While Cargill Ltd. says it still hasn’t made a final decision to pull out of the proposed Roberts Bank terminal, speculation has already begun about who might be a new partner for Saskatchewan Wheat Pool in the $175 million project.
And most say it’s a pretty short list.
It’s easier to say who’s not likely to get involved, a number of grain industry officials said in interviews last week.
That has led to suggestions that investors from outside the grain industry might be potential partners for Sask Pool. Some say the railways, which have a financial interest in the efficient movement of grain and rail cars to and from Vancouver, are prospective investors.
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But others say the railways are unlikely to get involved.
“The real issue is getting grain origination,” said United Grain Growers chief executive officer Brian Hayward, and that would seem to rule out the railways.
Cargill president Kerry Hawkins agrees, saying any partner in a project like Roberts Bank has to “bring grain to the table.”
“If you don’t bring grain then you aren’t going to be invited to the table,” he said. “The railways don’t have any grain … and if you don’t have grain then you can’t run an elevator.”
A spokesperson for CP Rail said that while the company supports anything that will improve grain handling efficiency at the west coast, he is not aware that the company has any interest in investing in a grain terminal.
Hawkins said Cargill hopes to make a decision before the end of December whether it will remain part of the Roberts Bank project.
“Right now we’re looking at what the various options might be and how we should proceed,” he said Dec. 8.
The future of the Roberts Bank project is up in the air following Cargill’s decision to buy 50 percent of Alberta Wheat Pool’s Vancouver terminal. Industry observers say there is now no reason for Cargill to stay involved in the Roberts Bank project, which was slated to open in 1999.
Hawkins said the AWP deal has obviously altered Cargill’s original thoughts about Roberts Bank, but added the company will thoroughly analyze the situation before making a final decision.
Sask Pool officials continued to say this week that the terminal project will go ahead, with or without Cargill.
The pool and Cargill jointly hold an option on land at Roberts Bank. That option expires in March, and if one partner pulls out, the rights revert to the other party.
Cargill and Alberta Pool say they intend to increase the annual handling capacity at the Vancouver terminal to six million from 4.2 million tonnes, which some say raises questions about the need for a new terminal at Roberts Bank.
“The port of Vancouver has not ever, we believe, reached its maximum throughput,” said Kent Magarell, spokesperson for James Richardson International, which operates Pioneer Grain.
His company believes Vancouver can handle 20 million tonnes and combined with five million tonnes potential at Prince Rupert Grain Ltd. terminal, that’s enough to meet foreseeable export demand from the West Coast.
Gordon Cummings, chief executive officer of Alberta Wheat Pool, said if Prince Rupert operates at peak efficiency, there is no need for Roberts Bank.
“If you resolve that … then the building of Roberts Bank would be an even greater overcapacity situation.”
Sask Pool officials have based the Roberts Bank project on projections of big increases in exports from the West Coast to meet rapidly growing demand from Pacific Rim countries. Plans call for the terminal to ship up to four million tonnes annually.
Who’s likely not in the running
- Canadian grain companies like Manitoba Pool Elevators, Pioneer Grain Co. or United Grain Growers have neither the financial resources nor the inclination to get involved in such a massive undertaking.
- None of the major U.S.-based grain companies seem likely to replace Cargill. Archer Daniels Midland is now a major shareholder in UGG, which owns a terminal at Vancouver. ConAgra’s main interest is in moving Canadian grain south to supply its American processing facilities. And smaller players like Louis Dreyfus aren’t big enough to participate.
