(Bloomberg) — A rift between between Teck Resources Ltd. and the company it uses to export its coal widened as the Vancouver-based miner publicly accused the shipper of charging too much and contaminating some freight.
The head of Teck, already shifting some steel-making coal freight away from Westshore Terminals Investment Corp., said on Wednesday that the export facility had contaminated “dozens” of shipments. Teck was forced to build its own terminal quickly, before a permit lapsed and its contract with Westshore expired, which drove up capital costs, according to Chief Executive Officer Don Lindsay.
“We had a lot of trouble with Westshore,” Lindsay told analysts at an industry conference in Banff, Alberta. “We’re not happy that the capex doubled. We had to get away from a company that used monopolistic pricing practices.”
Westshore, also based in Vancouver and operated by billionaire Jim Pattison, is the largest coal-loading facility on the west coast of the Americas. The company refuted Teck’s allegations.
Because Westshore had a 10-year contract with Teck, employees were able to ship the company’s coal “when they liked,” which often was not when prices were high, Lindsay said. That practice cost Teck $200 million in earnings before interest, taxes, depreciation and amortization during one quarter in 2018, when a million tons of sales were lost at a time coal margins exceeded $200 per ton, he said.
“We certainly disagree with the first two comments about not adhering to the contract and having tons of trouble with Westshore,” Nick Desmarais, Westshore’s corporate secretary, said by phone, referring to Teck’s allegations including the contamination of its coal. “And our rates are market rates.”
“They were contaminating our coal with thermal coal,” Lindsay alleged. “We had dozens and dozens and dozens of incidents, including one incident where it was so severe that our largest customer stopped sending ships to them.”
To contact the reporter on this story: Danielle Bochove in Toronto at [email protected]
To contact the editors responsible for this story: Luzi Ann Javier at [email protected], Joe Richter
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