Teck Resources (TSX, NYSE: TECK) announced Wednesday that the company has signed a long-term rail agreement with CN (TSX: CNR) (NYSE: CNI) for the shipping of steelmaking coal from Teck’s four BC operations between Kamloops and Neptune Terminals, as well as other west coast ports.
Following completion of the terminal expansion project, Neptune’s capacity is expected to rise to 30 million tonnes
Under the agreement, which runs from April 2021 to December 2026, CN will invest more than C$125 million to enhance rail infrastructure at Neptune Terminals. The deal would enable Teck to significantly increase shipment volumes from its Kamloops operations to an expanded Neptune Terminals.
Teck CEO Don Lindsay said that the agreement and associated infrastructure investment would provide the company with the rail capacity to match the major upgrades currently underway at Neptune. “We expect this will lower our total transportation costs and improve overall rail and terminal performance,” he added.
“CN is proud to sign this agreement with Teck and to be playing such a significant role in moving the steelmaking coal from Kamloops to the last mile at Neptune Terminals on Vancouver’s north shore,” said CN president and CEO JJ Ruest.
“This significant volume commitment from Teck is further proof of CN’s ability to serve our customers into Canada’s trade gateway on the west coast. This agreement also further enhances CN’s role as a supply chain enabler for Teck’s shipments into Neptune Terminals.”
Neptune Terminals has the capacity to handle more than 24 million tonnes of bulk products a year. Following completion of the terminal expansion project, its capacity is expected to rise to 30 million tonnes.
Shares of Teck Resources rose just over 5% on Wednesday afternoon. The Vancouver-based miner has an C$11.6 billion market capitalization.