The head of one of Canada’s largest pulse crop exporting companies is optimistic we’ll see Western Canadian crops shipped through the Port of Churchill again.
AGT Food & Ingredients is one of the partners in a group that has reached an agreement-in-principle to purchase the port and the rail line leading to it from OmniTrax.
AGT’s CEO Murad Al-Katib describes the Churchill acquisition as a “generational” project, with potential to create northern jobs while restoring and increasing export capacity for grain and natural resources. He says they also see potential to import materials such as fertilizer and frac sand through Churchill.
The port’s proximity to the prairies and European markets, as well as Mediterranean shipping routes, has always been attractive. A warming global climate would also favour Churchill’s accessibility in the long term.
However, Churchill has to overcome the challenging economics of a very short ice-free shipping season and limited capacity, as well as the risks and costs associated with bringing ships into Hudson Bay and having a rail line partially built on permafrost. OmniTrax has not shipped any grain through the port since 2015, while the rail line has been inoperable since it was damaged by flooding in May 2017.
Port capacity in Vancouver has also grown substantially since the end of the Canadian Wheat Board — the Port of Churchill’s main user — in 2012, with virtually all of the grain terminals in Vancouver undergoing expansion or new construction in recent years. AGT itself announced a deal in December to replace a forestry export facility with a new grain terminal in Vancouver.
That being said, there’s still a bottleneck in the Vancouver gateway every August through November, notes Al-Katib. That happens to be when Churchill, with its four deep-sea Panamax berths and 140 thousand tonnes of storage capacity, is ice-free.
“We think Churchill is a very viable surge port for Western Canadian grain. We think there will be regular shipments of wheat, pulses and canola that can go out. In particular, when we have crop years like this year, when we have carryout stock from one year to the next, Churchill will be an opportunity,” he says.
Advancements in ice-breaking technology could lengthen the shipping window through Churchill, he says, noting the economics for hiring ice-breakers will improve as traffic increases.
The buying group includes Fairfax Financial Holdings and a consortium of 30 First Nations and 11 non-First Nations communities in northern Manitoba, and seven Kivalliq communities in western Nunavut. (Fairfax is also an investor in AGT, contributing $190 million to the company last summer.) Financial terms of the deal-in-principle with OmniTrax have not been disclosed.
Ultimately, it’s a long-term investment, says Al-Katib.
“Fairfax’s history shows they look out 100 years. They don’t just look out in the next quarter, next year or next five years, so when we look at northern passage, we think this is a Canadian Arctic sovereignty and economic development play,” he says.
Al-Katib also serves as the chair of the Canadian government’s National Agri-Food Strategy Roundtable, a group of agriculture and food industry leaders appointed to provide the federal government with advice for fostering long-term growth. He says the group is recommending the government develop a cohesive, long-term export infrastructure plan.
“We need to start thinking out 50 years on our gateways and corridors. We need to start reserving land and planning infrastructure. We need to have that rolling 50-year infrastructure plan, where governments are starting to think out in decades, not mandates. These type of things are very important,” he says.
Murad Al-Katib joined Shaun Haney to discuss the future of the Port of Churchill, as well as CN and CP’s recent hopper car purchase announcements, and the latest on trade barriers on pulse exports to India and durum in Italy. Listen to their conversation, here:
Related:
- AGT Food and Ingredients part of Churchill rail and port deal
- The challenges facing the Port of Churchill — A ahipper’s perspective
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