets
before reclamation was completed in return for an agreement by Teck Cominco to
complete the reclamation and provide Elk Valley Coal with an indemnity against
any liability arising from the early transfer.

| | OUTSTANDING
      UNIT DATA
| | ---------------------------

The
Trustees 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
rateably without discrimination, preference or priority.

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

There
were approximately 49 million trust units outstanding on December 31, 2004 and
at March 2, 2005. Approximately 48,000 options are outstanding under the
exchange option plan as of December 31, 2004, and 41,000 options as of March 2,
2005.

On
March 2, 2005 we announced that unitholders will be asked to approve a
three-for-one unit split at our Annual and Special Meeting, which will be held
May 4, 2005.

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 on-going 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.

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.

2004
Annual Report|57

---

| | ASSET
      RETIREMENT OBLIGATIONS
| | ----------------------------------

Effective
January 1, 2004, the Trust adopted the new standard for asset retirement
obligations described in CICA Handbook Section 3110 and applied the
recommendations retroactively. The liability is measured at fair value and is
adjusted to its present value in subsequent periods as accretion expense is
recorded. The fair value of the estimated asset retirement costs is capitalized
as part of the carrying amount of the long-lived asset when incurred and
amortized to earnings over the asset's estimated useful life.

As
a result of the retroactive adoption of this standard, 2002 opening accumulated
earnings increased by $10 million and net income decreased by $1 million. Net
income for 2003 decreased by $2 million, capital assets increased by $39
million, goodwill decreased by $5 million, other long-term liabilities increased
by $13 million and future income taxes increased by $14 million.

We
have significant long-term liabilities relating to Elk Valley Coal's mine
reclamation and end-of-mine closure costs. 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. Elk Valley Coal has developed reclamation programs and cost estimates
based on meeting existing government regulations and standards.

| | EMPLOYEE
      FUTURE BENEFITS
| | ------------------------------

Elk
Valley Coal has 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
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 determined
using a unit-of-production method based upon the proven and probable mineral
reserves of the mine.

The
determination of mineral reserves involves the use of a number of estimates and
assumptions, including geological sampling and modeling, and 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.

Elk
Valley Coal reviews and evaluates 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 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.

The
possible impairment of goodwill must be considered annually. The carrying amount
of goodwill on the balance sheet of Elk Valley Coal at December 31, 2004 was $74
million, of which the Trust's share was $44 million.

58
| 2004
Annual Report

---

Financial
and Other Instruments

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

The
Trust and Elk Valley Coal uses derivative financial instruments, specifically
foreign exchange forward contracts, to help manage cash flows with respect to
foreign currency exposure. Foreign exchange forward contracts fix the rate at
which future anticipated flows of U.S. dollars are exchanged into Canadian
dollars. Derivative financial instruments are not entered into for trading or
speculative purposes. Foreign exchange forward contracts are designated as
hedges of anticipated U.S. dollar cash flows and gains or losses on the
contracts are not recorded in financial results or financial position until the
maturity date of the contracts. The unrealized gains on these contracts at
December 31, 2004 were $116 million.

|"Foreign
      exchange forward contracts are used to help manage cash flows with respect
      to foreign currency exposure."
|------------------------------------------------------------------------------------------------------------------------------

The
Trust and Elk Valley Coal have established policy limits to allow hedges of up
to 100% of estimated U.S. dollar exposure withinthe
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 tothe
Trust's share of the U.S. dollar exposure of Elk Valley Coal, and will take
into account any of Elk Valley Coal's outstanding hedges.At
December 31, 2004, foreign exchange forward contracts, including contracts
entered into directly and the Trust's share ofthe
contracts of Elk Valley Coal, totalled $555 million, which are disclosed in note
11 to the Consolidated Financial Statements.

The
layering of foreign exchange forward contracts implied by this strategy can
further reduce the risk 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 coal markets. The net investment
in and the net U.S. dollar denominated cash flows of NYCO are not hedged.

Our
ability to enter into foreign exchange forward contracts will 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 2004, the Trust
realized gains on foreign exchange forward contracts of $83 million due to the
U.S. dollar weakening relative to the U.S. / Canadian dollar exchange rate
specified in the contracts. In 2003, we realized a gain of $42 million.

The
Trust and Elk Valley Coal 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 Elk Valley Coal's contracts. To mitigate this risk of
non-performance, several counterparties of high credit quality are utilized. We
do not believe that there are any significant concentrations of credit risk.

2004
Annual Report|59

---

Risks
and Uncertainties

An
investment in units of the Trust involves numerous risks and uncertainties. An
investor should consider carefully the risk factors set out below as they all
have the potential to impact an investment in units. In addition, potential
investors should carefully review and consider all other information contained
in management's discussion and analysis and in the Trust's other public
disclosure documents before making an investment decision.

Elk
Valley Coal and NYCO have operations in North America and customers around the
world. As such, their results, and that of the Trust, are exposed to changes in
various markets and economies, and operations can be affected by a variety of
conditions. To minimize the impacts of such changes and conditions on the Trust's
financial performance, we seek to identify, evaluate and, where appropriate,
hedge financial, market and operation risk.

The
following briefly addresses some, but not all, risk factors that could affect
the Trust, its future results, the amount of cash available for distribution to
unitholders and the nature of the trust itself. Risk factors include, but are
not limited, to those set out below.

| | RISKS
      RELATING TO THE TRUST
| | ---------------------------------

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

C
A S H   D I S T R I B U T I O N S   T O   U N I T
H O L D E R S   A R E   D E P E N D E N T   O
N   F O R D I N G   I N C .

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

Although
the Trust intends to distribute the interest and dividend income earned, and any
returns of capital on, or redemptions of, the common or preferred shares of
Fording Inc., less expenses and amounts, if any, the Trust pays 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 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 sustaining capital expenditures, credit agreements,
and other factors that may be beyond the control of Fording Inc. or the Trust.
In the event significant sustaining capital expenditures are required, coal
prices and / or sales volumes 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.

The
Trust's 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, as applicable. 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.

I
N T E R E S T   R AT E S   A N D   O T H E
R   F A C T O R S   A F F E C T I N G   Y I E L D

One
of the factors that may influence the price of the 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 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

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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 the units, and such increase could result in a decrease
in the trading price of units and such decline could be material.

I
N C O M E   T A X

There
is no assurance that Canadian federal income tax laws or the current treatment
of mutual funds trusts will not be changed in a manner that affects unitholders
in a material adverse way. If the Trust ceases to qualify as a "mutual fund
trust" under the Income Tax Act, it is possible that the 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, the tax treatment of the units and distributions
made thereon, 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. The 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 the unitholders on December 31
and will be paid to the 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.

N
A T U R E   O F   U N I T S

The
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 corporation including,
for example, the right to bring "oppression" or "derivative" actions.
The units represent a fractional interest in the Trust. The Trust's primary
asset is its investment in the Fording Inc.'s subordinated notes and common
shares. 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, the Trust is not a trust company
and, accordingly, is not registered under any trust and loan company legislation
as it does not carry on or intend to carry on the business of a trust company.

L
I M I T   O F   N O N - C A N A D I A N   O W N E
R S H I P

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. If this limit has been, or is about to be exceeded,
certain steps, some of which are specified in the Declaration of Trust, may 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 or certain other actions being taken by the Trustees. Some of these steps
may result in the delisting of the units or actions otherwise restricting their
liquidity. The market price of the units could decline in the event that the
Trustees elect to undertake one or more of these steps.

R
E D E M P T I O N   R I G H T

Registered
unitholders are entitled to require the Trust to redeem their units in
accordance with conditions stated in the Declaration of Trust, which may be at a
value less than market price. It is anticipated that the redemption

2004
Annual Report|61

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right
will not be the primary mechanism for unitholders to liquidate their investment
in the units. 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.

D
I S T R I B U T I O N   O F   S E C U R I T I E
S   O N R E D E M P T I O N   O R   T E R M I N A
T I O N   O F   T H E   
T R U S T

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.

L
I M I T E D   L I K E L I H O O D   O F   U N I T
H O L D E R   L I A B I L I T Y

Effective
July 1, 2004, income trusts settled in Alberta, such as the Trust, have the
protection of limited liability under theIncome
Trust Liability Act(ITLA)
effective July 1, 2004, in respect of any act, default, obligation, or liability
of the Trust arising after July 1, 2004. However, the ITLA does not prevent
liability for any act, default, obligation, or liability arising before July 1,
2004. Ontario has passed legislation similar to the ITLA and Quebec has
legislation that provides similar protection to unitholders.

The
Declaration of Trust provides for additional limits to the liability of the
unitholders. The Declaration of Trust states 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 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. However,
the effectiveness of these provisions to limit the liability of unitholders is
uncertain.

Notwithstanding
that the Declaration of Trust seeks to limit the liability of a unitholder to
any person in connection with a holding of units, the effectiveness of such
provisions is uncertain. Further it is not yet clear to what extent unitholders
outside of Alberta, Ontario and Quebec benefit from the legislation that those
provinces have enacted. Accordingly, there remains 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.

A
D D I T I O N A L   U N I T S

The
Declaration of Trust authorizes the Trustees 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.

C
A P I T A L   I N V E S T M E N T

The
timing and amount of capital expenditures incurred by Elk Valley Coal or by NYCO
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 unusual expenditures are
made.

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U
N F U N D E D   L I A B I L I T I E S

Elk
Valley Coal has a number of unfunded liabilities, including pension, other
post-retirement benefit and asset retirement obligations. Funding of these
obligations in the future may have a significant and negative impact on cash
available for distributions to unitholders.

R
E S T R I C T I O N S   O N   P O T E N T I A L  
G R O W T H

The
payout by Fording Inc. of all 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, have a material adverse effect on the
amount of cash available for distribution to unitholders.

F
O R W A R D - L O O K I N G   I N F O R M A T I O N   M A
Y   P R O V E   I N A C C U R A T E

Numerous
statements containing forward-looking information are found in this document and
other documents forming part of the Trust's public disclosure record. Such
statements and information are subject to risks and uncertainties, some of which
are discussed elsewhere in this document. The occurrence of any of the events
described in those risk factors 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 INTEREST IN ELK VALLEY COAL
| | ------------------------------------------------------------------------

The
Trust's 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. Risks to which Fording Inc., Elk Valley Coal and NYCO are exposed
include, but are not limited to, the following:

C
R E D I T   F A C I L I T I E S

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.

I
N C O M E   T A X E S

Fording
Inc.'s ability to shelter current income taxes payable is primarily dependant
upon its ability to offset income from Elk Valley Coal and NYCO with the
interest it incurs on the subordinated notes owing to the Trust, as well as any
existing tax loss carry forwards and available tax pools.

As
a result of the strong demand for metallurgical coal, and the substantial
increase in prices for the 2005 coal year, Fording Inc. anticipates a future tax
liability will be accrued in 2005. With Elk Valley Coal's fiscal year-end
being January 31, 2006, one month after the Trust's, this creates a timing
difference between the recognition and the payment of taxes. As a result of this
difference the Trust has elected to withhold an amount equal to the amount of
the future tax liability accrual from cash otherwise available for distribution
so that future unitholders do not bear the cash effect of the deferred timing of
the payment of income taxes. Should price and volumes remain high, subsequent
years' income taxes may become more significant as the available loss carry
forwards will be fully utilized. Please refer to the Income Tax section found on
page 53 for a more complete description of the income tax discussion.

2004
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M
A R K E T   R I S K S   -   O V E R S U P P L
Y   O F   C O K I N G   C O A L

The
prices for coking coal and hard coking coal in particular, have a significant
impact on Elk Valley Coal's 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. An oversupply of coking coal in world markets or a general downturn
in the economies of any of Elk Valley Coal's 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.

C
O N F L I C T S   O F   I N T E R E S T

The
Trust and its unitholders are dependent upon Teck Cominco, as managing partner
and 40% owner, to manage the day-to-day operations of Elk Valley Coal. There is
a risk to the Trust, should any conflict arise between the Trust, Elk Valley
Coal and 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 certain
strategic or significant decisions.

O
P E R A T I O N A L   R I S K S

Profitability
and, therefore, funds available to the Trust for distribution to unitholders,
are also affected by the cost of product sold and transportation and other
costs, product quality and taxation.

S
h o r t a g e   o f   M i n i n g   E q u i p m e
n t

The
recent growth in global mining activities has created a demand for mining
equipment and related supplies that outpaces supply. As a result, future
operations could be adversely affected if Elk Valley Coal encounters
difficulties obtaining equipment, tires and other supplies on a timely basis. In
the event that Elk Valley Coal was unable to secure required mining equipment on
a timely basis, expansion activities, production, productivity and costs could
be negatively affected, resulting in a material adverse effect on cash available
for distribution to unitholders.

C
o a l   T r a n s p o r t a t i o n

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, operations are highly dependent on both rail and
port services. As a result, a significant portion of total transportation and
other cost are attributable to rail and port costs, which includes demurrage
charges for vessel waiting times. A substantial portion of the coal production
from Elk Valley Coal is transported to port facilities by CPR, and to a lesser
extent Canadian National Railway Company (CNR), and loaded on to vessels in
Vancouver at either Westshore Terminals or Neptune Terminals. Contractual
disputes, rail and port capacity issues, prolonged labour stoppages,
availability of vessels, weather problems or other factors that prevent CPR,
CNR, Westshore Terminals or Neptune Terminals from providing their services
could seriously impact Elk Valley Coal and Fording Inc.'s financial results,
and therefore, funds available to us for distribution to unitholders.

T
h e   S t e e l   I n d u s t r y

Substantially
all of the coking coal that Elk Valley Coal produces is sold to steel producers.
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 substitutes for
steel such as aluminum, composites and plastics. A significant reduction in the
demand for steel products would reduce

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the
demand for coking coal, which would have a material adverse effect upon Fording
Inc. and the funds available 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.

F
o r e i g n   C u r r e n c y   E x c h a n g e

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 the 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 Elk Valley Coal's 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 Fording Inc.'s policy to hedge a portion
of our U.S. dollar exposure through the use of foreign exchange forward
contracts. Fording Inc.'s ability to enter into foreign exchange forward
contracts will depend on the total hedge position it wishes to take and the
counterparties' assessment of its 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 foreign exchange forward contracts. The inability of Fording
Inc. or Elk Valley Coal to put in place effective hedges could materially
increase exposure to fluctuations in the value of the Canadian dollar relative
to the U.S. dollar.

D
e r i v a t i v e   I n s t r u m e n t s

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.

D
e p e n d e n c e   o n   M a j o r   C u s t o m
e r s

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. For example, sales to a single customer accounted for approximately
10% of Elk Valley Coal's revenue in 2004. A loss of, or a significant
reduction in, purchases by any of its largest customers could adversely affect
Elk Valley Coal and Fording Inc.'s revenues and the amount of cash available
for distribution to unitholders.

P
e r s o n n e l

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

In
addition, 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., NYCO and Elk
Valley Coal. The loss of such key personnel and the inability 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,
NYCO and Fording Inc. which, in turn, would reduce the amount of cash available
to the Trust for distribution to unitholders. Certain key executives have change
of control agreements.

2004
Annual Report|65

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| | RISKS
      INHERENT IN THE MINING INDUSTRY
| | -------------------------------------------

Mining
operations are subject to conditions that are beyond the control of management
that 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 NYCO
maintain insurance against risks that are typical in the mining industry. In
addition, Elk Valley Coal and NYCO 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, NYCO, or others in
the mining industry.

R
E S E R V E S   A N D   R E S O U R C E S

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 NYCO 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 resource 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
NYCO. 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 NYCO.

Fording
Inc.'s profitability will depend substantially on Elk Valley Coal's ability
to mine coal deposits that 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 characteristics of any properties that it
acquires until after the acquisition, which may adversely affect the
profitability and financial condition of Fording Inc.

Elk
Valley Coal has extensive coal properties and NYCO has wollastonite properties
that 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 Elk Valley Coal and
NYCO will be able to obtain the necessary authorizations to develop resource
properties in the future and this may negatively affect the ability of the Trust
to make future distributions to unitholders.

O
P E R A T I O N S   I N   A N D   S A L E
S   T O   F O R E I G N   C O U N T R I E S

Elk
Valley Coal operates in Canada and sells its products to customers located
around the world. NYCO operates in the United States and Mexico and sells
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

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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.

N
E W   A P P L I C A T I O N S   F O R   W O L L A
S T O N I T E

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 NYCO's growth.

H
E A L T H   I S S U E S   -   N Y C O

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 NYCO's ore
sources in the United States and in some of its products could result in NYCO
becoming exposed to liabilities, including workers' compensation and product
liability claims. Further, in the event that NYCO's 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 that has been
classified by the International Agency for Research on Cancer as 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 mining industry to a significant degree, in connection
with, among other things, employee health and safety, air quality standards,
water pollution, groundwater 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.

T
H E  E N V I R O N M E N T

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 that 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

2004
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and
cost of any programs contemplated or their potential effects on operations. Most
of Elk Valley Coal's 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.

P
E R M I T S   A N D   P E R M I T T I N G   P R O
C E S S

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 NYCO 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 NYCO to conduct mining operations or
to do so profitably.

A
C C U R A C Y   O F   L I A B I L I T Y   A C C R
U A L S

The
funding requirements of Elk Valley Coal's and NYCO's defined benefit pension
plans are based on actuarial valuations. The rates of investment return realized
by pension funds can fluctuate 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 additional liabilities could
have a material adverse effect upon Fording Inc. and the funds available to us
for distribution to unitholders.

A
S S E R T I O N   O F   A B O R I G I N A L   R I
G H T S   C L A I M S

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, where five of the six mines owned by Elk Valley Coal are
located, 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 that 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.

68
| 2004
Annual Report

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