Competitive rail rates needed for captive Canadian coal shippers

Elk Valley Coal Partnership, one of Canada’s largest coal exporters, has asked the Competition Policy Review Panel to review Canada’s policy framework for the rail transportation sector as part of its mandate to ensure that Canada’s national policies create a highly competitive economy and more and better jobs for Canadians. Elk Valley considers that monopolistic rail services create a significant barrier to its continued success in selling coal to the global steel industry.¬† The Panel, led by former BCE Inc. CEO Lynton (Red) Wilson, is expected to report to the federal Minister of Industry in June. In October 2007, the Panel released its consultation paper – ‘Sharpening Canada’s Competitive Edge’ – calling for stakeholder comment on issues related to investment and competitiveness.

“We welcome the Panel’s investigation of ways to create domestic conditions that foster the development of Canadian-based global businesses while attracting talent, capital and innovation in Canada,” said Boyd Payne, Elk Valley’s President and CEO. “No review of competition policy in Canada will be complete unless it addresses how we can achieve competitive, cost-based freight rates for major export industries that are dependent on rail transportation.”

Elk Valley owns and operates five mines in southeast British Columbia and one in west-central Alberta that produce specialised products for the steel industry. It is the largest supplier of steelmaking coal in the Northern hemisphere and accounts for more than 30% of the total tonnage handled by the Port of Vancouver. Elk Valley produces approximately 90% of all steelmaking coal produced in Canada and ships its products to customers in Asia, Europe, South America and North America.

Elk Valley’s mines are entirely dependent on rail to transport coal to its customers. Canadian Pacific hauls all of Elk Valley’s shipments from southeast British Columbia and Canadian National hauls all of Elk Valley’s shipments from west-central Alberta. There is no competition for rail services at any of Elk Valley’s mines. Each mine is captive to the carrier that serves it. All other export metallurgical coal mines in Canada are also captive to one railway. Regulatory change over the past few decades has not resulted in a reduction of railway market power over captive shippers like Elk Valley.

“We believe it is in Canada’s best interest for Elk Valley and others in the Canadian export coal industry to realise the benefits of competition in the provision of rail services,”¬†Payne said. “The Competition Policy Review Panel has a unique opportunity to contribute toward the effort to ensure that all Canadian businesses enjoy the benefits of competition, including those businesses, such as Elk Valley, that are held back from competing due to the exercise of railway market power. Our primary competitors in Australia enjoy competitive rail transportation today because of bold steps taken as a result of a review of competition policy similar to the mandate of this panel.”

Elk Valley’s full submission to the Competition Policy Review Panel is available at The Panel’s consultation paper – Sharpening Canada’s Competitive Edge – is available at