Atlas Salt (TSX: SALT) has signed a non-binding memorandum of understanding with CN to evaluate multi-modal rail solutions for moving de-icing salt from its Great Atlantic Salt Project to customers across Eastern Canada and beyond.
The agreement, announced Thursday, sets out three areas of study. Those areas include rail movement of de-icing salt on lanes served by CN’s network, railcar supply and equipment solutions to support Atlas Salt’s distribution requirements, and transload arrangements linking the company’s marine distribution with CN’s inland rail network and logistics partnerships.
That last point is where the interest lies. The project’s updated feasibility study assumed salt would be trucked from discharge ports to end customers, which is a workable but expensive final leg. Folding rail into the equation could lower delivered costs, extend the reach of the product inland, and improve economics relative to the study’s base case.
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“Logistics is the single largest driver of delivered cost in the de-icing salt business, and we are systematically engineering every leg of our supply chain to maximize our competitive advantages,” said Nolan Peterson, chief executive officer of Atlas Salt. “Collaborating with a partner of CN’s calibre to explore building out the rail component of our strategy is an important step, and it reflects the disciplined, cost and value focused approach we are taking across the Project.”
Buck Rogers, CN’s vice-president of petroleum, chemicals and regional, said the railway looked forward to exploring how its network could support the movement of Atlas Salt’s product to market.
The MOU commits neither side to a definitive agreement. The two companies intend to work together in good faith to develop the scope, terms and commercial framework of a potential multimodal rail logistics partnership.
Atlas Salt is advancing the project toward construction, with earthworks underway and a financing package of C$350 million to C$400 million in senior secured debt being arranged. Export Development Canada issued a letter of interest in July for up to C$150 million of that total.
Atlas Salt last traded at $1.70 on the TSX Venture.
