Canadian National Railway will sell “substantially all of the assets” of Illinois Central RailMarine Terminal near New Orleans to Raven Energy.
CN expects the $73 million deal, which is subject to regulatory approval, to close in about 45 days. Raven is an affiliate of Foresight Energy and Cline Group.
Upon closure, the deal calls for CN to enter a 10-year rail transportation agreement with Savatran, another Foresight and Cline unit, to haul coal from four Illinois mines to the Convent, La., rail transfer facility.
The facility, which transfers bulk commodities and liquids between trains, ships and barges, is located on the east bank of the Mississippi River, west of New Orleans.
The rail shipment accord with Savatran calls for that company to ship a minimum annual volume of coal via CN.
The deal comes as North American railroads and bulk ship lines are in another year of increasing their shipments of export coal through various gateways.
“These initiatives will allow CN to make better use of its southern rail corridor, while expanding its participation in the growing export of Illinois Basin coal,” said Luc Jobin, CN’s chief financial officer.
Foresight Energy CEO Michael Beyer said the deal “firms up the logistics for our coal sales into the international coal markets, which are a significant and growing part of our business.”
Foresight said it would expand capacity at the Convent facility to 8 million tons of export coal a year, about double current levels. That could be just the start. The company said it has the potential for another 8 million-ton expansion “as market conditions warrant.”
Contact John D. Boyd at email@example.com and follow him on Twitter @jboydjoc.