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NEWS-THIS MONTH IN COAL Ship Damages Coal Loading System at Westshore Terminals A large bulk carrier destroyed a section of trestle after crashing into a berth at Westshore Terminals. (Photo courtesy of Global BC) A large bulk carrier docking at Westshore Terminals in Vancouver, Canada, destroyed a coal conveyor system December 7, 2012, disabling the largest of the port's two berths. The mishap has put the berth out of service for an indefinite period of time and diminished the port's ability to export coal. The loss of the berth, which handles ships with a cargo capacity up to 260,000 metric tons (mt), is a significant blow to Westshore, which is North America's largest coal exporting port. Westshore has one remaining berth, that can handle ships with a capacity of 180,000 mt. The bulk carrier Cape Apricot, with a capacity of 180,000 mt, slammed into a trestle, the only link between the berth and the terminal, destroying more than 100 m of it. The ship went right through the causeway, taking a road, the coal-carrying conveyor belt, and electric and water lines with it. Denis Horgan, general manager, Westshore Terminals, called the incident "the biggest calamity in our history" and said the cleanup and repair is something "that will take months, not weeks." Noting the coal port already operates 24/7, Horgan said there's no doubt the loss of the berth, which is the bigger of the two, will impact customers. Fewer trains will be arriving at the terminal and less coal will be 24 E&MJ; • JANUARY 2013 stored at the site as a result. Westshore Terminals has filed a lawsuit against the Japanese owners of the ship. The terminal is the main shipping point for metallurgical coal from Teck Resources mines in eastern British Columbia. It is also used by U.S. coal companies. Teck Resources said it would continue to use Westshore's remaining berth, but will be shifting capacity to Neptune Terminals in North Vancouver to maintain export volumes. It's also investigating other options. Teck Resources recently provided an update its coal sales, saying the company expects to exceed 6.2 million mt for the fourth quarter of 2012, and production for the first quarter of 2013 is not expected to be materially impacted by the damage to Berth 1. Teck will use alternative shipping options while Westshore repairs the damage, including securing additional capacity through Neptune, Pacific Coast, Thunder Bay and Ridley Terminals. Based on Westshore's estimated repair schedule and expected loading capacity for Berth 2, Teck expects to have total shipping capacity of approximately 6 million mt in the first quarter of 2013. UK Coal Restructures In December, the UK's largest coal producer finally completed an eight-month restructuring exercise that has involved splitting its mining and property assets into separate entities. Faced with continuing operating losses, $220 million in debt and a $680 million deficit in its pension funds, UK Coal had risked breaching covenants had it not done so, with its mining operations liable to run out of cash early in 2013. Under the new structure, UK Coal Mine Holdings becomes a wholly-owned subsidiary of a new parent company, Coalfield Resources plc, with the property portfolio it acquired in the 1990s during the privatization of former state-owned British Coal being placed in Harworth Estates Property Group. Coalfield Resources retains a 90% economic interest in the mining division, although voting control has been passed to a newly established employee benefit trust. The company's pension funds now have a 75.1% interest in Harworth Estates in return for a $50 million cash injection to the property business, with all surplus cashflow from the mines to be used to fund the pension deficit for the foreseeable future. During 2011, UK Coal produced 7.5 million mt of mainly power-station fuel, of which 5.7 million mt came from its three remaining underground mines. Although the company reported net profits of US$87 million on revenues of US$770 million for the year, its long-term performance has been weak since the late 1990s. It reported a US$34 million loss for the first half of 2012, and warned that its deep mine with the longest potential resource life, Daw Mill, will close in 2014 (or before) unless its performance improves and costs are cut. If nothing else, the restructuring buys Coalfield Resources time. However, the company is saddled with high fixed costs at its underground mines, problems with winning permits for new surface operations, and a coal market in which imports compete strongly for generators' business. The question remains, of course, whether it will be able to provide a 'soft landing' for its remaining 2,500 workforce in the longer term as reserves run out, or whether imports—including increasing tonnages from US suppliers faced with their own shale-gas competition issues—will undermine the last pillar of Britain's coal industry. www.e-mj.com