Saudi stake in G3 raises questions

Farmers and other grain industry players have good reason to wonder what effects the diplomatic standoff between Canada and Saudi Arabia will have on Canadian-based grain company G3.

According to media reports, Saudi Arabia may or may not be planning to sell its Canadian assets, including its share in G3, a company based in Winnipeg.

In 2017, G3 began constructing an export terminal in Vancouver, which is expected to be capable of handling eight million tonnes of grain annually. The grain terminal, on the north shore of Burrand Inlet, would be the first built at the Port of Vancouver in 50 years.

But many farmers are asking if G3 will proceed given Saudi Arabia’s hostile response to a Canadian government tweet criticizing the Saudis over human rights.

“A lot of farmers are starting to raise questions. They’ve been asking us as to what is the status of the construction and financing of the terminal in Vancouver,” said Phil de Kemp, Barley Council of Canada executive director.

“An additional terminal brings in more competition. And these new loop tracks (at the terminal) more efficiencies. If that gets pushed back, that’s certainly going to have a dampening effect on (grain) marketing.”

In 2015, Saudi Agricultural and Livestock Investment Co. (SALIC) and Bunge acquired a majority stake in the former Canadian Wheat Board to form G3. In 2016, SALIC bought a portion of Bunge’s shares to acquire a 75 percent stake in the joint partnership, according to a Reuters’ report.

Over the last three years, G3 has gone on a building spree, constructing country elevators in Manitoba and Saskatchewan and the terminal in Vancouver.

In March, G3 announced it would construct two additional elevators — one in Wetaskiwin, Alta., and the other in Maidstone, Sask.

The additional infrastructure should benefit western Canadian grain movement, which has been bogged down by record crop production and sluggish transportation to port in recent years.

The Vancouver terminal is especially critical for grain movement and reports suggest that construction could be completed in the fall of 2019, almost a year ahead of schedule.

Grain industry sources said no one in the trade knows if SALIC will dump its share in G3. However, cancelling the Vancouver terminal project is unlikely because another company would likely step forward and buy G3’s assets if the Saudis decided to sell.

Nonetheless, the Canada-Saudi diplomatic battle could affect G3’s future investment in western Canadian infrastructure.

A G3 spokesperson said all of this is speculation.

“Regarding the recent announcement from the Kingdom of Saudi Arabia, G3 is continuing with business as usual,” said Peter Chura in an email. “G3 is continuing with its ambitious expansion program, building new high-efficiency elevators in Western Canada, and G3 Terminal Vancouver, a next-generation grain export terminal on the West Coast.”

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