Construction of a new grain collection facility and transportation hub is still on track at Northgate, Sask., near the Canada -U.S. border.
However, a major American grain company will not be involved in the project.
Ceres Global Ag Corp., the project’s main proponent, announced earlier this month that Scoular Co. will not be involved in funding, developing and building the proposed facility
Ceres, which is based in Toronto, recently terminated its arrangements with Scoular. Instead, Ceres will use its own subsidiary company, Riverland Ag, to design and develop the Northgate grain facility.
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Scoular is a Kansas-based grain trader with more than 70 offices and facilities in North and South America. Its global annual sales are valued at more than $6 billion.
Scoular had been expected to play a major role in the Northgate facility, but company officials learned in late January that Ceres had unilaterally terminated the agreement.
Circumstances surrounding the termination are still being discussed, Scoular officials said last week. Details are not being released.
“This decision is disappointing to Scoular and, more importantly, is a setback for customers at Northgate who will be deprived of access to our long-established international shipping networks serving end-use customers,” said Bob Ludington, Scoular’s chief operating officer.
He said Northgate was one prong in Scoular’s much larger strategy to serve producers and end users through an extensive transportation and logistics network and an expanded grain buying presence.
“Scoular will continue to aggressively pursue that strategy in Canada and elsewhere,” Ludington said.
Ceres plans to spend an additional $17.4 million this year to complete construction of the grain facility and other infrastructure, including oil and gas transload facilities.
“We looked at all the options for Northgate and concluded that building out the site, advancing the energy transload business and having Riverland design and develop the grain elevator was the best risk-return option for Ceres,” said chair Gary Selke.
“Northgate presents an exciting opportunity for Ceres and will open a whole new logistics outlet for Canadian farmers and energy producers to market their products in the (United States), Mexico and beyond.”
Ceres chief executive officer Michael Detlefsen said the Northgate project will give the company an opportunity to “fundamentally retool its grain business,” transforming Riverland from a passive grain storage model to an active trading company.
Ceres said in its third quarter report to investors that it decided to use Riverland Ag to develop the grain facility because of the uniqueness of Northgate’s location, which is in the heart of a wheat and oat production region.
The company said 178 million bushels of Canadian grain and oilseeds are produced within 160 kilometres of the proposed facility. The location also offers access to the BNSF rail system and an ability to buy freight transport, to which no other elevator in Western Canada has access.
This site would allow Riverland Ag to deliver crops such as canola to Mexican customers in unit trains. It would also allow Riverland to develop a durum export program through its existing facility in Duluth, Minnesota.
