Teck mulls alternatives as coal strike looms

Teck Resources Ltd. [TECK.B-TSX;TECK.A-TSX; TECK-NYSE) is preparing mitigation strategies for a possible shutdown of a key coal export terminal on Canada’s west coast due to a looming strike by workers.

The warning comes after Westshore Terminals [WTE-TSX] announced that on December 16, it received a 72-hour strike notice from Local 502 of the International Longshore and Warehouse Union, pertaining to Westshore’s coal export terminal at Roberts Bank, Delta, British Columbia (south of Vancouver).

Westshore has been in negotiations for several months with Local 502 for a new collective agreement. The previous collective agreement and those of two other ILWU locals at the terminal expired on January 31, 2020. Negotiations with Local 502 are the first of three.

The strike notice states that the members of Local 502 will stop work at the terminal site on December 19, 2020. That stoppage would result in the complete suspension of operations at the terminal, which is still key for Teck’s coal volumes as its own Neptune terminal in North Vancouver is not expected to be completed until the end of the first quarter of 2021.

Teck spokesperson Chris Stannell told Reuters News Service that the company is examining the feasibility of shipping additional output through other terminals beside Neptune, in the event of a strike, such as Riley Terminals near Prince George, B.C. “We currently have inventory at port and are continuing to load vessels as normal at this time,” Stannell said.

The strike threat comes after Teck recently reached a deal in principle with Westshore Terminals on proposed terms for a substantially reduced metallurgical coal shipping contract following the expiration of the current 10-year, 19 million tonne-per-year contract in March, 2021.

Located in Delta, British Columbia, Westshore Terminals is Canada’s premier coal export terminal and handles over 33 million tonnes of coal annually. The Westshore Terminals Ltd. partnership is owned by Westshore Terminals Investment Corp.

Under the terms of the proposed new agreement, Westshore will ship 5.0-7.0 million tonnes per year at fixed loading rates starting in April 2021 until the total contract volume of 32.25 million tonnes is reached. That equates to between four and six years.