Port of Vancouver in talks for new export facility

The Port of Vancouver turned the spotlight on itself in two big ways Wednesday, announcing that it’s working on a deal with a global company to build a new export facility and welcoming a visit from Gov. Chris Gregoire, who touted that deal and other work by the port to create jobs.

The port has reached a preliminary agreement with BHP Billiton, a global mining company, under which the company would build an export facility at the port’s Terminal 5 to ship fertilizers for crops. The port continues to negotiate the project with BHP, and hopes to finalize terms of the deal and have a lease agreement in place by early 2012, Larry Paulson, executive director of the port, said Wednesday.

Paulson said the cost of the project has yet to be determined. Likewise, the number of jobs it would produce also has not been settled. If all goes as planned, construction of the export facility “probably” would finish in 2014, Paulson said, with it going into operation in 2015.

The project with BHP is significant, Paulson said, including the fact that it would eventually more than double the port’s cargo. The scope of the project “will surpass anything” the port has done previously, Paulson said, adding that “all I’m hearing from BHP Billiton is it will happen.”

Gregoire, speaking at the port’s Terminal 5, said the port’s effort to land BHP Billiton highlights its ability to attract employers with excellent land, water and rail access. She said she was looking forward to the BHP groundbreaking. “I intend to be here when it happens,” she said.

The port’s announcement and the governor’s visit come after several recent moves by the port to promote job creation in an otherwise lackluster economy. On Tuesday, for example, the port’s board of commissioners approved selling 20 acres to Farwest Steel Corp. for $5 million, enabling the company to build a new facility at which it hopes to eventually employ 228 workers.

The port’s plans with BHP Billiton call for building an export facility for potash, a natural mineral fertilizer that improves crop yields. The facility, to be built on roughly 30 to 40 acres of the port’s 218-acre Terminal 5 site, would include handling, storage, dock and rail facilities. BHP, headquartered in Melbourne, Australia, would ship potash by rail to the port, where it would then be loaded onto ships bound primarily for Asia. The company would haul the potash from a mine it’s developing in Canada’s Saskatchewan Basin.

Mark Young, port and logistics manager for BHP Billiton, said in a news release that the Terminal 5 site is “attractive” and will be able to handle the company’s production needs. “Designing and developing an efficient, world-class port and logistics system is an important part of achieving our goal of building a successful, low-cost potash business,” Young said.

Patty Boyden, director of environmental services for the port, said potash is a “nonflammable, noncombustible” salt considered to be nontoxic to aquatic organisms by the U.S. Environmental Protection Agency. Boyden said the potash would be stored in fully enclosed facilities.

“We’re just early in the process,” she said. “We will need to go through a rigorous process to evaluate environmental matters.”

Gregoire lauds loop

During her visit to the port, Gregoire also highlighted the completion this summer of the port’s Terminal 5 rail loop project, saying it offers more opportunities to bring jobs to the region. The $14.6 million, 6-mile-long track allows unit trains, which can be more than a mile and a half in length, to be handled within the port, reducing congestion on the regional rail system by 25 percent, port officials said.

The loop is a key phase of the port’s West Vancouver Freight Access project, a planned 27-mile expansion of track to improve rail access to port property, eliminate rail yard congestion and aid waterfront development.

A draft study of the West Vancouver Freight Access project estimates the project will cost $148 million from 2011 to 2017, when it’s expected to be completed. And port officials said Wednesday that landing BHP Billiton as a new tenant at Terminal 5 will aid in the construction of the West Vancouver Freight Access project.

The draft study, by consulting firm Moffatt & Nichol, says the port faces a $63 million shortfall on the project. As a result, the port must borrow a total of $75.5 million between 2011 and 2017, the study says. That amount would cover the $63 million shortfall and the $12.8 million in interest expense associated with the cost of borrowing money to build the project.

The study says that development of the freight access project is “highly dependent” on the port landing a tenant for Terminal 5, which would increase port revenues. Paulson said Wednesday the effort to secure the deal with BHP Billiton “significantly improves our ability to attract borrowing and to attract grants” to build the West Vancouver Freight Access project. BHP Billiton is counting on the project as part of its plan to set up shop at the port, Paulson said. “It’s a positive thing.”