12/14/2012

Canadian National Railway - CN Article
CN lands export coal contract, forges another EJ&E-related voluntary mitigation pact

Coalspur Mines Ltd. and CN reached an agreement on a seven-year coal transportation contract for the planned Vista project in Alberta, which has the potential to become one of North America's largest export thermal coal mines. The pact is expected to be executed in first-quarter 2013.

The contact will enable the miner to achieve total logistics cost savings to move coal from the mine, which is expected to produce 12 million tons annually beginning in 2015, Coalspur officials said in a prepared statement. Savings are estimated at about $20 million over the first five years of coal production, said Coalspur President and Chief Executive Officer Gill Winckler.

Key contract terms include rates, terms and price escalations for the first five years of production. Similar with most western Canadian coal producers, CN plans on supplying equipment to move Coalspur's coal to West Coast terminals. Coalspur has secured a port allocation agreement with Ridley Terminals Inc. at the Port of Prince Rupert, British Columbia, to export thermal coal from the Vista mine to Asia Pacific Rim countries, including China, Japan and Korea.

"Our comprehensive supply chain approach to managing the flow of coal from mines to West Coast terminals improves transparency of the process, and improves coal logistics and customer service," said Jean-Jacques Ruest, CN's executive vice president and chief marketing officer.

Meanwhile, CN also reached a voluntary mitigation agreement (VMA) with the village of Bartlett, Ill., concerning the Class I's January 2009 acquisition of a major portion of the Elgin, Joliet and Eastern Railway Co. (EJ&E).

CN will provide the village funding for noise mitigation measures and emergency training, and will monitor switching activity in conjunction with another railroad to minimize extended blockages of West Bartlett Road.

The Class I reached its first EJ&E-related VMA in August 2008 and has continued working with communities along the line to reach voluntary agreements aimed at providing environmental mitigations tailored to each municipality's needs. To date, 28 of the 33 communities directly affected by the EJ&E transaction have signed VMAs, CN officials said.