The Port of Churchill and the rail line leading up to it have been sold to a group that includes Saskatchewan based pulse and specialty crop exporter AGT Food & Ingredients.
After an earlier agreement-in-principle fell apart, the federal government announced the sale on Friday of the northern port and rail line from Omnitrax to the Arctic Gateway Group, which includes AGT, Toronto-based Fairfax Financial Holdings, and Missinippi Rail Limited — a consortium of First Nations and northern communities.
Financial details of the deal have not been disclosed. AGT says the deal includes multi-year contribution agreements with the federal government to support the share purchase, along with repairs of the port and rail operations. AGT also says it will not incur any material expenditure or additional debt as part of the acquisition. AGT and Fairfax, which also invested $190 million in AGT last summer, will operate the port and rail line under a 99-year operating agreement.
“Entering into this transaction completes discussions which started back in late 2017 with the Government of Canada, the First Nations and communities in the North and Fairfax to reconstruct and operate the Churchill line. Though the investment isn’t material for AGT from a capital expenditure perspective, we feel the ability to add further port access is important for our long term plan as the recovery of markets for Canadian agricultural products continues in the coming years,” says AGT’s president and CEO, Murad Al-Katib, in a statement.
Back in spring, Al-Katib said AGT believes Churchill can be used as a “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 said.
The Hudson Bay rail line leading to Churchill has been closed since May 2017 due to flooding. Omnitrax had been looking to sell the infrastructure for several years, and refused to invest the tens of millions of dollars needed to fix the washed out track.
The federal government says construction crews have already been mobilized to begin fixing the flood-damaged Hudson Bay rail line immediately — with the goal of restoring rail service before winter.
“We will commence the repairs and do all we can to restore service expeditiously and safely. We are racing against time. We will immediately begin our work to make the broader project also a reality,” says Paul Rivett, Arctic Gateway Group director.
Before the end of the Canadian Wheat Board’s single desk in 2012, the CWB historically accounted for over 90 percent of the volume moved through Churchill. Annual volumes typically exceeded 400,000 tonnes, but despite a federal incentive program that coincided with the changes to the CWB, shipments dropped to under 200,000 tonnes in 2015.
The port did not ship any grain in 2016, as Omnitrax laid off port employees weeks before the shipping season.