Deal in principle announced for Churchill railway, port

Prairie pulse processor AGT joins buying group

Port of Churchill
The Port of Churchill in 2015. (CNS Canada photo by Jade Markus)

The federal government has announced an “agreement in principle” which will see a new partnership fix up northern Manitoba’s washed-out Hudson Bay Railway and take over the mothballed Port of Churchill.

Details of the agreement were slim at best in the government’s announcement Wednesday, except to say the buying group slated to take over the northern Manitoba assets includes Toronto-based investment firm Fairfax Financial Holdings; Regina pulse crop processor AGT Food and Ingredients; and Missinippi Rail Partners, a joint operation of Missinippi Rail Limited Partnership and OneNorth, a pair of groups representing northern communities in Manitoba and Nunavut.

The buying group’s agreement in principle with U.S. shortline operator OmniTrax, the previous owner of the rail and port assets, will “restore rail service to northern Manitoba and transfer ownership of the Port of Churchill,” the government said.

The new arrangement, the government said, has “active participation” from 30 First Nations and 11 non-First Nations communities in northern Manitoba, plus seven Kivalliq communities in western Nunavut.

“The people of northern Manitoba have long understood the value of the rail line,” federal Natural Resources Minister Jim Carr, a Winnipeg MP, said in the government’s release. “This agreement in principle allows those most affected to have a direct stake in the future and long-term interests of their communities.”

Wednesday’s announcement, the government said, “is a signal that negotiations are moving forward and a made-in-Canada solution is imminent.”

Missinippi and OneNorth “provide First Nation and community participation through their ownership stake and shortline rail experience,” the government said, while Fairfax and AGT offer “significant private sector leadership” as well as their own experience in shortline rail.

AGT — a supplier of lentils, peas, beans and chickpeas from the Prairies and other pulse-growing countries — and Fairfax are also “integral to the longer-term financial prospects of the Port of Churchill,” the government said.

Wednesday’s announcement appears to officially freeze out another prospective buying group, a consortium of Manitoba First Nations led by Chief Glenn Hudson of Peguis First Nation with a new operator, iChurchill Inc.

iChurchill said May 22 it had agreed to terms with OmniTrax in March for the port and railway, but last week halted any further negotiations, citing the federal government’s “unwillingness to engage in meaningful dialogue” on the buying group’s proposal.

‘Foundational’

OmniTrax in May last year closed down the Hudson Bay Railway, an asset the government described Wednesday as “one of the foundational pieces of transportation infrastructure” in northern Manitoba.

In the wake of flooding that spring, OmniTrax said the track bed was washed away in 19 spots, five bridges were “visibly damaged” and another 30 bridges and 600 culverts would need to be further assessed. It later said repairs would cost as much as US$60 million and it wasn’t prepared to pay without government assistance.

The federal government has said its 2008 agreement with OmniTrax calls for federal financial support to the railway, for which OmniTrax in return was to maintain and operate rail service through to Churchill until 2029. OmniTrax, Carr said in October, “has not met its obligations.”

Denver-based OmniTrax had bought the government-owned port and Canadian National Railway’s (CN) rail line from The Pas to Churchill in 1997. The rail line, completed in 1929, and the port facility, built by 1931, were set up to serve northern communities and provide an alternate shipping route into and out of Western and central Canada.

From a grain export perspective, railing grain out of certain areas of Saskatchewan and Manitoba up and out through Churchill instead of east to Thunder Bay is believed to shave up to three days off voyages to some ports in Western Europe.

But the port’s grain handle declined in the five years after the deregulation of its main customer, the Canadian Wheat Board. OmniTrax shut down the port facility and laid off its staff before the 2016 grain shipping season.

The port’s ice-limited shipping season, typically July through October, has been a benefactor of global warming in recent years, but warmer weather also makes the rail line, much of which is built on permafrost, less stable. — AGCanada.com Network

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