Coal Dust Concerns Plague Fraser Surrey Docks Expansion Plan

Fraser Surrey Docks (FSD), which bills itself as “the largest modern, multi-purpose marine terminal” on North America’s West Coast, is in trouble. Business has declined dramatically since the 2008 financial crisis, with the company’s roster of full-time employees dropping from 500 to 230 in that time. Jeff Scott, president and CEO of FSD, recently told The Vancouver Sun that the company’s “future is in jeopardy.”

Scott hopes to revive the business by expanding FSD’s existing terminal to include a Direct Transfer Coal Facility capable of shipping an initial 4 million metric tons (MT) of United States coal to Asia each year. If approved, the plan would see coal loaded onto barges at the terminal, then taken to the mouth of the Fraser River by tugboats. “Once barges pass Sand Heads, they will be towed in tandem to Texada Island. From there the coal will be stored before transfer to a deepsea vessel for overseas export,” FSD’s permit application to Port Metro Vancouver (PMV) reads.

PMV is currently reviewing the proposal and has final approval over it.

Environmental and health concerns

Unsurprisingly, FSD’s bid to save itself has met with opposition. Environmental groups have expressed concern that the port expansion will cause “an increase in coal dust in the Lower Mainland, dirtying the air and contaminating crops and drinking water,” according to The Globe and Mail. They also believe that coal dust will increase residents’ risk of developing asthma, pneumonia, emphysema and heart disease, among other ailments.

And it’s not just environmental activists who are concerned. Just this week, CBC News reported that Dr. Paul Van Buynder, chief medical officer at the Fraser Health Authority, has called for an assessment of the health risks associated with the plan. Though he believes it is “likely that this will be a safe proposal,” he also said his organization is “disappointed with the extent of the information provided to the health department and … think[s] that the modeling that [it has] seen is insufficient to be confident that there won’t be health impact.”

Responding to such concerns, Duncan Wilson, vice president of corporate responsibility at PMV, explained to The Globe and Mail that FSD is required to commission studies on issues such as land use and health impacts and must hold open houses to explain how it will mitigate its actions. However, he also noted that coal is not a regulated commodity and as such, its trade cannot be restricted. That means “if there is a larger discussion of its effects on climate change, that’s a conversation beyond the port’s permit process.”

Similarly, Robin Silvester, CEO of PMV, said at PMV’s annual general meeting, held at the beginning of the month, that he only controls how things are shipped, not what is being shipped. “If you want to raise the question of what is traded, that’s a question that needs to be raised with the federal government, not the port,” he commented.

Does Asia even need coal?

Largely ignored in the debate over whether the FSD expansion should be allowed to take place is the question of whether Asian nations actually need US coal. As Coal Investing News reported last month, US coal giant Peabody Energy (NYSE:BTU) is convinced that they do, despite the fact that China is determined to control its use of the fuel. However, recent US export statistics are not encouraging.

Calling it a “troubling sign” for US coal producers, The Wall Street Journal reported last week that US coal exports fell 31 percent in April from the previous month due mostly to “slower demand growth in China … and increased production.”

As The Wall Street Journal phrased it, “[t]he export spigot for coal is beginning to close.” Whether it will reopen in the future is a question that those involved in the FSD expansion may want to consider.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Related reading:

Will China’s “Control Coal” Policy Impact the US?

China’s Clean Coal Game