Fording Provides Update On CP Rail Dispute
14 Dicembre 2004 - 6:59PM
PR Newswire (US)
Fording Provides Update On CP Rail Dispute Final Offer Arbitration
Decision Received CALGARY, Dec. 14 /PRNewswire-FirstCall/ --
Fording Canadian Coal Trust (TSX: FDG.UN, NYSE: FDG) today
announced that it has been advised of the decision of an arbitrator
appointed by the Canadian Transportation Agency to conduct a final
offer arbitration between Elk Valley Coal (60% Fording, 40% Teck
Cominco Limited (TSX:TEK.SV.B, TEK.MV.A)) and Canadian Pacific
Railway (CPR) in respect of the freight rates for westbound
shipments of metallurgical coal from the Elkview mine. The rail
agreement for the Elkview mine expired at the end of March 2004.
Subject to the outcome of the two legal proceedings described
below, the arbitrator's decision determines the rate to be paid by
Elk Valley for coal from the Elkview mine for a one year period
commencing October 5, 2004. The arbitrator selected the final offer
submitted by CPR. The rate selected is confidential and cannot be
disclosed. In July 2004, CPR commenced an action in the Alberta
Court of Queen's Bench asserting that as a result of the plan of
arrangement completed in February 2003, the agreement with CPR
regarding the westbound transportation of metallurgical coal from
the Fording River, Coal Mountain and Greenhills mines (the Fording
contract) also applies to shipments from the Elkview and Line Creek
mines. A decision in the Alberta Court action is not currently
expected before the fall of 2005 at the earliest. CPR has also
applied to the Canadian Transportation Agency for an order that
final offer arbitration is not available to Elk Valley on the basis
that the Fording contract applies to the Elkview mine. The Agency's
decision in respect of CPR's application is currently expected by
early February 2005. The disputes over rail rates have not, and are
not expected to have, any adverse affect on the shipment of coal
from Elk Valley's mines. If the Agency or the Court finds that the
Fording contract applies to all five mines, that finding would
supersede the arbitrator's decision issued earlier today.
Management believes that it is too early to make any assessment as
to the probable outcome of the legal proceedings. If the Fording
contract is determined to apply to all five mines, rail rates for
westbound shipments would increase or decrease in relation to
increases or decreases in the U.S. dollar selling price of
metallurgical coal. Elk Valley has been accruing for rail rates on
this basis and therefore reported distributable cash for the
remainder of the 2004 coal year should not be affected. The total
amount of the increase in rail rates for the 2005 coal year would
depend on coal prices for such year, which have not yet been
established, offset somewhat by approximately two months of coal
sales at 2004 coal year prices that will be delivered in the 2005
coal year. At current U.S./Canadian exchange rates and prices, each
U.S.$1.00 (or Cdn.$1.23) increase in realized metallurgical coal
prices would increase transportation and other costs by
approximately Cdn.$0.33 per tonne and the metallurgical coal
operations' income from operations by approximately Cdn.$0.90 per
tonne. Going forward into 2005, increased rail costs related to
anticipated higher metallurgical coal prices would decrease cash
available for distribution over what would have been or will be
distributed should the arbitrated rate apply. The Fording contract
expires March 31, 2007 at which time rates would be re- negotiated.
If the Fording contract is determined not to apply to all five
mines, management believes that the rate established by the
arbitrator for the Elkview mine should also be the rate for the
mines governed by the Fording contract for the year commencing
October 5, 2004. In such event, the amount accrued by Elk Valley
would have adequately allowed for the impact of the arbitrated rate
and the reported distributable cash should not be negatively
affected for the remainder of the 2004 coal year. Going forward, if
all five mines are subject to the arbitrated rate through to
October 4, 2005, a greater portion of additional revenue from
increased coal prices would be available for distribution than
would be the case if rail rates increased proportionately with
metallurgical coal prices. About Fording Fording Canadian Coal
Trust is an open-ended mutual fund trust. Through investments in
metallurgical coal and industrial minerals mining and processing
operations, the Trust makes quarterly cash distributions to
unitholders. The Trust, through its wholly-owned subsidiary,
Fording Inc., holds a 60% ownership interest in the Elk Valley Coal
Corporation and is the world's largest producer of the industrial
mineral wollastonite. The Elk Valley Coal Corporation owns the
substantial majority of Canada's senior metallurgical coal mining
properties and is the world's second largest exporter of
metallurgical coal, capable of supplying approximately 25 million
tonnes of high-quality coal products annually to the international
steel industry. Forward-looking Information Certain information
included in this document is of a forward-looking nature.
Forward-looking information is subject to known and unknown risks,
as well as uncertainties and other factors. Accordingly, actual
results may differ materially from those expressed or implied in
forward-looking information. Some of the risks, uncertainties and
other factors affecting Fording Canadian Coal Trust are discussed
in our public filings with the securities regulatory authorities in
Canada and the United States. Copies of Fording Canadian Coal
Trust's Canadian filings, including our most recent management
information circular, annual information form, annual report,
quarterly reports, material change reports and news releases, are
available online at http://www.sedar.com/, and copies of our U.S.
filings, including our most recent annual report on Form 40-F as
supplemented by filings on Form 6-K, are available at
http://www.sec.gov/. Information in this document is presented as
of December 14, 2004 and is subject to change after this date.
However, Fording Canadian Coal Trust disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
DATASOURCE: Fording Canadian Coal Trust CONTACT: Susan J.
Soprovich, Director, Investor Relations, (403) 260-9834, ;
Catherine Hart, Coordinator, Investor Relations, (403) 260-9817
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