Project Brief: GCT Deltaport Berth 4 Prepared for: PCLC April 23, - - PowerPoint PPT Presentation

GCT Canada Limited Partnership

April 23, 2019

Project Brief: GCT Deltaport Berth 4

CONFIDENTIAL

Prepared for: PCLC

GCT Canada Limited Partnership

Outline

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• 1. About GCT
• 2. GCT Deltaport Expansion, Fourth Berth Project (DP4) overview

and project status

• 3. GCT submission to CEAA RBT2 Panel – Why?
• 4. Comparative analysis
• 5. The Ask

GCT Canada Limited Partnership

ABOUT GCT GLOBAL CONTAINER TERMINALS INC.

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GCT Canada Limited Partnership

GCT Global Container Terminals Inc.

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HQ in Vancouver, 4 million TEUs at leading global gateways

GCT CANADA

GCT Vanterm GCT Deltaport GCT Inc. HQ GCT Bayonne GCT New York

GCT USA

GCT Canada Limited Partnership

GCT Global Container Terminals Inc.

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• In 2007 GCT was acquired by Ontario

Teacher’s Pension Plan (OTPP) who

• wned 100% of the equity
• December 2018, IFM Investors and

BCI, British Columbia Investment Management joined OTPP as equity partners

• IFM Investors manages US$81B

globally of institutional funds. HQ in Australia with North America offices in New York City

• BCI manages $135B globally.

HQ in Victoria, BC

• GCT remains a majority Canadian-
• wned company with 3 exceptional

shareholders who are leading infrastructure investors with significant experience in the ports sector

Canadian & International Institutional Investors

GCT Ownership

GCT Canada Limited Partnership

Sustainable Operator

Investing in the communities in which we operate

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DELTA VANCOUVER Delta Chamber of Commerce BC Children’s Hospital Delta Farmland & Wildlife Trust BC Lung Association Delta Firefighters Greater Vancouver Board of Trade Delta Hospital Foundation Hastings Community Policing KidSport Delta Hastings Elementary School North Delta Blue Jays Baseball Heart & Stroke Foundation Operation Red Nose – Delta Society Mission Possible Reach Child & Youth Development Ride to Conquer Cancer Rotary Club of Tsawwassen UBC Supply Chain Program Tour de Delta Union Gospel Mission South Delta Secondary School Scholarship & Drama Program Vancouver Maritime Museum

GCT Canada Limited Partnership

Sustainable Operator

Investing in the communities in which we operate

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GCT Canada Limited Partnership

Responsible Stewards of Roberts Bank

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• GCT honoured with prestigious

Clean50 Top 15 clean projects award

• As part of our initiative to set the

standards for sustainability in the marine industry, all four GCT terminals are Green Marine certified earning “Excellence & Leadership” in nearly every category

• GCT Canada was recognized by CN

EcoConnexions Sustainable Partner program for 2018

• GCT Canada was recognized by CN

EcoConnexions program for 2018

Proven environmental performance

GCT Canada Limited Partnership

GCT DELTAPORT EXPANSION, FOURTH BERTH PROJECT (DP4)

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GCT Canada Limited Partnership

Marketplace context

Capture of U.S. destined discretionary cargo

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COMPETING FOR U.S. DESTINED CARGO

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GCT Canada Limited Partnership

Marketplace context

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CARRIERS REQUIRE FEWER BUT LARGER TERMINALS IN EACH PORT

Source: Drewry, Future of Ports and Shipping, 2015

Ocean Carriers & Alliances Terminals Consolidation has

• ccurred

Consolidation still needs to occur “The dominance of the three alliances has changed the character of that competition, as it provides a lot of leverage to alliances. A port with calls from the three alliances would ideally have three or more competing terminals that have exactly the right capacity to serve the calls from the respective alliances. Needless to say, this is rarely ever the case. Ports with three terminals and calls from three alliances can find themselves confronted with three alliances that predominantly use two terminals. Other ports might have two terminal operators that will have to deal with cargo from three

• alliances. Often the outcome of such dynamics

is a “winner takes all” phenomenon, where one terminal is over-utilised whereas the competing terminals will be underutilised.”

(Source: pg.63, The Impact of Alliances in Container Shipping, International Transport Forum, OECD/ITF 2018)

GCT Canada Limited Partnership

Pacific Gateway Container Trade

Historic Forecasts vs. Actual

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GCT Canada Limited Partnership

BC West Coast Overview

Capacity expansions vs. forecast

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GCT Canada Limited Partnership

Long-Term Canadian Port Infrastructure Investor

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History of GCT investment in Port of Vancouver

1997 + 2001

DP Commissioned + Expanded

2010

3rd Berth Expansion complete

COMPLETED

2018

Yard Expansion & Densification

PLANNED

Active plans

Investment at GCT Vanterm

Future

Investment at GCT Deltaport

$180M $300M $160M ~$1B+

GCT Canada Limited Partnership

Informed by Robust and Advanced Environmental Studies

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2014 2015 2016 2018 2019 Parsons Brinckerhoff Amec Foster Wheeler CPCS PGL Ausenco DATE VENDOR DESCRIPTION 2017 Roberts Bank Container Terminal Capacity Enhancement alternatives Conceptual Fisheries Offsetting Plans for the Proposed Deltaport Expansion Project Assessment of Policy Options to Satisfy Canadian West Coast Container Port Capacity Needs Preliminary Environmental Impacts Comparison: RBT2 & DP4 GCT Deltaport Expansion: Offsetting Outline and Approach Analysis of Capacity Options on the West Coast of Canada Black Quay

• GCT independently engaged expert advisors, environmental and engineering

consultants to examine capacity options for Canada’s West Coast. Based on their findings, we have concluded that incremental expansion of GCT Deltaport that would deliver up to 2 million TEUs of additional capacity in two construction stages is feasible. It may also have lower environmental impacts and deliver capacity at a lower all-in cost when compared to the proposed RBT2.

• GCT understands that GCT is not barred from submitting applications for

regulatory approvals, including under the Fisheries Act (which has been significantly amended since 2003) and under CEAA 2012.

• In this case, the VFPA is GCT's regulator under several statues (CEAA 2012 and the

Canada Marine Act). The VFPA’s PER process applies to activities proposed on lands and waters within its jurisdiction.

• After numerous engagements with VFPA, GCT has submitted the Preliminary

Project Enquiry (PPE) to VFPA in February 2019.

GCT Canada Limited Partnership

Preliminary Project Enquiry

GCT Deltaport Expansion, Fourth Berth Project (DP4)

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GCT Canada Limited Partnership

DP4 Project Timeline

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

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Operations Construction

Permitting

PER / Environmental Assessments Indigenous & Stakeholder engagement and consultation Pre-PER Environmental approvals

*Determination of whether DP4 is a designated project under CEAA / BC EAO = EA Process

1 2 4 5 3 6 7

*The Canadian Environmental Assessment Act, 2012 designates projects that require a federal environmental assessment to determine whether the designated projects

have the potential to cause significant adverse environmental effects. New Federal legislation (Bill C-69) may change the federal environmental assessment process and its application to proposed activities. The BC Environmental Assessment Office may also be involved with the EA Process if reviewable under Provincial Assessment. The processes may be harmonized.

Timing of Project Schedule may vary and will ultimately be determined by regulatory process timelines, business case and market conditions

GCT Canada Limited Partnership

Studies informing the DP4 project rationale

Engineering Studies

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Navigational Memo

• Ausenco, Capt. J. Swann

Engineering Studies (Project Design, Wharf Structure, Mooring Arrangements)

• Ausenco

Roberts Bank Terminal Capacity Enhancement Alternatives

• Parsons Brinckerhoff

GCT Canada Limited Partnership

Studies informing the DP4 project rationale

Environmental

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GCT Canada Limited Partnership

Studies informing the DP4 project rationale

Environmental

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Potentially lower environmental impacts

Infill = 56 ha Dredging = 43 ha Total = 99 ha Eelgrass 71% of total footprint (~70 ha)

Key Point: Overall lower environment impacts expected from smaller footprint, and in particular lower impacts to crabs and crabbing area are expected which is of significant importance to the Tsawwassen First Nation

GCT Canada Limited Partnership

GCT Deltaport Berth 4 Project

Project rendering

Short Sea Shipping Berth Expanded Rail Yard Expanded Container Yard Tsawwassen First Nation Marina & Tug Basin

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GCT Canada Limited Partnership

Deltaport Berth 4 Project

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Aerial Photograph with existing and proposed use

GCT Canada Limited Partnership

Habitat Survey 2013

Fill Area Dredge Area

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Fill

GCT Canada Limited Partnership

GCT Collaboration with First Nations

• TFN is a self-governing First Nation who has implemented the first urban

treaty in Canadian history

• GCT/TFN 2010 Memorandum of Understanding that sets out the

framework for respectful collaboration in a number of areas for the mutual benefit and future prosperity of both organizations and GCT maintains active dialogue with the TFN Executive Council and administrative officials

• Based on TFN input GCT commissioned the PGL report - a comparative

summary of RBT2 and early GCT Deltaport expansion concept effects

• Collaborative engagement continues to explore options and interests for

sustainable growth of container handling capacity while preserving the responsible stewardship and co-management of Roberts Bank

• Excerpt from TFN CEAA submission on RBT2
• “TFN is not satisfied that the full range of alternative means have been sufficiently analysed,

including the use of uplands adjacent to the existing terminals to construct a facility for container storage and sorting that would reduce the project footprint in the intertidal zone.”

• “ In the end, it is our view that, so far, the Proponent has not provided sufficient information

for the purpose of proceeding to a public hearing.”

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GCT Deltaport is located next to Tsawwassen First Nation (TFN)

GCT Canada Limited Partnership

Transformational Change through collaboration:

Labour, Clean Growth & Timely Capacity

• DP4 will be a semi-automated expansion incorporating the newest approach to

green infrastructure, taking into consideration climate impacts, community benefits and building on GCT’s collaboration with local First Nations

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Quote from the Senate Committee on Transportation (March 21, 2018)

• DP4 will be built in consultation

with labour, using innovation and new technologies while supporting quality well-paying jobs and middle-class growth

• DP4 can be brought on-line in a

cost-effective staged manner by densifying an existing terminal, making it responsive to changes in the ocean shipping industry and aligning it with capacity demands

Rob Ashton, President ILWU Canada “Now what the Port Of Vancouver is saying is, “We’re going to utilize your money to work against you, and by the way, you can’t have any ability to run the terminal, so we’re going to send it out to another corporation. Some other company, an investment bank

• r whatever it is”

“Then what happens is they create a fully automated terminal or mostly automated terminal, which then drives the current tenants either out of business or forces them to automate their terminals, which then drives workers out of jobs.” “With GCT at Deltaport, there has been some automation there. That automation has happened through discussions and negotiations with the labour unions that are represented there.”

GCT Canada Limited Partnership

DP4 Project Rationale

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• GCT is uniquely positioned to provide the needed container terminal

capacity on the Canadian West coast in the most timely, economic and sustainable way

Summary

 Provides needed port capacity at the right time  Environmentally responsible based on updated scientific studies and

current environmental policy

 Brownfield investment reduces footprint, cost and impact per TEU of

capacity provided

 GCT has decades of experience operating at Roberts Bank with

longstanding relationships with supply chain partners, community stakeholders, first nations and labour

 Leverages public and private investments into trade corridor with three

Class 1 rail infrastructure already in place

 Structure in place to attract even more investment from large Canadian

and international investors.

GCT Canada Limited Partnership

VFPA Project & Environmental Review Process

(PER)

Total Fill Area- 56 ha. Total Dredged Area- 43 ha. Berth #4

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GCT Canada Limited Partnership

VFPA Project & Environmental Review Process

Denial to review the application

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At Roberts Bank, expanding the existing Deltaport container terminal is not an option for two main reasons. First, Fisheries and Oceans Canada has prohibited further land reclamation inland from Deltaport, due to environmental sensitivity. Second, expanding Deltaport would mean one terminal

• perator would control a significant majority of the market for

container terminal services, Healthy competition is necessary to ensure users continue to pay reasonable rates for reliable service.

Taking all of the above factors into consideration, we will not be processing your Enquiry through our project and environmental review process at this time. The RBT2 Project is our preferred project for achieving the expansion of capacity to meet projected increases in demand.

GCT Canada Limited Partnership

Original RBT2 proposed locations

Related to 2003 DFO responses

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GCT Canada Limited Partnership

3 GCT SUBMISSION TO

CEAA RBT2 PANEL

GCT Canada Limited Partnership

GCT Submission to CEAA RBT2 Panel

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GCT Canada Limited Partnership

GCT Submission to CEAA RBT2 Panel

Why?

• GCT previously commented on the RBT2 project in 2014 (CEAR Document No. 111).
• In reviewing the information provided by the Proponent (VFPA) and those additional

from government departments and agencies with oversight, to date there have not been responses to the information requested outlined in the letter.

• The VFPA’s RBT2 project that was originally proposed in 2003 and then again

in 2013 is now outmoded and, GCT submits, no longer viable given changes in a number of market factors.

• It is GCT’s view that the long-term sustainability of Canada's western trade gateway is
• nly achievable through careful terminal design that reflects a modern, innovative,

and a more sustainable approach to planning and constructing such an expansion.

• As such, GCT’s submission to CEAA regarding the Proponent’s sufficiency of

information focuses on gaps in three key areas: 1. Project Rationale; 2. Alternative Means Assessment; and 3. Environmental Impact Statement.

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GCT Canada Limited Partnership

DP4 AND RBT2 COMPARATIVE ANALYSIS

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GCT Canada Limited Partnership

Comparison between DP4 and RBT2

34 DP4 RBT2* Cost/Capacity

• Lower cost (overall and $/TEU basis)
• Currently estimated at C$1.0 – $1.6 billion
• 2.0 million TEU of additional capacity
• More expensive (overall and $/TEU basis)
• Currently estimated at C$2.5 - $3.0 billion
• 2.4 million TEU of additional capacity

Subsidy

• No taxpayer subsidy required
• Significant subsidy likely to be required

Staged Construction

• Yes – Capex can be spent as demand requires
• ~3-4 yrs. IAA Process, 4-5 years construction
• Capacity available ~ 2029-2030
• No – Majority of capex needs to be spent upfront to

establish the terminal Island footprint and expansion

• f the existing causeway
• Capacity available ~2029

Commercial Structure

• Simple development agreement & lease amendment
• No complex interface issues
• Complex interface between Infrastructure Developer

and Terminal Operator

• More complex structure may lead to more disputes

Investor Commitment

• Fully committed Canadian Container Terminal

Operator (CTO) with existing volumes

• CTO required to commit to future lease payments

without any existing Gateway volume experience Project Participation

• GCT Owners are committed to the project
• No publicly-confirmed commitment by CTO or

Infrastructure Builder

• Project has already been abandoned once (2008)

Environmental

• Both projects face environmental impacts, however DP4 is expected to have a smaller footprint and therefore

expected to have less environmental impacts. Union Support

• Support indicated by key longshore and foremen union

(ILWU)

• ILWU recently issued a statement questioning the

project First Nations

• GCT has and is committed to meaningful consultation

and engagement at each stage of the process

• VFPA is proceeding to public hearing without

responding to substantial outstanding information requests and concerns expressed by Indigenous communities

* The statements on T2 above are based on GCT’s internal analysis and should not be relied upon by the reader without further verification and analysis

GCT Canada Limited Partnership

ASK AND NEXT STEPS

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GCT Canada Limited Partnership

The Ask and discussion

 GCT is asking for fair, transparent, timely and equal footing regulatory process for private sector project proponents where the local Port Authority is a proponent of a competing project  GCT has informed government of need for comprehensive analysis

• f preferred container capacity growth options for West Coast of

Canada  GCT is supportive of the Port Modernization Review in order to decouple current conflicted governance model of Port Authorities

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