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GCT Canada Limited Partnership April 23, 2019 Project Brief: GCT Deltaport Berth 4 CONFIDENTIAL Prepared for: PCLC

Project Brief: GCT Deltaport Berth 4 - Port of …...Project Brief: GCT Deltaport Berth 4 CONFIDENTIAL Prepared for: PCLC GCT Canada Limited Partnership Outline 2 1.About GCT 2.GCT

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GCT Canada Limited Partnership

April 23, 2019

Project Brief: GCT Deltaport Berth 4

CONFIDENTIAL

Prepared for: PCLC

GCT Canada Limited Partnership

Outline

2

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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1

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.

5

• In 2007 GCT was acquired by Ontario Teacher’s Pension Plan (OTPP) who owned 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-owned 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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2

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 occurred

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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?

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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

CO

MP

LE

TE

D

2018 Yard Expansion & Densification

PL

AN

NE

D

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

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*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

or 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 operator 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 only 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

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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 of 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 of 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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GCT Canada Limited Partnership 37

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