Supply Chain Partners in Coal
Jay Roberts
Account Manager - Bulk
2012 Northeast British Columbia Community Coal & Energy Forum
October 11, 2012 - Chetwynd, British Columbia
1
Business Units
Coal mines
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%
Ports
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
2
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)
Origin
To Vancouver
Rail Miles
To Prince Rupert
Rail Miles
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
Powder
River
Basin
3
4165 nautical miles / 13.6 days
No queue
3964 nautical miles / 12.9 days
Advantage Prince Rupert
5 day queue
Variance
Gladstone
Miles
201
Sailing days
0.7
Vessel queue
(5)
Dollars (total trip)
$ (33,000)
Aug., 2012 Metal Strategies report
Value Proposition – Met Coal
4
4165 nautical miles / 13.6 days
No queue
4415 nautical miles / 14.4 days
Advantage Prince Rupert
10 day queue
Variance
Fukuyama
Miles
(250)
Sailing days
(0.8)
Vessel queue
(10)
Dollars (total trip)
($106,000)
Aug., 2012 Metal Strategies report
Value Proposition – Thermal Coal/Petcoke
5
 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
6
New Mine Projects
1
Quintette (Teck)
2 Coalspur (thermal)
3
Summit Coal
4
HD Mining
5
Xstrata Coal Canada
6
13
10
7
6 Mount Klappan
7 Cardero Coal
8 7Roman Mountain (Peace River)
9
5 9 4 11
8 1
3
Echo Hill (Hillsborough) (thermal)
12
2
16
10 Kailuan Dehua (Gething)
11 Canadian Dehua (Wapiti River)
12 Alberta Coal (Fox Creek) (thermal)
13 Atrum Coal (Groundhog)
14
14 Coalmont
15 County Coal
16 Transalta
23
1
2013
2014
Projects Underway
4
2015
5 76
8
2016
16 9
15 12 13
2017
7
A Solid Agenda in Place
Becoming a
True Supply
Chain Enabler
A Great
Franchise
Delivering
Superior
Growth
Outside-in
Perspective
Balancing
Operational
& Service
Excellence
Creating Solid
Value for our
Shareholders
DNA of
Innovation
Execution
Through
People
8
A Supply Chain Approach
Proactive
communication
Closer
relationship
Supply
Chain
Approach
Joint
monitoring and
metrics
End-to-end
resource
planning
Collaborative, transparent, data-driven process
9
Coal - Supporting Significant Export Growth
Prince Rupert
RTI Capacity*
24 M
Vancouver
11M
PMV Capacity*
*Metric Tonnes
45 M
34 M
Convent Capacity*
20M
10 M
4M
CN Coal Franchise
Existing mines & expansions
Potential new mines
*Metric Tonnes
*Short Tons
Aiming to Double our Coal Export Franchise
New Orleans
10
Mines
Railways
Port Terminals
Vessels
Help synchronize
production plans with
each link of supply
chain (mine, rail, port
and vessel) and
facilitate growth plans
for existing and new
mines
Manage constraints at
the ports and facilitate
expansions to maximize
coal throughput
Build relationships with
key stakeholders
Minimize vessel dwells
Integrate a supply chain concept across each segment from
the mine to the end customer
Our Supply Chain Approach
11
Ridley Terminals Supply Chain Logistics
Vessel Lineup
Ridley Terminals
Inventory
Tonnes Date
Tonnage
Required
Trains
Req’d
74,200
Shi Dai 2
30-Sep
99,010
0
0.0
77,000
Kaiyo
30-Sep
Max
allowed
200,000
52,190
4.4
Trains
Loaded
1.0
Empty
To Mine
2.0
Days
Remaining
Mine XX
Tonnage
0
68,000
5
48,012
Potential vessel demurrage: recovery plan in motion with customers and Ridley Terminals
Enhancing our Supply Chain
12
Advantages
Transparency
Visibility
Engagement
Communication
Synchronizing:
Mine
Rail
Port
With vessels
Improving from “Good to Great” Service
13
18MMT
24MMT
30MMT
40+ MMT
14MMT
J F M A M J J A S O N D
2012
J F M A M J J A S O N D
2013
3rd
Stacker /
Reclaimer
J F M A M J J A S O N D
2014
4th Stacker /
Reclaimer
J F M A M J J A S O N D
2015
2nd rotary dumper,
new thaw shed,
35 acres to add
storage
Ridley Terminal Expansion Plan
Additional land
to add storage,
new track and
construction of
2nd berth
14
 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
15
 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 2013-14 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
16