14 December 2004
Fording May Increase
Payments to Canadian Pacific After Ruling
Fording Canadian Coal Trust,
the world's second-biggest exporter of coal used to make steel, said it may have to
boost payments to Canadian Pacific Railway Ltd. after losing a preliminary decision in a contract
dispute.
A federal Canadian agency yesterday ruled in favor of Canadian Pacific, the country's No. 2 railway.
While terms of the arbitrated decision weren't released, Fording said today that the railroad may
be entitled to 27 percent of future revenue increases from British Columbia coal exports.
The dispute involved Canadian Pacific and the partners of Elk Valley Coal Partnership, which is 60
percent-owned by Calgary-based Fording and 40 percent by Teck Cominco Ltd.
of Vancouver. The railway said it believes the contract entitles it to a proportional increase in
revenue from five mines as the price of export coal, which has nearly doubled this year, rises.
Fording said in today's statement that the railway could receive 33 Canadian cents (27 cents) of
every C$1.23 in additional revenue if Canadian Pacific prevails when the case concludes. Fording
said the amounts could change because they're based on 2004 prices and currency rates, and 2005 coal
rates haven't been set.
Neither Fording nor Canadian Pacific, based in Calgary, responded to requests for comment.
The Canadian Transportation Agency backed the railway.
Shares of Fording fell 19 cents to C$87.77 at 4 p.m. in Toronto. Teck Cominco rose 68 cents to
C$34.68. Canadian Pacific rose C$1.75 to C$39.40.
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