trending Market Intelligence /marketintelligence/en/news-insights/trending/wbqvkp_w94at77wpepkmhq2 content esgSubNav
In This List

Railway strike in Canada would be bad for business, miners warn

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


Railway strike in Canada would be bad for business, miners warn

A railway strike stands to disrupt Canada's mining sector, one of its top customers, should it prove prolonged, halting the transport of bulk commodities such as potash and coal and cutting off supply of inputs such as fuels and chemicals on which mines may depend.

Key unions at Canadian Pacific Railway Ltd. gave notice May 26 that they may walk off the job on May 29.

Some miners will have no alternative but to stockpile ore for as long as possible before curtailing operations if a strike fails to be resolved. "You're talking about millions of tonnes," said Brendan Marshall, a spokesperson for the Mining Association of Canada. "There's not a feasible alternative to move those goods." The worst case scenario, Marshall said, would be to cut-back operations.

Already the prospect of a strike has been blamed for temporary layoffs in the potash sector, which depends on rail for transport. In April, Nutrien Ltd. said it was laying of hundreds of workers at Canadian mines citing a backlog in Canada's rail system and the potential for a strike.

Marshall noted the mining sector regularly accounts for more than half of Canadian Pacific's freight revenues. A tally by S&P Global Market Intelligence of Canadian Pacific's revenue tons per mile — a measure of volume and distance cargo travels — shows that in 2017 much of what the railway company transports comes from the mining sector. Coal accounted for 16% of the count followed by potash at 11% with metals, minerals and consumer products at 8%. Grain, energy and intermodal container transport were also heavy users.

SNL Image

Teck Resources Ltd. depends on Canadian Pacific services for transport needs, notably in its coal division, but did not respond to a specific question about the degree to which a strike may impact operations. On the whole it would have an impact, Teck spokesperson Chris Stannell said.

"Any stoppage of rail service would be negative for the economy as a whole, including our business," Stannell said in a statement provided to S&P Global. "As such, we look forward to a prompt resolution."

Marshall noted some of Teck's coal operations are captive to Canadian Pacific. "That's a significant volume of product that's reliant on that railway," he said.

Meanwhile, Nutrien said in a statement that it was "very concerned" about the impact of the strike "and on our ability to supply key customers with the products they need."

The Mining Association of Canada has called for the federal government to intervene in a possible strike, recommending binding arbitration. In a May 28 letter to the government, Pierre Gratton, president of the Mining Association of Canada, said "the economy can ill afford the effects of a protracted labor dispute that grinds a half of Canada's rail freight capacity to a halt."

So far, the Canadian government has not tipped its hand. According to media reports, it has said it hopes the issue is resolved without intervention.

But if a strike materializes, Marshall doubts Canada would wait long before entering the fray and imposing a solution as in the past. "I think it could it could be a matter of days as opposed to weeks, but that depends on the decisions that the government makes," he said.