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CPKC railway to trial hydrogen locomotives with Vancouver's Teck Resources

Agreement with CPKC to move coal from Elk Valley appears to overlap agreement with CN
After $800 million upgrade to the Neptune bulk terminal, agreement with CN required railway to spend $125 million on upgrades.

Teck Resources (TSX:TECK.B,NYSE:TECK) has signed an agreement with Canada’s new multi-national railway -- Canadian Pacific Kansas City Limited (TSX:CP, NYSE:CP) – for its Elk Valley coal operations in B.C.

The agreement overlaps with an agreement signed in 2019 with Canadian National Railway (TSX:CNR,NYSE:CNI). That agreement also was for the moving of coal -- from Kamloops -- to the Neptune bulk terminal in North Vancouver, as well as others.

Teck’s new agreement with CPKC – the newly formed company resulting from CP’s acquisition of Kansas City Southern Railway – runs to 2026. So does Teck’s agreement with CN.

Teck ships its coal through the Neptune terminals in North Vancouver and Ridley Terminals in Prince Rupert.

The agreement Teck signed with CN in 2019 to move coal from its four coal mines in the Elk Valley through the newly expanded Neptune terminal in North Vancouver obliged CN to spend more than $125 million enhancing rail infrastructure to handle increased freight volumes.

According to Teck spokesperson Chris Stannell, the agreements with CP and CN covering different routing.

"Teck will continue to use both CN and CPKC in the transport of products from our steelmaking coal operations to West Coast ports," he said in an emailed statement.

Teck said it plans to partner with CPKC to develop a pilot program that will use hydrogen-powered locomotives, with the trial to begin in 2024.

“This collaboration with CPKC to pioneer hydrogen locomotive technology supports our climate action strategy and our objective of achieving net zero by 2050,” Teck CEO Jonathan Price said in a press release.

“The agreement complements our Neptune Terminals investment and other secured West Coast port capacity to support the efficient movement of our high-quality Canadian steelmaking coal to our global customers.”

(This story has been updated with comments from Teck.)

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