Ownership of the proposed coal port at Cherry Point north of Bellingham shifted abruptly Tuesday, with a Goldman Sachs subsidiary dropping out and a major Mexican businessman stepping in.
The developments led opponents of the proposed Gateway Pacific Terminal to point to questions about the financial viability of exporting coal for power generation in Asia. But the supporters of the project appear to be moving forward.
SSA Marine, whose holding company, Carrix, will finance the big project, announced that GS Infrastructure Partners, the Goldman Sachs subsidiary, sold its 49 percent of FRS Capital Co. FRS is Carrix's parent company and a key part of the coal port effort.
The controlling 51 percent throughout the transactions is held by the Smith and Hemingway family, descendants of the family of Frederick Smith, founder of what became SSA Marine. The company terms itself “the world's largest independent, privately-held marine terminal operator, with activities at more than 210 terminal facilities.” The SSA statement said the family purchsed Goldman's share of FRS Capital, and the business magnate, Fernando Chico Pardo, then made a sizeable investment of capital in return for the 49 percent share.
SSA Marine is headquartered in Seattle, and has major terminals in other countries as well as the United States. Its application for permits to ship some 52 million tons of bulk commodities from Cherry Point has drawn widespread opposition because of its focus on coal exports.
Goldman Sachs last July posted a warning for investors that coal exports would decline in future years. Tuesday’s announcement prompted a prominent coal opponent, Crina Hoyer of ReSources for Sustainable Communities, to say, “Goldman Sachs’ stepping away from coal export is yet another sign from Wall Street that coal export is a losing investment.
"We already know that local Main Street businesses would feel the negative impacts from coal export. And communities across the region are saying no to this bad deal because of health, climate, environmental and economic impacts.”
Fernando Chico Pardo is a major international investor and a longtime associate of Carlos Slim, one of the world’s wealthiest men. Chico Pardo, 61, is listed by Business Week as a board member or executive of dozens of businesses in Mexico and internationally; his major investments are Promecap and Grupo ASUR, both Mexican. A profile by the Kellogg School of Management at Northwestern University touts his interest in social welfare and the United Nations.
Chico Pardo and SSA Marine said “substantial new capital injection” accompanied the ownership shift, but gave no details and SSA Marine did not immediately return calls for more information.
Referring to Goldman Sachs, Carrix Chairman Jon Hemingway stated in the news release, "We've been fortunate the past seven years to work closely with one of the world's leading investors in infrastructure and their fine people but appreciate that, as with all investment funds representing an array of investors, they approach their investments with a need to invest, hold and then sell over a defined time frame. They have been a valuable and collaborative partner in our business through a challenging time for our industry and we hope that we will get the opportunity to work with them again.”
The transaction is not expected to signal any lack of commitment to the terminal at Cherry Point; Goldman Sachs is moving on and Fernando Chico Pardo is moving in. Additional capital, as stated by SSA Marine, could be applied almost anywhere in the SSA universe; Gateway Pacific is a major investment but certainly not the company’s only large project.
Goldman may have become impatient with the length of proceedings to secure permits for the $664 million project; intense public opposition, particularly along the thousand-mile rail line from Wyoming, has caused public agencies to call for an intense and lengthy environmental review. Additionally, November’s election in Whatcom County put a new majority on the county’s governing board that is at least skeptical of the coal port and certain to pose detailed questions when asked to approve permits.
International coal markets, particularly in Asia, have been soft during 2013, but some analysts believe the market will rebound in coming years.
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