##### 



Exhibit C
 FORDING CANADIAN COAL TRUST   MANAGEMENTS DISCUSSION AND ANALYSIS
 FORWARD-LOOKING INFORMATION
 This managements discussion and analysis contains forward-looking information within the meaning
of the United States Private Securities Litigation Reform Act of 1995 including, 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, optimize, may, and will or similar words
suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions,
intentions or statements about future events or performance. This managements discussion and
analysis contains forward-looking information, included in, but not limited to, the sections titled
Overview, Strategy and Key Performance Indicators, Nature of Operations, 2007 Compared with 2006,
Outlook, Liquidity and Capital Resources, Outstanding Unit Data, Critical Accounting Estimates,
Changes in Accounting Policies, Financial and Other Instruments, Key Risks and Uncertainties.
 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 materially
inaccurate. For a further discussion of the assumptions, risks and uncertainties relating to the
forward-looking statements contained in this managements discussion and analysis, please refer to
the sections entitled Caution Regarding Forward-Looking Statements and Key Risks and Uncertainties.
 INTRODUCTION
 The Trust
    1




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www.sedar.com www.sec.gov www.fording.ca
   2




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Elk Valley Coal Partnership
       NYCO
   NON-GAAP FINANCIAL MEASURES
   3




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CONTROLS AND PROCEDURES
  Internal Control  Integrated Framework Internal Control  Integrated Framework
  4




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OVERVIEW
 Highlights
 (millions of Canadian dollars, except as noted)
    
    2007
    
    
    2006
    
    
    2005Revenue
    
    $
    1,427.3
    
    
    $
    1,798.2
    
    
    $
    1,829.9Income from operations
    
    
    308.2
    
    
    
    682.9
    
    
    
    776.2Net income from continuing operations
    
    
    322.5
    
    
    
    542.9
    
    
    
    834.3Add (deduct):Future income tax expense (reversal)
    
    
    73.0
    
    
    
    9.2
    
    
    
    (97.0
    )Unrealized gains on foreign exchange forward contracts
    
    
    (38.7
    )
    
    
    
    
    
    
    Change in accounting standards for in-process inventory
    
    
    
    
    
    
    31.7
    
    
    
    Gain from reduction of interest in Elk Valley Coal
    
    
    
    
    
    
    
    
    
    
    (5.4
    )Gain on issuance of partnership interest
    
    
    
    
    
    
    
    
    
    
    (27.2
    )Net income from continuing operations before unusual
items, future income taxes and unrealized gains or
losses on foreign exchange forward contracts
    
    $
    356.8
    
    
    $
    583.8
    
    
    $
    704.7Cash available for distribution
    
    $
    348.9
    
    
    $
    617.8
    
    
    $
    721.6Distributions declared
    
    $
    358.8
    
    
    $
    610.2
    
    
    $
    700.6Net income from continuing operations per unit
    
    $
    2.18
    
    
    $
    3.69
    
    
    $
    5.68Net income from continuing operations per unit before
unusual items, future income taxes and unrealized
gains or losses on foreign exchange forward
contracts
    
    $
    2.41
    
    
    $
    3.97
    
    
    $
    4.79Cash available for distribution per unit
    
    $
    2.36
    
    
    $
    4.20
    
    
    $
    4.91Distributions declared per unit
    
    $
    2.43
    
    
    $
    4.15
    
    
    $
    4.76Total assets
    
    $
    1,086.8
    
    
    $
    1,073.8
    
    
    $
    1,182.6Total long-term debt
    
    $
    280.9
    
    
    $
    312.5
    
    
    $
    215.2Coal sales  Trusts 60% share (millions of tonnes)
    
    
    13.6
    
    
    
    13.6
    
    
    
    14.5
   5




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STRATEGY AND KEY PERFORMANCE INDICATORS
 Strategy
   Key Performance Indicators
  NATURE OF OPERATIONS
 The Steel and Metallurgical Coal Industries
   6




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7




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Competitive Position
       8




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Operating the Business
 Selling coal
  Elk Valley Coal sales by region (%)
    
    2007
    
    
    2006
    
    
    2005Asia
    
    
    47
    
    
    
    45
    
    
    
    45Europe
    
    
    33
    
    
    
    35
    
    
    
    34North America
    
    
    14
    
    
    
    11
    
    
    
    13South America
    
    
    6
    
    
    
    9
    
    
    
    8
    Transporting coal
   9




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Mining coal
   
    
    The strip ratiois the average volume (bank cubic metres) of rock that must be moved for
each tonne of clean coal produced and can vary from period to period around a long-term
trend. The strip ratio impacts the size of the mining fleet, plant productivity and the cost of mining inputs
such as labour, tires and fuel. A lower strip ratio normally reduces the unit cost of product
sold.
  10




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
    
    The haul distanceis the one-way distance the trucks, on average, have to travel to move
the overburden. The haul distance impacts the size of the mining fleet, productivity in the
mine and the cost of mining inputs such as labour, tires and fuel. Shorter haul distances
normally result in lower cost of product sold.
    
    Total material productivityis a measure of operational efficiency, stated in the volume
of rock and coal moved per eight-hour work shift. Higher productivity, which depends on
such things as mine design, employee levels, size of the mining fleet, haul distance and
equipment availability and capacity, normally reduces the unit cost of product sold.
       11




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
    
    The percentage of clean product recovered compared with the amount of raw coal processed
is referred to as plant yield. The yield achieved is a function of the physical
characteristics of raw coal being processed and the amount of ash and impurities in the raw
coal. 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.
    
    Clean coal productivityis a measure of the overall operational efficiency of the coal
preparation plant and minesite operations. It is stated as the amount of clean coal
produced per eight-hour work shift. In addition to factors that affect productivity in the
mining operations, productivity for coal preparation plants is dependent upon plant design
and site employee levels.
  2007 COMPARED WITH 2006
 Results of Operations (Trusts 60% Share)
 Volumes and prices
    
    2007
    
    
    2006
    
    
    2005Coal production (millions of tonnes)
    
    
    13.5
    
    
    
    13.1
    
    
    
    15.4Coal sales (millions of tonnes)
    
    
    13.6
    
    
    
    13.6
    
    
    
    14.5Average sales price (US$per tonne)
    
    $
    97.70
    
    
    $
    113.10
    
    
    $
    99.30Average sales price 1
    
    $
    104.90
    
    
    $
    132.50
    
    
    $
    126.40Operating results(millions of dollars)Revenue
    
    $
    1,427.3
    
    
    $
    1,798.2
    
    
    $
    1,829.9Cost of product sold
    
    
    562.0
    
    
    
    532.3
    
    
    
    469.2Transportation
    
    
    478.0
    
    
    
    500.3
    
    
    
    510.2Selling, general and administration
    
    
    20.0
    
    
    
    23.4
    
    
    
    17.2Depreciation and depletion
    
    
    49.8
    
    
    
    49.2
    
    
    
    47.5Income from operations
    
    $
    317.5
    
    
    $
    693.0
    
    
    $
    785.8
 1
    
    The average sales prices for 2006 and 2005 include the realized effects of our foreign exchange forward contracts
of $4.20 per tonne in 2006 and $6.60 per tonne in 2005. Revenues
   12




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13




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##### 



(millions of Canadian dollars)Revenue in 2006
    
    $
    1,798Variance attributed to lower U.S. dollar coal prices
    
    
    (225
    )Variance attributed to the change in the U.S./Canadian
dollar exchange rate
    
    
    (94
    )Realized gains on foreign exchange forward contracts
included in revenue in 2006
    
    
    (58
    )Variance attributed to coal sales volumes
    
    
    6Revenue in 2007
    
    $
    1,427
 Cost of Product Sold
    
    2007
    
    
    2006
    
    
    2005Coal sales (millions of tonnes)
    
    
    13.6
    
    
    
    13.6
    
    
    
    14.5Coal production (million of tonnes)
    
    
    13.5
    
    
    
    13.1
    
    
    
    15.4Cost of product sold (millions of dollars)
    
    $
    562.0
    
    
    $
    532.3
    
    
    $
    469.2Cost of product sold (per tonne)
    
    $
    41.30
    
    
    $
    39.20
    
    
    $
    32.40
  Operating statistics
    
    2007
    
    
    2006
    
    
    2005Total material moved (millions of bank cubic metres)
    
    
    134.6
    
    
    
    136.8
    
    
    
    154.2Strip ratio (bank cubic metres of
waste rock per tonne of clean coal
produced)
    
    
    8.5
    
    
    
    9.0
    
    
    
    8.5Haul distance (kilometres per haul)
    
    
    3.4
    
    
    
    3.1
    
    
    
    2.8Total material productivity (bank
cubic metres per 8-hour work
shift)
    
    
    320.2
    
    
    
    330.9
    
    
    
    360.1Plant yield (percent)
    
    
    65
    
    
    
    64
    
    
    
    65Clean coal productivity (tonnes of
clean coal produced per 8-hour
work shift)
    
    
    33.4
    
    
    
    32.8
    
    
    
    37.4
  14




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Transportation Costs
    
    2007
    
    
    2006
    
    
    2005Coal sales (millions of tonnes)
    
    
    13.6
    
    
    
    13.6
    
    
    
    14.5Transportation (millions of dollars)
    
    $
    478.0
    
    
    $
    500.3
    
    
    $
    510.2Transportation (per tonne)
    
    $
    35.10
    
    
    $
    36.90
    
    
    $
    35.30
      15




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Other Income and Expenses
 (millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Interest expense
    
    $
    (21.4
    )
    
    $
    (18.8
    )
    
    $
    (11.3
    )Net foreign exchange gains (losses)
    
    $
    31.0
    
    
    $
    (5.6
    )
    
    $
    4.2Realized gains on foreign exchange forward contracts1
    
    
    74.5
    
    
    
    
    
    
    
    Unrealized gains on foreign exchange forward contracts2
    
    
    38.7
    
    
    
    
    
    
    
    Change in accounting policy for in-process inventory
    
    
    
    
    
    
    (31.7
    )
    
    
    Gain on issuance of partnership interest
    
    
    
    
    
    
    
    
    
    
    27.2Gain on corporate reorganization
    
    
    
    
    
    
    
    
    
    
    5.4Other
    
    
    3.2
    
    
    
    0.5
    
    
    
    (1.8
    )$
    147.4
    
    
    $
    (36.8
    )
    
    $
    35.0
 1
    
    Realized gains or losses on foreign exchange forward contracts were included in revenues in 2006 and 2005 under previous accounting standards.2
    
    Unrealized gains or losses on foreign exchange forward contracts were not recorded in 2006 or 2005 under previous accounting standards.      16




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##### 



Income Taxes
 Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Current income tax expense (reversal):Provincial mineral taxes and Crown royalties
    
    $
    38.3
    
    
    $
    75.5
    
    
    $
    58.7Canadian corporate income taxes
    
    
    0.4
    
    
    
    (0.3
    )
    
    
    3.938.7
    
    
    
    75.2
    
    
    
    62.6Future income tax expense (reversal) :Provincial mineral taxes and Crown royalties
    
    $
    2.0
    
    
    $
    9.2
    
    
    $
    31.3Canadian corporate income taxes
    
    
    71.0
    
    
    
    
    
    
    
    (128.3
    )73.0
    
    
    
    9.2
    
    
    
    (97.0
    )Total income tax expense (reversal)
    
    $
    111.7
    
    
    $
    84.4
    
    
    $
    (34.4
    )
    CASH AVAILABLE FOR DISTRIBUTION
   17




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18




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##### 



(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Current year:Cash from operating activities
    
    $
    387.1
    
    
    $
    690.4
    
    
    $
    632.8Add (deduct):
    
    
    
    
    
    
    
    
    
    $Increase (decrease) in non-cash working capital
    
    
    (17.9
    )
    
    
    (40.6
    )
    
    
    124.3Sustaining capital expenditures, net
    
    
    (46.5
    )
    
    
    (26.0
    )
    
    
    (38.8
    )Capital lease payments
    
    
    (1.6
    )
    
    $
    (1.8
    )
    
    
    (2.2
    )Proceeds from the sale of NYCO, net of taxes paid
and payable
    
    
    30.5
    
    
    
    
    
    
    
    Other
    
    
    (2.7
    )
    
    
    (4.2
    )
    
    
    5.5Cash reserve
    
    
    
    
    
    
    
    
    
    
    Cash available for distribution generated in the year
    
    
    348.9
    
    
    
    617.8
    
    
    
    721.6Distributable cash carried forward from prior years
    
    
    15.7
    
    
    
    8.1
    
    
    
    (12.9
    )Distributable cash, including amounts carried forward
    
    
    364.6
    
    
    
    625.9
    
    
    
    708.7Distributions declared during the year
    
    
    (358.8
    )
    
    
    (610.2
    )
    
    
    (700.6
    )Distributable cash carried forward to future years
    
    $
    5.8
    
    
    $
    15.7
    
    
    $
    8.1Per unit amounts:Cash available for distribution generated in the year
    
    $
    2.36
    
    
    $
    4.20
    
    
    $
    4.91Distributions declared
    
    $
    2.43
    
    
    $
    4.15
    
    
    $
    4.76
    19




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FOURTH QUARTER 2007
     Operations
    2006 COMPARED WITH 2005
 Operations
 Revenues
   20




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Cost of Product Sold
   Transportation Costs
  Other Income and Expenses
   Income Taxes
   21




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##### 



SUMMARY OF QUARTERLY RESULTS
  Coal statistics
    
    2007
    
    
    2006(Trust's 60% Share)
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Production (million of
tonnes)
    
    
    3.3
    
    
    
    3.4
    
    
    
    3.7
    
    
    
    3.1
    
    
    
    3.3
    
    
    
    3.0
    
    
    
    3.3
    
    
    
    3.5Sales (millions of tonnes)
    
    
    3.6
    
    
    
    3.4
    
    
    
    3.8
    
    
    
    2.8
    
    
    
    3.5
    
    
    
    3.5
    
    
    
    3.5
    
    
    
    3.1Average US$prices (per
tonne)
    
    $
    92.70
    
    
    $
    93.20
    
    
    $
    100.70
    
    
    $
    105.40
    
    
    $
    106.30
    
    
    $
    108.80
    
    
    $
    116.10
    
    
    $
    122.30Average CDN$prices (per tonne)
    
    $
    91.50
    
    
    $
    97.30
    
    
    $
    110.90
    
    
    $
    123.50
    
    
    $
    122.60
    
    
    $
    124.40
    
    
    $
    133.00
    
    
    $
    152.30Cost of product sold (per
tonne)
    
    $
    40.00
    
    
    $
    41.00
    
    
    $
    39.50
    
    
    $
    45.80
    
    
    $
    36.40
    
    
    $
    42.60
    
    
    $
    39.20
    
    
    $
    38.60Transportation (per tonne)
    
    $
    33.00
    
    
    $
    35.80
    
    
    $
    34.50
    
    
    $
    37.80
    
    
    $
    36.80
    
    
    $
    35.60
    
    
    $
    37.40
    
    
    $
    37.80
     22




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##### 



(millions of dollars, except
    
    2007
    
    
    2006per unit amounts)
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Revenue
    
    $
    327.5
    
    
    $
    331.0
    
    
    $
    418.3
    
    
    $
    350.5
    
    
    $
    424.9
    
    
    $
    440.3
    
    
    $
    459.8
    
    
    $
    473.3Income from operations
    
    
    42.8
    
    
    
    53.4
    
    
    
    116.8
    
    
    
    95.3
    
    
    
    149.8
    
    
    
    143.7
    
    
    
    172.3
    
    
    
    217.1Net Income from continuing operations
    
    
    48.8
    
    
    
    90.5
    
    
    
    106.4
    
    
    
    76.8
    
    
    
    114.6
    
    
    
    123.3
    
    
    
    139.8
    
    
    
    165.2Net Income
    
    
    48.8
    
    
    
    90.5
    
    
    
    117.0
    
    
    
    77.0
    
    
    
    68.6
    
    
    
    123.8
    
    
    
    140.2
    
    
    
    165.3Net income from continuing operations
before unusual items,
future income taxes and
unrealized gains or losses
on foreign exchange
forward contracts
    
    
    74.9
    
    
    
    82.9
    
    
    
    128.4
    
    
    
    70.6
    
    
    
    116.3
    
    
    
    120.0
    
    
    
    150.8
    
    
    
    196.5Cash available for distribution
    
    
    74.8
    
    
    
    61.4
    
    
    
    135.2
    
    
    
    77.4
    
    
    
    146.5
    
    
    
    122.5
    
    
    
    147.3
    
    
    
    201.5Distributions declared
    
    
    78.6
    
    
    
    88.7
    
    
    
    95.9
    
    
    
    95.6
    
    
    
    139.7
    
    
    
    117.6
    
    
    
    147.0
    
    
    
    205.8Distributions declared per unit
    
    
    0.53
    
    
    
    0.60
    
    
    
    0.65
    
    
    
    0.65
    
    
    
    0.95
    
    
    
    0.80
    
    
    
    1.00
    
    
    
    1.40
 CAUTION REGARDING FORWARD-LOOKING STATEMENTS
 This 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,
the 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, optimize, may, and will or similar words suggesting future outcomes, or
other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future
events or performance. This managements discussion and analysis contains forward-looking
information, included in, but not limited to, the sections titled Overview, Strategy and Key
Performance Indicators, Nature of Operations, 2007 Compared with 2006, Outlook, Liquidity and
Capital Resources, Outstanding Unit Data, Critical Accounting Estimates, Changes in Accounting
Policies, Financial and Other Instruments, Key Risks and Uncertainties.
 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 materially
inaccurate. For a further discussion of the risks and uncertainties relating to the forward
looking statements please refer to the section entitled Key Risks and Uncertainties.
  23




---



##### 



The forward-looking statements contained in this managements discussion and analysis are based, in
part, upon certain assumptions made by the Trust, including, but not limited to, the following: no
material disruption in production; no material variation in anticipated coal sales volumes, coal
prices or cost of product sold; no material variation in the forecasted yields, strip ratios, haul
distances and productivity for each mine in which the Trust has an interest; no material increases
in the global supply of hard coking coal other than what is currently projected by management;
significant quantities of weaker coking coals will not be substituted for hard coking coal;
continued strength in global steel markets; no material disruption in construction or operations at
minesites; no variation in availability or allocation of haul truck tires to Elk Valley Coal in
2008; an absence of labour disputes in the forecast period; no material variation in the
anticipated cost of labour; no material variations in markets and pricing of metallurgical coal
other than anticipated variations; no material variation in anticipated mining, energy or
transportation costs; continued availability of and no further material disruption in rail service
and port facilities; no material delays in the current timing for completion of ongoing projects;
financing will be available on terms favourable to the Trust and Elk Valley Coal; no material
variation in the operations of Elk Valley Coal customers which could impact coal purchases; no
material variation in historical coal purchasing practices of customers; coal sales contracts will
be entered into with new customers; existing inventories will not result in decreased sales
volumes; parties execute and deliver contracts currently under negotiation; and, no material
variations in the current taxation environment other than those changes that have already been
announced.
 The Trust cautions that the list of factors and assumptions 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 and
United States securities regulatory authorities, including its most recent management information
circular, annual information form, quarterly reports, managements discussion and analysis,
material change reports and news releases. Copies of the Trusts Canadian public filings are
available on SEDAR at www.sedar.com. The Trusts U.S. public filings, including the Trusts most
recent annual report on form 40-F as supplemented by its filings on form 6-K, 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 by 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 except as required by law.
 OUTLOOK
     24




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
   25




---



##### 



Distribution Reinvestment Plan
  Cash Flows and Working Capital
    Capital Expenditures and Other Investing Cash Flows
   26




---



##### 



Financing Cash Flows
    27




---



##### 



Contractual Obligations
  LessPayments due by period
    
    
    
    
    
    than 1
    
    
    1 - 3
    
    
    4 - 5
    
    
    After 5(millions of dollars)
    
    Total
    
    
    year
    
    
    years
    
    
    years
    
    
    yearsForeign exchange forward
contracts
    
    $
    294.3
    
    
    $
    294.3
    
    
    $
    
    
    
    $
    
    
    
    $
    Long-term debt
    
    
    279.6
    
    
    
    
    
    
    
    
    
    
    
    279.6Capital leases and equipment financing
    
    
    2.9
    
    
    
    1.6
    
    
    
    1.3
    
    
    
    
    
    
    
    Operating Leases
    
    
    23.7
    
    
    
    15.2
    
    
    
    6.3
    
    
    
    2.2
    
    
    
    Purchase obligations
    
    
    28.2
    
    
    
    27.9
    
    
    
    0.3
    
    
    
    
    
    
    
    Pension and other
post-retirement funding
requirements
    
    
    139.6
    
    
    
    11.7
    
    
    
    24.6
    
    
    
    26.5
    
    
    
    76.8Asset retirement obligations
    
    
    225.4
    
    
    
    5.7
    
    
    
    9.7
    
    
    
    11.9
    
    
    
    198.1Total obligations
    
    $
    993.7
    
    
    $
    356.4
    
    
    $
    42.2
    
    
    $
    320.2
    
    
    $
    274.9
    28




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29




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OTHER INFORMATION
 Off Balance Sheet Arrangements
    Transactions with Related Parties
   Outstanding Unit Data
   30




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##### 



Critical Accounting Estimates
   Asset Retirement Obligations
   31




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Income Taxes
  Capital Assets, Including Coal Reserves, Depreciation and Depletion and Impairment Testing
     32




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Employee Future Benefits
  Inventory Valuation
    Changes in Accounting Policies
 Financial instruments, hedges and comprehensive income
    33




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Inventories
  Financial instruments and capital disclosures
 Capital Disclosures Financial
Instruments  Presentation
 Intangible assets
 Intangible Assets, Goodwill and Other
Intangible Assets
 International financial reporting standards (IFRS)
  FINANCIAL AND OTHER INSTRUMENTS
   34




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KEY RISKS AND UNCERTAINTIES
 www.sedar.com www.sec.gov www.fording.ca
  35




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##### 



Market Risks
 Demand and Price Volatility
   Oversupply of Hard Coking Coal
  Foreign Currency Exchange
   
    
    Settling U.S. dollar coal prices and volumes with its customers annually, which improves
the predictability of revenues for the current coal year;
    
    Monitoring the global metallurgical coal industry very closely to understand and react to
changes in demand, new sources of supply and new competitors;
  36




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
    
    Working with its customers to understand their needs so it can meet their specifications
and adapt to changes;
    
    Preserving its value to customers by maximizing the quality of its coal products and the
stability and reliability of its supply to the market over the long-term; and
    
    Increasing flexibility in its operations to be able to adapt to increased market
volatility.
  OPERATIONAL RISKS
 Lack of Diversification
  Coal Transportation
   Business Plan Execution
  Dependence on Major Customers
   37




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
    
    Forging strong, long-term commercial relationships with its customers;
    
    Optimizing the quality of its products to help achieve maximum value for its products in
the marketplace and maintain its significant market share;
    
    Maintaining adequate reserves to remain a reliable, long-term supplier of high-quality
hard coking coal;
    
    Maintaining production from several operations;
    
    Addressing rail and port costs to ensure long-term competitiveness; and
    
    Holding an equity position in Neptune Terminals, which enables it to pay for services at
this port on a cost of service basis.
 REGULATORY RISKS
 Permitting and Aboriginal Affairs
  Climate Change
    38




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
    
    Conducting its business in an ethical manner and contributing to the communities in which
it operates;
    
    Committing to building mutually beneficial relationships with the Aboriginal communities
where its operations are located; and
    
    Establishing operating procedures that are designed to protect the environment and comply
with regulatory requirements.
 MANAGEMENTS REPORT
  Managements Responsibility for the Financial Statements
     39




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Managements Report on Internal Control over Financial Reporting
  /s/ Boyd Payne
    
    /s/ R. James BrownBoyd Payne
    
    R. James BrownPresident
    
    Vice President and Chief Financial Officer
  40