OmniTrax has accepted a letter of intent from a group of Northern Manitoba First Nations wanting to purchase the Port of Churchill and the Hudson Bay Railway.
It was first reported several weeks ago that the Denver-based transportation company was considering selling its Manitoba assets.
The letter triggers a 45 day due diligence period in which both parties will work together to “ensure that a purchase becomes reality,” said a news release from OmniTrax Canada issued Friday.
“Having visited many communities along the rail line, it became clear to me that the rail line served as a utility for these remote communities and that for the line and the assets to truly succeed, First Nation participation in ownership and management was essential,” said Merv Tweed, president of OmniTrax Canada and a former Conservative MP from southwest Manitoba.
OmniTrax Canada has agreed to work with the undisclosed First Nations for a number of years ensuring a smooth transition. The company says the federal and provincial governments will also be approached to support the purchaser and ensure the success of the deal.
According to Canadian Grain Commission figures, only 187,800 tonnes of wheat, durum and lentils were shipped through the port this year — well below Churchill’s typical seasonal volume of greater than 400,000 tonnes.
Prior to the end of its single desk in 2012, the Canadian Wheat Board was responsible for over 90 percent of the grain shipped through the port. As part of the legislation ending the CWB’s monopoly, the federal government introduced the Churchill Port Utilisation Program, providing grain companies with a per-tonne incentive for shipping grain through the port until 2017 (up to a maximum of $5 million per year for five years.) The rate in 2015 was $9.20 per tonne. Bill C-18 also included $4.1 million over three years to maintain the port during the transition.
Further details on the sale are expected in the New Year.
- What Grain Transportation Problem? Prairie Drought Overshadows Need for Long-Term Transport Investment
- Grain & Trains: How Oil is Part of the Solution to Western Canadian Logistic Woes