Teck is upgrading its coal handling infrastructure at Neptune Terminals in North Vancouver to handle more metallurgical coal exports. | Rob Kruyt

Canadian National Railway (TSX:CNR) will invest $125 million in rail improvements as part of a new five-year rail agreement signed with Teck Resources (TSX:TECK.B).

Neptune Terminals in North Vancouver, which handles most of the metallurgical coal that Teck mines in B.C., is undergoing an upgrade. Teck is a part owner of Neptune Terminals, which handles both coal and potash.

Under a new five-year agreement, CN has agreed to make $125 million worth of rail upgrades. The agreement and investment will allow Teck to increase its shipments of metallurgical coal through North Vancouver, as well as “other” west coast ports, the company said.

CN also serves Prince Rupert, where steelmaking coal mined in B.C. is shipped through Ridley Terminals. Ridley Terminals’ main customer is Conuma Coal, but Teck has also been increasing its shipments of coal through Prince Rupert.

"This agreement and the associated infrastructure investment will provide us with rail capacity to match the major upgrades underway now at Neptune Terminals,” Teck CEO Don Lindsay said in a press release. “We expect this will lower our total transportation costs and improve overall rail and terminal performance.”

Markets reacted favorably to the announcement. Teck’s shares took a 5% bump Wednesday, December 4 on the announcement.

nbennett@biv.com

@nbennett_biv