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Supply Chain Partners in CoalSupply Chain Partners in Coal

Jay RobertsAccount Manager - Bulk

2012 Northeast British Columbia Community Coal & Energy Forum

October 11, 2012 - Chetwynd, British Columbia

2CN’s Network Spans North America

Coal mines

PortsBusiness Units Share of CN

Revenues

Intermodal 20%

Grain and Fertilizers 17%

Petroleum and Chemicals

16%

Forest Products 14%

Metals and Minerals 11%

Coal 7%

Automotive 5%

Other revenues 10%

Coal represents 10% of CN carloads

CN Markets

Transborder 28%

Global Asia 26%

Domestic Canada 22%

Domestic US 18%

Global Europe 4%

Global South America 2%

Based on 2011 revenues

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Powder River Basin

CN

CP

BNSF

Origin To Vancouver Rail Miles To Prince Rupert Rail Miles

NEBC (CN) Pr. George-Kamloops-Vancouver 800 (CN) Pr. George-Rupert 610

AB (CN) Jasper-Kamloops-Vancouver 650 (CN) Jasper-Pr. George-Rupert 830

CN network provides built-in redundancy for coal export shipments via West Coast

CN has direct access to three terminals on the west coast (Neptune and Westshore in Vancouver and RTI in Prince Rupert)

Multiple Options to West Coast

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Variance Gladstone

Miles 201

Sailing days 0.7

Vessel queue (5)

Dollars (total trip) $ (33,000)

Aug., 2012 Metal Strategies report

5 day queue

3964 nautical miles / 12.9 days3964 nautical miles / 12.9 days

4165 nautical miles / 13.6 days4165 nautical miles / 13.6 days

No queue

Advantage Prince Rupert

Value Proposition – Met Coal

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4165 nautical miles / 13.6 days4165 nautical miles / 13.6 days

4415 nautical miles / 14.4 days4415 nautical miles / 14.4 days

10 day queue

Variance Fukuyama

Miles (250)

Sailing days (0.8)

Vessel queue (10)

Dollars (total trip) ($106,000)

Advantage Prince Rupert

Aug., 2012 Metal Strategies report

No queue

Value Proposition – Thermal Coal/Petcoke

6Advantages of Canadian West Coast Coal

Geopolitically North America is a very stable environment

CN network provides a built-in redundancy of three ports and two separate routes to export

Canadian coal has many advantages Competitive alternative source versus Australian & Indonesian coal

Established & proven quality coal for the Japanese, Chinese and Korean markets

Proven reserves with the existing mines that can be expanded & new mines that are being developed

Is closer via the Port of Prince Rupert to Japan, China and South Korea than Newcastle, Australia

Canada has all the infrastructure for rail and port required to export additional tonnage with marginal capital expense

CN – Rupert is one supply chain on West Coast of North America with available (or expandable) capacity from current to 30MMT in 2014, with possibility to expand to 60MMT by 2016

7Projects Underway

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51

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32

New Mine ProjectsQuintette (Teck)

Coalspur (thermal)

Summit Coal

HD Mining

Xstrata Coal Canada

Mount Klappan

Cardero Coal

Roman Mountain (Peace River)

Echo Hill (Hillsborough) (thermal)

Kailuan Dehua (Gething)

Canadian Dehua (Wapiti River)

Alberta Coal (Fox Creek) (thermal)

Atrum Coal (Groundhog)

Coalmont

County Coal

Transalta

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2013 2014 2015 2016 2017

21 4 5 67 8 9

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A Solid Agenda in Place

Becoming a True Supply

Chain Enabler

Delivering Superior Growth

Balancing Operational

& Service Excellence

Creating Solid Value for our Shareholders

Execution Through People

A Great Franchise

Outside-in Perspective

DNA of Innovation

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A Supply Chain Approach

Collaborative, transparent, data-driven processCollaborative, transparent, data-driven process

Coal - Supporting Significant Export Growth

Prince Rupert

Vancouver

New Orleans

RTI Capacity*

PMV Capacity*

Existing mines & expansions

Aiming to Double our Coal Export Franchise

Aiming to Double our Coal Export Franchise

11M

24 M

34 M

45 M Convent Capacity*

4 M10 M

*Short Tons

CN Coal Franchise

Potential new mines*Metric Tonnes

*Metric Tonnes

20M

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11Our Supply Chain Approach

Integrate a supply chain concept across each segment from the mine to the end customer

Mines

Help synchronize production plans with each link of supply chain (mine, rail, port and vessel) and facilitate growth plans for existing and new mines

Railways

Manage constraints at the ports and facilitate expansions to maximize coal throughput

Port Terminals

Build relationships with key stakeholders

Vessels

Minimize vessel dwells

12Enhancing our Supply Chain

Vessel Lineup

Tonnes Date

Ridley Terminals Inventory

TonnageRequired

TrainsReq’d

TrainsLoaded

EmptyTo Mine

Days Remaining

Mine XX Tonnage

74,200Shi Dai 2

30-Sep

77,000Kaiyo

30-Sep

99,010

Max allowed200,000

0

52,190

0.0 0

4.4 1.0 2.0 5

68,000

48,012

Ridley Terminals Supply Chain Logistics

Potential vessel demurrage: recovery plan in motion with customers and Ridley Terminals

13Improving from “Good to Great” Service

AdvantagesTransparencyVisibilityEngagementCommunicationSynchronizing:

MineRailPortWith vessels

AdvantagesTransparencyVisibilityEngagementCommunicationSynchronizing:

MineRailPortWith vessels

14Ridley Terminal Expansion Plan

2012 2013 2014 2015

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

14MMT

18MMT 24MMT40+ MMT

Additional land to add storage, new track and construction of

2nd berth

3rd Stacker / Reclaimer

2nd rotary dumper, new thaw shed, 35 acres to add

storage

30MMT

4th Stacker / Reclaimer

15Investment in Sidings in BC North

Targeted investment in advance of forecasted traffic increase in the Ridley corridor

Priorities based on reducing stand-off time / train meets

As volumes increase in the future, it is a matter of adding more sidings to handle the traffic

40MMT = 8 loaded trains per day = 16 trains [loaded + empty] per day

CN to construct five long sidings in 2012 on B.C. North Line as part of C$155-million multi-year capital program to expand freight train capacity to handle rising traffic in Edmonton-Prince Rupert corridor

CN has extended or constructed 21 sidings to handle 12,000-foot trains between Edmonton and Prince Rupert since 2004

16Investment in Locomotives and Crews

Major locomotive acquisition program to accommodate anticipated traffic growth and to improve operational efficiency

65 new high-horsepower locomotives as well as 96 second-hand high-horsepower locomotives that will be upgraded

Retirement of older, high-maintenance locomotives and the cascading of less fuel-efficient main-line units

Delivery in 2013-14 of 65 new locomotives includes the acquisition of alternating-current locomotives (AC) - much higher adhesion or train-pulling ability at low speeds – will be assigned to heavy-haul coal service in northern British Columbia and Alberta

50 per cent of CN’s high-horsepower locomotive fleet will have DP by the end of 2013

6 month window required for hiring and training crews