Omnitrax looks for buyer for port of Churchill

The Port of Churchill, which includes Canada’s most northerly grain export terminal, is up for sale.

Merv Tweed, president of OmniTrax Canada, confirmed that the company is looking for a buyer for the port as well as Hudson Bay Rail (HBR), the company that owns and operates the railway line between Churchill and the Pas, Man.

Tweed said OmniTrax has already received expressions of interest from a number of potential buyers.

“The two businesses will be sold together,” he said.

“We’ve had expressions of interest on it in the last three to six months, and that’s what’s kind of prompted us to continue to move forward.

“We’re hoping to have something done, at least papered to some degree, by the end of the year.”

Tweed said reduced grain volumes and high operating costs were two factors that influenced the company’s decision to sell.

Grain shipments through the port of Churchill were down sharply this year, the result of a late harvest and fluctuating commodity prices that prompted some famers to delay grain sales and deliveries.

The costs associated with operating a railway that serves a number of small remote communities were also prohibitive.

“After a period of time, we’ve come to realize that Hudson Bay Rail not only (serves Churchill) for grain … but it also serves a lot of communities along the rail line and … the costs of doing that just become unreal at times,” he said.

“We’ve built a lot of efficiencies into our operations and we’ve made a lot of changes for the positive, but we just think that it’s time that someone else maybe takes a chance and takes a look at it.”

Tweed said OmniTrax has made its intentions known to Ottawa as well as Manitoba’s provincial government.

If a deal to sell the assets cannot be negotiated, the company will explore all options, including closures of the port facility, the rail line or both, he added.

“I think we’re going to look at every option at this point, and one of those options is to discontinue service,” he said.

“We don’t want to do that. We believe that the value of the rail line socially to the communities that it serves is vital, so we’re optimistic that someone or something will come forward that’s viewed as a proposal that everyone can accept.”

Grain shipments through the Port of Churchill are expected to fall below 200,000 tonnes this year, down from approximately 500,000 tonnes in a normal shipping season.

Sinclair Harrison, president of the Hudson Bay Route Association, said until recently, OmniTrax as well as grain shippers were optimistic about the facility’s future.

However, that momentum appears to have been derailed by low grain volumes this year.

“They did have a dramatic downturn in shipping this year,” Harrison said.

“They were at 184,600 tonnes as opposed to 540,000 last year and 640,000 the year before that.”

Harrison said the port still represents a feasible option for grain shippers in northeastern Saskatchewan and northwestern Manitoba.

However, the pending expiry of the Port of Churchill Utilization Program (PCUP) in 2017 could have a negative impact on grain shipments through the northern port.

The five-year, $25 million PCUP subsidy was designed to offset reduced grain volumes that were associated with the elimination of single-desk marketing in 2012.

Tweed said the decision to sell the port and HBR will not impact OmniTrax Canada’s other operations.

OmniTrax also owns the Carleton Trail Railway, a Saskatchewan-based short line that runs between Prince Alberta and Saskatoon.

Contact brian.cross@producer.com

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