Lumps of hope for Ridley’s financial forecast

The 2016 annual general meeting for the coal terminal offered cautious optimism for rising demand

Cautiously optimistic was how Marc Dulude, president and CEO of Ridley Terminals Inc., described the economic tide the crown corporation is currently wading in.

“We have a lot of opportunity at the table,” Dulude said, emphasizing the shift toward diversifying the primarily-focused coal terminal.

On August 9, Ridley Terminals reviewed its 2016 financial performance at its annual general meeting held at the North Coast Convention Centre. The future was painted brighter for the company than previous years, with a surge in coal prices in the latter part of the year and a multi-million dollar investment from AltaGas.

“The board really wants to go with diversification. Why, because we cannot rely only on coal,” Dulude said. “This diversification will reduce the risk of going through a difficult period again.”

Even though operating expenses fell 58 per cent from $159-million to $67-million, Ridley Terminals’ total revenues dropped 33.5 per cent from $91.6-million to $60.9-million, and there was a 10 per cent decrease in coal shipments.

A large part of expenses included a $12-million legal settlement with the wood pellet company, Houston Pellet Limited Partnership. From 2007-2010, wood pellets were moved through the terminal until coal prices rose and it was more favourable to ship coal.

“The contract with that provider expired and they came to renew, but because coal markets were bumping up they couldn’t come to terms with us because we had a fixed capacity and obviously we want to be of service to everyone,” said Ryan Staschuck, manager of business development and finance.

The pellet company had brought their assets onto a leased site at Ridley Terminals and the lawsuit was over whether or not the terminal was liable for Houston Pellet’s business interruption or simply their terminal assets, which included a rail-car unloading facility, storage bin and related conveyance that was used to export wood pellets.

“It was finally settled and that was essentially the settlement where we actually gained something out of it. We retained the assets on the site that we could potentially repurpose for future shipments of wood pellets or other substances,” Staschuck said.

Another gain was an $8-million deposit from AltaGas, which is constructing a propane export terminal on Ridley Island. The deposit was recognized within the $15.2-million of cash flows — which was a $3-million decrease from the year before.

“AltaGas is a first very solid step in our goal to diversify,” Dulude said.

An $18.8-million boost to revenues in 2016 came from shortfall penalties, which weren’t recognized in 2015. Customers that shipped below their minimum annual contract volumes had to pay the difference in tonnage at a lower rate.

“It’s an insurance policy they sign up front,” Staschuck said.

Looking ahead, shipments of coal and petroleum coke are expected to increase by 25 per cent in 2017. The demand for thermal coal, which made up 60 per cent of the exports from the terminal in 2016, is expected to steadily increase in the next 20 years.

Concern over air pollution has lead to restrictions on lignite or “brown coal” and demand is growing for thermal coal, which burns cleaner and requires less product to produce heat.

Coal mining activities are picking up again as well. In 2016, Ridley Terminals made a new contract with Conuma Coal Resources Ltd., which acquired three mines in the Tumbler Ridge region. One of the mines restarted operations in September with a second mine expected to open sometime this year.

 

Ridley Terminals Inc. presented its 2016 financial report to the public on August 9th. (Shannon Lough / The Northern View)