The Ridley coal export terminal in Northern BC, which has been suffering through a dismal year of collapsing exports in the face of weak international prices, recently published its 2014 annual report on its website.

And it’s a doozy.

Annual reports usually are written with a hint of sunny can-do optimism. They trumpet every shred of good news, present even the direst challenges as golden opportunities, and paint a vision of a bright and profitable corporate future.

But Ridley’s 2014 annual report is written differently. There’s no sunny optimism, just a litany of woes. You can’t read it without thinking that the authors are as depressed as the coal markets that are dragging down their business.

  • The sense of doom starts from the top.

    In a prefatory letter, Ridley’s board chair admits: “this has been a challenging year due to the significant decline in shipments because of the decline in world coal prices.”

    “The long years of work to create a viable cooperation with First Nations has been eroded stemming from title issues related to the proposed sale.” -George Dorsey, President & Chief Operating Officer, Ridley Terminals International

    The statement from the company’s president and COO is even more stark:

    “The year 2014 has been a difficult one in many respects. The announced sale process of [Ridley] has failed to move forward. The long years of work to create a viable cooperation with First Nations has been eroded stemming from title issues related to the proposed sale. Both of these set-backs are a concern to management. The key customers of the terminal face ever increasing financial challenges with coal prices on a decline and mine delays and closures having reduced projected RTI volume by in excess of 10 million tonnes. These market forces are a threatening development

    And the very first paragraph of the report reads like an admission of defeat.

    After four consecutive years of growth in volume handling at the terminal, 2014 saw a decrease in volumes shipped through the terminal, this was a direct result of depressed coal markets. Over supply [sic] of export coal, with little to no increase in demand, drove down seaborne coal prices significantly during the current reporting period. Several of RTI’s customers made decisions to curtail or shutdown [sic] mining activities, until market conditions turnaround [sic]. As a result, terminal rail unloading volumes decreased by 40.98% or 4,793,000 tonnes during 2014 when compared to 2013, for a total of 6,904,000 tonnes unloaded (2013: 11,697,000 tonnes). Ship-loading volumes decreased by 41.31% or 4,870,000 tonnes during 2014 for a total of 6,919,000 tonnes loaded (2013: 11,789,000 tonnes). Net operating profit for the terminal for 2014…fell to $18,354,000 (2013: $43,043,000) for a decrease of $24,689,000 or 57.36% over 2013.

    Low prices, depressed markets, declining throughput, collapsing profits, and major customers literally closing up shop: it’s easy to imagine that the folks in the Ridley offices are feeling blue. Heck, they didn’t even bother to proofread the opening paragraph of their annual report! (Did you notice that the very first sentence of the annual report’s summary was a run-on?)

    But what must be especially disturbing to Ridley’s management is that if anything, the terminal’s financial woes have just started. For example, Ridley’s throughput fell another 46 percent in the first four months of 2015, compared to the same period in 2014.

    There’s a clear lesson here for would-be coal terminal developers in Washington and Oregon: it’s a terrible time to be entering the coal export business. Just a few years back, Ridley’s glowing prospects must have given coal companies hope that they could replicate that success here in Washington. But Ridley’s finances serve as a different sort of example today: a real-time demonstration of the folly of sinking millions of dollars into infrastructure serving one of the most volatile and reviled commodities on the planet.