Federal budget failure may impact Ridley Island expansion plans

The federal budget released on March 22 proposed financial support for the expansion of Ridley Terminals Inc, allowing it to borrow from capital markets to fund its expansion plans.

But those plans may be put on hold for the time being if opposition parties defeat the budget in the House of Commons this week, which would trigger an election.

It doesn’t look promising. All three opposition parties have already expressed opposition to the budget, citing shortcomings on a variety of issues. “Overall, it was a net disappointment,” said Skeena-Bulkley Valley MP Nathan Cullen in a teleconference with reporters Tuesday afternoon. “I think an election is definitely on its way.”

A non-confidence motion will be introduced in the House of Commons Friday afternoon (eastern time), which will probably cause the government to fall and trigger an election. The budget bill would die on the floor.

But not everyone wants that to happen. Bud Smith, chair of Ridley, supported the budget, especially its reference to “approval for the borrowing that is critical to our expansion plans.”

In an email to Muskeg News, Smith didn’t say the budget’s defeat would stop expansion at Ridley. But he said the defeat wouldn’t help with expansion.

“Clearly not passing the budget won’t help RTI create its new capacity and add additional jobs that new capacity will bring to Prince Rupert,” Smith wrote.

Smith’s email also said four government ministers are working with Ridley today to try and get the borrowing approved before an election begins. “If their efforts prevail RTI will move ahead as scheduled,” he wrote. “If not then not passing the budget will hurt RTI and all who depend on RTI.”

There is work being done without the help from the budget, however. Smith wrote that engineers are continuing their design work, and the company is also buying a new replacement dumper system, which will be installed this December. Ridley will pay for the dumper through its own cash flow, he wrote.

Ridley Terminals is a Crown Corporation under broad policy direction from the government of Canada. It operates as a commercial entity through revenue received from its shipping activities. Although revenue has been increasing steadily, government contributions of $8.1 million and $1.8 million were provided in 2005 and 2006 when the corporation could not meet its financial operating requirements.

Things appear to be getting better, however. Throughputs at the terminal reached record levels in 2010, and are expected to increase in coming years with continued growth of the coal market.

According to data from the Prince Rupert Port Authority, Ridley shipped over 8 million tonnes of throughput in 2010, most of it coal. And, at the end of January, the terminal signed a contract with Arch Coal, based in St. Louis, to ship at least 2 million tonnes of coal each year until 2015. The Arch contract will contribute to expansion plans that have been in the works for the past few years.

According to a press release from August 2010, RTI is currently undergoing improvements to its facility and equipment to better meet customer demand.

Ridley Terminals ships metallurgical and thermal coal, as well as other bulk commodities. It operates 24 hours a day on land leased from the Prince Rupert Port Authority. The terminal has an annual shipping capacity of 12 million tonnes, and the possibility for expansion to 24 million tonnes. The terminal uses a computer-based technology for rail car unloading, product storage, and vessel loading.

~Written by Liz Williams, with files from Chris Armstrong. Story first appeared at www.muskegnews.com