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Supply Chain Partners in Coal

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Presentation on theme: "Supply Chain Partners in Coal"— Presentation transcript:

1 Supply Chain Partners in Coal
Jay Roberts Account Manager - Bulk 2012 Northeast British Columbia Community Coal & Energy Forum October 11, Chetwynd, British Columbia

2 CN’s Network Spans North America
Coal mines Ports Business Units Share of CN Revenues Intermodal 20% Grain and Fertilizers 17% Petroleum and Chemicals 16% Forest Products 14% Metals and Minerals 11% Coal 7% Automotive 5% Other revenues 10% CN Markets Transborder 28% Global Asia 26% Domestic Canada 22% Domestic US 18% Global Europe 4% Global South America 2% Coal represents 10% of CN carloads Based on 2011 revenues CN’s Network Spans North America

3 Multiple Options to West Coast
CN CP BNSF CN network provides built-in redundancy for coal export shipments via West Coast CN has direct access to three terminals on the west coast (Neptune and Westshore in Vancouver and RTI in Prince Rupert) Powder River Basin Origin To Vancouver Rail Miles To Prince Rupert NEBC (CN) Pr. George-Kamloops-Vancouver 800 (CN) Pr. George-Rupert 610 AB (CN) Jasper-Kamloops-Vancouver 650 (CN) Jasper-Pr. George-Rupert 830 Multiple Options to West Coast

4 Value Proposition – Met Coal
4165 nautical miles / 13.6 days No queue 3964 nautical miles / 12.9 days Advantage Prince Rupert Variance Gladstone Miles 201 Sailing days 0.7 Vessel queue (5) Dollars (total trip) $ (33,000) 5 day queue Aug., 2012 Metal Strategies report Value Proposition – Met Coal

5 Value Proposition – Thermal Coal/Petcoke
4165 nautical miles / 13.6 days No queue 4415 nautical miles / 14.4 days Advantage Prince Rupert Variance Fukuyama Miles (250) Sailing days (0.8) Vessel queue (10) Dollars (total trip) ($106,000) 10 day queue Aug., 2012 Metal Strategies report Value Proposition – Thermal Coal/Petcoke

6 Advantages of Canadian West Coast Coal
Geopolitically North America is a very stable environment CN network provides a built-in redundancy of three ports and two separate routes to export Canadian coal has many advantages Competitive alternative source versus Australian & Indonesian coal Established & proven quality coal for the Japanese, Chinese and Korean markets Proven reserves with the existing mines that can be expanded & new mines that are being developed Is closer via the Port of Prince Rupert to Japan, China and South Korea than Newcastle, Australia Canada has all the infrastructure for rail and port required to export additional tonnage with marginal capital expense CN – Rupert is one supply chain on West Coast of North America with available (or expandable) capacity from current to 30MMT in 2014, with possibility to expand to 60MMT by 2016 Advantages of Canadian West Coast Coal

7 Projects Underway 6 7 4 5 1 8 3 2 New Mine Projects 1 2 3 4 5 9 6 7 7
Quintette (Teck) Coalspur (thermal) Summit Coal HD Mining Xstrata Coal Canada Mount Klappan Cardero Coal Roman Mountain (Peace River) Echo Hill (Hillsborough) (thermal) Kailuan Dehua (Gething) Canadian Dehua (Wapiti River) Alberta Coal (Fox Creek) (thermal) Atrum Coal (Groundhog) Coalmont County Coal Transalta 2 6 13 3 4 10 7 5 4 5 9 11 6 1 8 7 7 3 8 12 2 9 16 10 11 12 13 14 14 15 16 1 2 3 4 5 7 6 8 16 9 15 12 13 Projects Underway

8 A Solid Agenda in Place A Great Franchise Outside-in Perspective
Becoming a True Supply Chain Enabler Delivering Superior Growth Balancing Operational & Service Excellence Creating Solid Value for our Shareholders A Great Franchise Outside-in Perspective DNA of Innovation Execution Through People 8

9 A Supply Chain Approach
Proactive communication Joint monitoring and metrics End-to-end resource planning Closer relationship Collaborative, transparent, data-driven process 9

10 Aiming to Double our Coal Export Franchise
Coal - Supporting Significant Export Growth Prince Rupert RTI Capacity* 24 M Vancouver 11M PMV Capacity* 45 M *Metric Tonnes Convent Capacity* 34 M 20M 10 M 4 M CN Coal Franchise Existing mines & expansions *Metric Tonnes *Short Tons Potential new mines Aiming to Double our Coal Export Franchise New Orleans 10

11 Our Supply Chain Approach
Mines Help synchronize production plans with each link of supply chain (mine, rail, port and vessel) and facilitate growth plans for existing and new mines Railways Manage constraints at the ports and facilitate expansions to maximize coal throughput Port Terminals Build relationships with key stakeholders Vessels Minimize vessel dwells Integrate a supply chain concept across each segment from the mine to the end customer Our Supply Chain Approach

12 Enhancing our Supply Chain
Ridley Terminals Supply Chain Logistics Vessel Lineup Ridley Terminals Inventory Tonnage Required Trains Req’d Trains Loaded Empty To Mine Days Remaining Mine XX Tonnage Tonnes Date 74,200 Shi Dai 2 30-Sep 99,010 0.0 68,000 77,000 Kaiyo 30-Sep Max allowed 200,000 52,190 4.4 1.0 2.0 5 48,012 Potential vessel demurrage: recovery plan in motion with customers and Ridley Terminals Enhancing our Supply Chain

13 Improving from “Good to Great” Service
Advantages Transparency Visibility Engagement Communication Synchronizing: Mine Rail Port With vessels Improving from “Good to Great” Service

14 Ridley Terminal Expansion Plan
18MMT 24MMT 30MMT 40+ MMT 14MMT J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D 2012 2013 2014 2015 3rd Stacker / Reclaimer 2nd rotary dumper, new thaw shed, 35 acres to add storage 4th Stacker / Reclaimer Additional land to add storage, new track and construction of 2nd berth Ridley Terminal Expansion Plan

15 Investment in Sidings in BC North
Targeted investment in advance of forecasted traffic increase in the Ridley corridor Priorities based on reducing stand-off time / train meets As volumes increase in the future, it is a matter of adding more sidings to handle the traffic 40MMT = 8 loaded trains per day = 16 trains [loaded + empty] per day CN to construct five long sidings in 2012 on B.C. North Line as part of C$155-million multi-year capital program to expand freight train capacity to handle rising traffic in Edmonton-Prince Rupert corridor CN has extended or constructed 21 sidings to handle 12,000-foot trains between Edmonton and Prince Rupert since 2004 Investment in Sidings in BC North

16 Investment in Locomotives and Crews
Major locomotive acquisition program to accommodate anticipated traffic growth and to improve operational efficiency 65 new high-horsepower locomotives as well as 96 second-hand high-horsepower locomotives that will be upgraded Retirement of older, high-maintenance locomotives and the cascading of less fuel-efficient main-line units Delivery in of 65 new locomotives includes the acquisition of alternating-current locomotives (AC) - much higher adhesion or train-pulling ability at low speeds – will be assigned to heavy-haul coal service in northern British Columbia and Alberta 50 per cent of CN’s high-horsepower locomotive fleet will have DP by the end of 2013 6 month window required for hiring and training crews Investment in Locomotives and Crews

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