Decommissioning underway | The 100 year old facility couldn’t handle large ships; company sharing capacity with Cargill
Parrish & Heimbecker is decommissioning its century old grain terminal at Thunder Bay, Ont., citing inadequate size and the need for greater efficiency.
P & H executive John Heimbecker said the terminal’s size and draft are no longer sufficient to accommodate large, modern grain vessels.
“The terminal was basically 100 years old and the draft of the terminal and the size of the terminal were not sufficient to … compete in an open market environment,” he said.
“Dredging wasn’t really an option and the size of the terminal, which was 42,000 tonnes, wasn’t large enough to be able to load full ships.”
The P & H terminal was used regularly until last fall. It handled some grain earlier this year but has been inactive for several months.
The company will now load grain at Thunder Bay through a larger, more modern facility that was previously owned by Cargill.
Earlier this year, P & H entered a joint venture that saw it acquire a 50 percent ownership stake in the Cargill facility.
P & H had earlier indicated it might keep its old terminal open to handle commodities that weren’t covered in the joint venture with Cargill.
However, those plans appear to have changed. The licence for the P & H facility was cancelled Sept. 3.
Heimbecker said it isn’t clear what will happen with the old structure.
“We’ve started the process of de-commissioning it, but beyond that I don’t know what’s going to happen,” he said. “It’s not a terminal that one could sell back into the marketplace because the issues that plagued us … are also going to plague any potential new buyers.”
Heimbecker said deregulation of the western Canadian wheat market highlighted the need to find larger and more efficient terminal space at Thunder Bay.
Under the single desk, P & H couldn’t ship milling wheat to its own flour mills by water. Instead, it depended on the wheat board to co-ordinate grain shipments.
However, the company can now source and ship its own grain through Thunder Bay.
“Now we’re able to actually do that business directly ourselves, so that in and of itself creates a huge opportunity for us and it’s going to create a need for more capacity.”
Cargill president Len Penner said his company’s decision to sell Thunder Bay terminal capacity to P & H made sense for both companies.
“This is about creating a business arrangement that will help build a long-term sustainable business,” Penner said in a news release.
“Both of our terminals have been underutilized in past years. With P & H as our partner, we’ll make the business stronger by sharing costs and efficiencies.”
Heimbecker said the former P & H facility served the industry well.
“We put quite a lot of grain through it,” he said. “It’s not as though we’re taking a terminal out of circulation that could be long-term competitive.… That terminal just couldn’t be.”