Trafigura buys U.S. coal, commodity terminal

LONDON/HOUSTON, June 3 (Reuters) – Commodity trader Trafigura said Friday it was paying Ormet Corp $28 million for the idled Burnside bulk terminal in Louisiana and will invest $100 million to reopen the terminal to handle coal, bauxite and alumina.

The terminal sits on the Mississippi River adjacent to an alumina refinery that Ormet said last month it was restarting after five years.

The terminal would be the second on the Lower Mississippi River with potential access to rail as well as barge shipments of coal, which gives greater flexibility to exporters than terminal operators who depend on barge delivery.

“We are aware that currently the U.S. faces real constraints in supplying coal. The 20 or so terminal facilities across the country are simply maxed out,” Simon Collins, a director of Trafigura Beheer, said in a press release.

“The redeveloped terminal will reduce pressure on existing facilities while providing a vitally needed multimodal logistics platform on the Mississippi,” Collins said.

Around 11.5 million short tons (10 million metric tonnes) of throughput, including all bulk commodities, are expected annually. Previously, capacity was listed at less than half that. The 40-year-old terminal has been idle since 2008.

Under the terms of the deal, Trafigura will also provide services to Ormet’s alumina refinery.

The potential for unloading railed coal to ships at the terminal, if developed, would be a “huge advantage” for a a U.S. export shipper, said New Jersey-based coal trader Frank Kolojeski.

The terminal originally had only capability to load coal from vessels onto rail cars for import, he said.

The terminal is located adjacent to the Canadian National rail line that serves CN’s IC Rail Marine Terminal, a big coal-handler downriver from Burnside. And it has a spur off that line.

Depending on barges alone means dealing with seasonal issues, such as high water on the river, currently in spring flood phase, and the availability of barges in fall grain harvest season, he said.

As coal demand worldwide has grown, and key exporting countries have had logistical or weather issues with deliveries, U.S. coal exports have become a more important factor in world coal trade this year. (Reporting by Ikuko Kurahone and Bruce Nichols; Editing by Marguerita Choy)