Fortune Minerals eyes Ridley Terminals to ship to Asian markets

Washington (Platts)--12Oct2005

Fortune Minerals Ltd. said Tuesday it is a partner in Northwest Bulk Terminals
Inc., which has been chosen as the primary bidder to purchase Ridley Terminals
Inc. from Canada's federal government.

However, others are also interested in the property.  

Ridley Terminals owns and operates the Ridley Island coal terminal in Prince
Rupert, British Columbia, on lands under lease from the Prince Rupert Port
Authority, which is also owned by the federal government.

Transportation Minister Jean Lapierre confirmed that the Fortune group is the
frontrunner after recently obtaining a cabinet order preventing Ridley's
management from signing long-term contracts until he has completed the sale of
Ridley to NBTI.

Transport Canada, the Canadian government's transportation department, is in
the process of divesting ownership of small regional and local ports. The
National Marine Policy was announced in December 1995 and approved in April
1996.

"When we purchased Klappan in 2002, we wrote a letter to the then-energy
minister indicating how important we thought the terminal was and that we'd be
interested in purchasing it if they ever decided to close it," Fortune
President Robin Goad told Platts Coal Trader Tuesday. "Some time later, the
government put out a tender process and identified a number of companies as
prospective purchasers."

The terminal is located about 200 miles southwest of Fortune's Mount Klappan
anthracite coal project. Mount Klappan has an estimated reserve of 2.8 billion
tonnes (metric tons) and is targeted to open at the beginning of 2008 in
northwest British Columbia. The London, Ontario-based company is looking to
produce metallurgical coal and pulverized coal injection material at the mine.

Goad estimated that about a dozen parties bid on the terminal. He would not
name NBTI's other partner, but said it is a private British Columbia company
with expertise in handling bulk materials. The partnership was formed to bid
on and operate the terminal.

He also wouldn't discuss details of the bid.

Prince Rupert has an ice-free, deepwater harbor and is the closest North
American port to Asia. It is also a western terminus for Canadian National
Railway. The coal terminal was built by the federal government in the 1980s at
a cost of about $212.7 million (CAN $250 million) to load and export coal from
the former Quintette and Bullmoose coal mines in northeast British Columbia.
However, Lapierre said it is costing taxpayers $425,000 (CAN $500,000)/month
in subsidies. The terminal is believed to be on the market for a fraction of
its cost, according to press reports.

Last year, the terminal shipped about 1.5 mt, considerably less than its 16-mt
capacity. 

Fortune said NBTI has a business plan, which it believes will make the Ridley
terminal profitable and allow Fortune to ship its coal and PCI to the Asian
market.

Mining association supports another bidder

However the Mining Assn. of British Columbia supports a proposal by a group of
five Vancouver and Calgary-based companies including Teck Cominco, to buy and
operate the facility. The Ridley Shippers Coalition also includes Northern
Energy and Mines, Western Canadian Coal, Sumitomo Canada and Grand Cache Coal.

"The principal issue for us is what's in the best interest of British
Columbia," Brian Battison, director of public affairs for the mining
association, told Platts Coal Trader Tuesday. "If it was operated as a co-op,
it would be operated on a cost pass-through basis. We need to keep costs as
low as possible, and port charges are one of our biggest costs."

Battison said Australian coal is British Columbia's biggest competitor for the
Asian market. And most ports in Australia are either government owned or owned
by the shippers. "That's the competition we have to meet."

 But he said if Fortune and its partner buy the port, it will be operated for
profit.

There are also questions that if the tender were held today instead of two
years ago when prices were low and not much coal was being shipped, bids for
the terminal would be higher. "It would be a completely different picture
today with an aggressive, competitive response," Battison said.

Meanwhile, for Fortune, the results of a feasibility study by Marston Canada
Ltd. that assessed a surface mine and identified proven and probable mining
reserves expected to produce 1.5 mt and 3 mt/yr in two different scenarios is
scheduled to be released later this week or early next week, Goad said
Tuesday.

He said the study also analyzed the possibility of shipping the coal from
Mount Klappan by CN to Prince Rupert, about a 560-mile train ride, or trucking
it about 150 miles to the port of Stuart, which is about 93 miles from the
mine.

Initial production from the Klappan Sequence would start in the proposed
Lost-Fox deposit with proven reserves of 40.5 mt and probable reserves of
almost 11 mt. Initial production is expected to be 1.75 mt of finished product
from an open pit mine and a wash plant.
	-- Mark E. Heckathorn, mark_heckathorn@platts.com 

For more information, take a trial to Platts Coal Trader at
http://www.coaltrader.platts.com.

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.