While the terms of the contract are undisclosed, the coal will come from Teck’s CP-served operations in southeast British Columbia to export ports in Kamloops and the Vancouver area.

According to the railroader, coal freight rates will be similar to current ones, though it noted rates were volume-based and that a higher rate could be realized if export volumes fell below target levels.

As the new agreement progresses, CP will discuss longer term arrangements with Teck Coal.

According to news service Reuters, an arbitrator ruled in July that Teck could switch some export traffic from CP to rail rival Canadian National Railway to lower its shipping costs.

At the time, Teck said its per-ton average transportation costs, including rail and port fees, were anticipated to be $US33-35 for last calendar year.

Teck Coal is a subsidiary of Vancouver-based operator Teck Resources.