Hillsborough eyes new coal docks

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

Hillsborough CEO David Slater said the company is currently using a third party port in B.C. to export coal 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 required for foreign shipments.

About one-third of the coal production from the 520,000-tonne-per-year Quinsam mine is destined for export. The balance, sold domestically, is shipped through loading facilities located on the Middle Point Peninsula, about 6 km 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 loads at 2,000 tonnes per hour.

But eyeing rising demand in Asia, 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,” Slater says. “But our dreams will not be extinguished by having to wait.”

With backing from an Asian individual who Slater declined to name, Hillsborough hopes to raise the $25 million it will need to build the 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.

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.

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

The consortium has said it wants to raise its production to around 5 million tonnes within five years, compared with 240,000 tonnes last year.