Saskatchewan’s ninth short-line railway could be running by mid-October.
Great Sandhills Terminal (GST) of Leader, Sask., has signed a memorandum of understanding with Canadian Pacific Railway to purchase 188 kilometres of rail line for $6.3 million.
If all goes according to plan, the deal will close Oct. 12.
The line being sold runs northwest from the CPR main line west of Swift Current, through Leader to Burstall, near the Alberta border. It also includes a nine km spur line running from Burstall to a Spectra Energy plant at McNeil, Alta.
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The grain company said in a news release the continued operation of the Empress short line is essential to the continued operation of the terminal.
“GST’s goal is to ensure the long-term viability of the railway lines and rail service to customers and communities along the lines,” it said.
In addition to GST, there are commercial elevators at Cabri and Prelate, Sask., several private elevators and producer car loading sites along the line.
GST chief executive officer Jim Major said although rail traffic on the line has been steadily increasing the past five years, its long-term future has been in doubt.
CPR told the terminal company as far back as 2003 that it wanted to either sell the line or discontinue its operation because there wasn’t enough traffic to justify upgrades to the track.
Abandonment would have been disastrous for the terminal, which in the past few years has been shipping about 140,000 tonnes annually.
Major said traffic on the line increased from 2,235 cars in 2003 to 4,003 cars in 2007. About half the traffic is gas from the Spectra Energy plant and another 30 to 35 percent is grain from GST.
He thinks business will continue to grow once GST takes over the line.
“There is certainly an opportunity to move more grain out of the area,” he said.
GST added a 6,200 tonne storage bin last year and is looking to expand its business to include rye, peas and canola, beyond its shipments of wheat, durum and malting barley.
The company will have to raise $3 million from investors, including farmers, businesspeople and towns and municipalities along the line.
It has also applied for an interest-free loan from the provincial government equal to 32 percent of the purchase price, and is hopeful CPR will provide a loan or equity investment.
Investors can either invest directly in the new company, Great Sandhills Railway Ltd., a wholly owned subsidiary of GST, at a cost of $100 per share, or they can buy shares in GST, which will then invest that money in the rail company.
GST shares will be sold for $150, with a minimum purchase of 50 shares. The offering is for a minimum of 3,000 shares ($450,000) and a maximum of 60,000 shares ($9 million).
A memorandum will be available providing more detail on the offering and the intended use of the proceeds, and the company will be holding public meetings in the area soon.
“We feel pretty confident that we’ll raise the money,” said Major. “This will bring a lot of benefits to communities all along the line and I’m sure they’ll recognize that.”
He said the railway company will create six full-time and five part-time jobs.
The president of operations for the rail company will be Perry Pellerin, a former employee of Canadian National Railway and currently head of GNP Consulting, a transportation and logistics consulting firm.
The railway will buy two locomotives and lease another.
It’s looking into purchasing new fuel-efficient locomotives from the United States that consume 60 percent less fuel.
Keeping the line in service will also keep an estimated 10,000 trucks a year off local highways, helping reduce road maintenance costs.
GST was created in 1995 and initially had an operating agreement with Saskatchewan Wheat Pool. That ended in 2004 and the company is 100 percent producer-owned.
It has minority equity interests in GNP Consulting and Alliance Grain Terminal Ltd., a 102,000 tonne export facility located at the port of Vancouver.
