Fording Canadian Coal Trust

Fording Canadian Coal Trust was a Canadian royalty trust focused on metallurgical coal assets. Its principal holding was a 60% interest in the Elk Valley Coal Partnership, an operating partnership that produced hard-coking coal in British Columbia’s Elk Valley. Hard-coking coal is a key raw material for conventional steelmaking because it can be converted into coke and used in blast-furnace production. Through the Elk Valley partnership, Fording also held a 46% interest in Neptune Bulk Terminals (Canada) Ltd., which operated a dedicated coal-export berth at the Port of Vancouver. The trust was assembled in 2003 from coal-related assets associated with Luscar Ltd. and CONSOL Energy Canada Ltd. joint ventures, Teck Cominco Ltd., and the former Fording Coal Ltd. Fording Coal had earlier been connected to Canadian Pacific Railway before becoming independent from that corporate lineage in 2001. The creation of the trust placed a substantial Canadian metallurgical-coal portfolio into a publicly traded royalty-trust structure, giving investors exposure to coal production, export infrastructure, and the cash distributions generated by those assets. Fording’s operating exposure was concentrated in southeastern British Columbia rather than spread across a large number of commodities or geographies. The Elk Valley operations supplied hard-coking metallurgical coal primarily to the international steel industry. The associated interest in Neptune Bulk Terminals provided an important logistics link between inland mines and seaborne customers through Vancouver. Accordingly, the trust’s commercial identity was based less on consumer branding than on ownership of producing assets, partnership interests, transportation access, and royalty-trust distributions. Teck Cominco was already the minority partner in the Elk Valley Coal Partnership, holding the remaining 40% interest. On July 29, 2008, Teck Cominco announced an agreement to acquire all of Fording Canadian Coal Trust’s assets. The transaction closed on October 30, 2008, at a final cost reported at approximately US$14 billion. After the acquisition, the Elk Valley Coal Corporation was to be renamed Teck Coal Limited, bringing the principal operations under Teck’s control and ending Fording’s role as an independent listed coal trust. The trust was subsequently dissolved, with 2009 identified in existing reference material as the year of dissolution. Its disappearance reflected the consolidation of a major metallurgical-coal asset base into Teck Cominco, now Teck Resources. Fording therefore has historical importance as a large Canadian coal investment vehicle and as a predecessor structure to Teck’s modern steelmaking-coal business, but it is no longer an operating company or active public-market brand.

Fording Canadian Coal Trust emerged from the restructuring and consolidation of Canadian coal interests in the early 2000s. The trust was formed in 2003 using assets associated with Luscar Ltd. and CONSOL Energy Canada Ltd. joint ventures, Teck Cominco, and the former Fording Coal Ltd. Fording Coal had originally been a unit of Canadian Pacific Railway, but that connection ended in October 2001 before the trust was assembled. The resulting investment vehicle was organized as a Canadian royalty trust. Rather than operating as a diversified mining group, it concentrated on ownership interests in a defined set of coal-producing and coal-export assets. Its principal asset was a 60% stake in the Elk Valley Coal Partnership, while Teck Cominco held the remaining 40%. The partnership operated metallurgical-coal mines in the Elk Valley of British Columbia and produced hard-coking coal used predominantly in steelmaking. Fording’s exposure extended beyond mine production. Through its interest in the Elk Valley partnership, it also owned 46% of Neptune Bulk Terminals (Canada) Ltd. Neptune operated a dedicated coal berth at the Port of Vancouver. This infrastructure connection supported the movement of coal from British Columbia’s interior to overseas customers and gave the trust an integrated position spanning mining, partnership ownership, and export logistics. The trust became a significant publicly traded coal vehicle. Reference material describes its securities as trading under the FDG and FDG.UN designations on the New York Stock Exchange and Toronto Stock Exchange, respectively. Its reported market capitalization reached approximately US$11 billion in 2008, although that figure reflects the period immediately before its acquisition and should not be treated as a current valuation. A major change came in 2008, when Teck Cominco sought full control of the assets. On July 29, Teck Cominco announced an agreement to acquire 100% of Fording’s assets. The transaction was strategically significant because Teck was already the minority partner in the Elk Valley Coal Partnership and could consolidate the entire operating interest through the purchase. The deal closed on October 30, 2008, with a final cost reported at about US$14 billion. Following completion, the Elk Valley Coal Corporation was scheduled to be renamed Teck Coal Limited. This transferred the core mining business and associated interests into Teck’s corporate structure and removed the need for Fording to remain an independent royalty trust. Existing reference material identifies 2009 as the year in which the trust was dissolved. Fording’s corporate history consequently ends not with a bankruptcy or operational shutdown, but with an acquisition-led absorption into its former minority partner. Historically, Fording represents the use of a Canadian royalty-trust structure to hold cash-generating natural-resource assets. Its business was narrowly focused on hard-coking coal, but its strategic importance derived from the quality and scale of the Elk Valley resource base and its connection to an export terminal. After the 2008 transaction, the Fording name ceased to represent a standalone listed enterprise, while the underlying coal operations continued within Teck’s coal business.

• 2009

  Trust is dissolved

  [1]Fording Canadian Coal Trusten.wikipedia.org

  Existing reference material identifies 2009 as the year Fording Canadian Coal Trust was dissolved after the acquisition of its assets.

• 2008

  Teck Cominco announces acquisition

  [1]Fording Canadian Coal Trusten.wikipedia.org

  On July 29, Teck Cominco announced an agreement to purchase all of Fording’s assets.

• 2008

  Acquisition closes

  [1]Fording Canadian Coal Trusten.wikipedia.org

  The acquisition closed on October 30 at a final reported cost of approximately US$14 billion. The Elk Valley Coal Corporation was to be renamed Teck Coal Limited.

• 2003

  Fording Canadian Coal Trust is formed

  [1]Fording Canadian Coal Trusten.wikipedia.org

  The trust was created by assembling coal-related assets associated with Luscar, CONSOL Energy Canada, Teck Cominco, and the former Fording Coal.

• 2001

  Fording Coal separates from its Canadian Pacific Railway lineage

  [1]Fording Canadian Coal Trusten.wikipedia.org

  The former Fording Coal Ltd., which had originally been a unit of Canadian Pacific Railway, was separated from that corporate connection in October 2001.

A Canadian investment trust centered on large-scale hard-coking coal production in British Columbia and related export infrastructure.

• Metallurgical coal

  Elk Valley hard-coking coal

  Fording’s principal economic product was hard-coking metallurgical coal produced through its 60% interest in the Elk Valley Coal Partnership in British Columbia. The coal was primarily supplied to the steel industry, where suitable grades are converted into coke for use in blast-furnace steelmaking. The product was sold into international markets rather than positioned as a consumer-facing brand.

• Bulk-terminal infrastructure

  Neptune Bulk Terminals coal-export services

  Through the Elk Valley partnership, Fording held a 46% interest in Neptune Bulk Terminals (Canada) Ltd. Neptune operated a dedicated coal berth at the Port of Vancouver, supporting the export chain for coal produced in British Columbia. This was an infrastructure interest rather than a separately marketed consumer product.

• 2008

  Sale of all trust assets to Teck ComincoM&A

  Background

  Fording owned 60% of the Elk Valley Coal Partnership, while Teck Cominco owned the remaining 40%. Acquiring Fording would give Teck control of the principal metallurgical-coal platform and its associated terminal interest.

  Action taken

  Teck Cominco announced the transaction on July 29, 2008, and completed the purchase on October 30, 2008. The final cost was reported at approximately US$14 billion.

  Aftermath

  The Elk Valley Coal Corporation was to be renamed Teck Coal Limited, and Fording ceased to operate as an independent listed trust. Existing reference material identifies the trust’s dissolution in 2009.

  Final acquisition cost. Approximately US$14 billion (2008 transaction close)

  Source

1. 1Fording Canadian Coal Trusten.wikipedia.org