Hillsborough eyes new coal docks on Vancouver Island

Vancouver – Hillsborough Resources (HLB-T, HLSRF-O) is gearing up to boost coal exports from its British Columbia mine after quietly arranging to acquire additional port facilities on a peninsula near the Vancouver Island town of Campbell River.

The move is part of Hillsborough’s long term plan to cut costs and take advantage of rising Asian demand by increaing production at its Quinsam coal mine to 600,000 tonnes per year from the current 520,000 tonne level.

Hillsborough chief executive officer David Slater said the company pays a third party to handle coal exports to customers in South America and the eastern seaboard because its own facilities on Vancouver Island are too small to handle the type of vessels that are required for foreign shipments.

About one third of the coal production from the Quinsam mine is destined for export markets. The balance is sold domestically and is shipped through loading facilities which are located on the Middle Point Peninsula, about six kilometres north of Campbell River.

Coal for the domestic market is transferred by truck to the Middle Point loading facility, which has a storage capacity of 15,000 tonnes and a loading rate of 2,000 tonnes per hour.

But Hillsborough wants to reduce its shipping costs and increase its ability to export coal by acquiring additional loading capacity in the Campbell River region.

With that goal in mind, the company has been negotiating with a private real estate firm to lease a 10 acre property close to tidewater and near its domestic loading facilities on the Middle Point Peninsula.

“We hope to be shipping coal [through the new facility] by the end of this year,” said Mr. Slater in an interview. “But our dreams will not be extinguished by having to wait,” he said.

With backing from an Asian individual who Mr. Slater declined to name, Hillsborough hopes to raise the $25 million it will need to build the necessary loading and conveyor systems that will be needed to load the coal into waiting sea vessels.

The property that Hillsborough is planning to use is owned by Middle Bay Properties, which acquired the site in a distressed sale from a fish farm construction company.

Once the new port facility is up and running, the company will no longer have to ship coal to foreign markets from loading docks on Texada Island, which is located in the Georgia Strait between Vancouver Island and the B.C. mainland.

Mr. Slater is hoping that the new facilities can store as much as 80,000 tonnes of coal and that it will soon be loading onto ships with the capacity to handle up to 85,000 tonnes.

“It’s going to be an interesting year,” he said. Mr. Slater was referring to the fact that Hillsborough is part of a consortium, known as the Peace River Coal Partnership, which planned to begin coal shipments from the former Trend mine on January 8.

Hillsborough holds a 20% stake in the partnership, which is led by Anglo Coal Canada, a subsidiary of Anglo American (AAUK-Q), the South African mining conglomerate.

The consortium has said it want to raise its production to around five million tonnes within five years from now, compared to 240,000 tonnes last year.