CN has pipeline of growth worth hundreds of millions: analyst
Benoit Poirier of Desjardins Capital Markets outlines numerous big-money projects that CN is uniquely positioned to benefit from.
MONTREAL— The construction of a new potash export terminal in Prince Rupert, B.C. should add hundreds of millions of dollars to Canadian National Railway’s annual revenues from carrying potash, gas-based urea and coal in the coming years, an industry analyst said.
Benoit Poirier of Desjardins Capital Markets said Canpotex’s option to build its new potash export terminal in Prince Rupert, B.C could generate about $500 million a year in additional revenues for the Montreal-based railway.
CN is the exclusive railroad serving the port, a position that could help it capture half the potash market by 2016.
Canpotex markets fertilizer abroad on behalf of the three biggest Saskatchewan producers: Potash Corp., Agrium Inc. and the American potash producer Mosaic Co.
The consortium plans to spend about $800 million to increase its capacity at Prince Rupert to 11.5 million tonnes per year by 2020. Poirier estimates CN’s rail costs would be less than $100 million.
Indian fertilizer company IFFCO also recently selected the Becancour Waterfront Industrial Park in Quebec to establish a $1.2-billion gas-based urea plant that would use CN’s network to serve customers in the U.S. Midwest.
Construction of the fertilizer co-operative’s fifth ammonia urea plant in the world and first in North America is expected to take about 18 months and be operational in about five years. Shipped volumes weren’t immediately known but the facility would have a capacity of 1.3 million tonnes per year.
Railway service to the port was one of the reasons Becancour was selected after IFFCO considered 50 other locations. It also has a year-round deepwater port and access to natural gas supply.
Poirier said Coalspur Mines’ decision to export thermal coal from Alberta through Port Rupert could net CN another $277 million of annual revenue, up from $200 million a year.
It could reap the benefits from a potential International Longshoremen’s Association strike scheduled for the end of September. A strike would likely divert traffic to Vancouver and Prince Rupert in the west and Halifax and Montreal in the east.