TORONTO (miningweekly.com) – Vancouver-based Teck Resources has secured improved rates for coal rail shipments from its mines in southeast British Columbia to ports in north Vancouver, the firm said on Monday.

A five-year rail agreement with Canadian Pacific Railway (CP) had expired at the end of March, and the new rate structure was established through arbitration proceedings.

Crucially, the new rates are not linked to the prices of the company's coal products, and the company said the arbitration decision will enable it to “substantially” reduce coal transportation costs.

Teck now expects average transportation costs, including rail and port costs, to be in the range of $33/t to $35/t for the 2009 calendar year, compared with previous guidance of $35/t to $37 /t.

Overall, the rail rates established by the arbitration proceedings are expected to result in savings of approximately $70-million for 2009 coal contract year, which began on April 1.

Teck also reported on Monday that it has entered a new agreement with Canadian National Railway (CN), which involves an interchange of coal trains between CP and CN at Kamloops, in British Columbia.

This will mean CN will now deliver some Teck coal to the Vancouver area.

“This important development provides for choice of rail carriers for some coal exports from western Canadian mines for the first time that Teck is aware of,” the firm said.

Teck may use the Kamloops interchange for up to 3,5-million tons until March 1, 2010, which represents about 15% of historic annual total Teck coal shipping volumes, CP said in a separate statement.

The companies did not disclose details of the CN interchange agreement.

However, CP said on Monday that the new arrangements would trigger changes in its operations.

"We will adjust our model, cost structure, and associated resources accordingly and continue to pursue all efforts to ensure this is the most cost effective move possible and that we maintain an efficient supply chain," said CP CFO Kathryn McQuade.

CP shares dropped 4,8% on Monday, to C$43,08 apiece by 16:24 in Toronto.

Teck also declined, by 2,1%, to C$19,57 a share.

The company's stock jumped 8% on Friday, after it announced that Chinese State-owned sovereign wealth fund China Investment Corp (CIC) will buy 101,3-million of Teck's class B subordinate voting shares for C$1,74-billion.

The proceeds will help Teck pay down its bank debt.

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