Port of Churchill
A group of Manitoba's First Nations plans to buy the Hudson Bay Railway and the Port of Churchill from Denver-based OmniTrax Canada for an undisclosed amount.
OmniTrax said on Friday that it has accepted a letter of intent from the group for the purchase of its assets in Manitoba, and will work with the purchasers for "a number of years" to ensure a smooth transition in ownership of the railway that runs between the port and The Pas, Man.
Privately held OmniTrax Inc., which owns several short lines in North America, bought the 820-kilometre railway in 1997 for $11-million after the privatization of Canadian National Railway Ltd. It assumed ownership of the deep water Churchill port for $10. The deal announced on Friday includes a fuel tank operation that services the airport.
"It was always the ownership's intent to sell it back to Canadian ownership at some point in time," said Merv Tweed, president of OmniTrax Canada. "We've spent a lot of effort on the rail and on the port, spent a lot of money on upgrades and we think it's a good time to move forward with that."
Mr. Tweed said details on the buyers, which includes a growing group of First Nations, will become available after the 45-day due diligence period. "The understanding is this is beneficial for both [sides]. It's a rail that serves all of their communities," said Mr. Tweed, who says he will will stay on to work with the new owners.
The future of the unprofitable railway and port were cast in doubt with the 2012 move by the federal government to end the wheat-trading monopoly of the Canadian Wheat Board, which was by far the biggest customer for the port.
The Canadian Wheat Board, renamed G3 Canada Ltd. by its new owners, has been building a network of grain elevators, terminals and vessels that bypasses Churchill and uses the Great Lakes, St. Lawrence River and West Coast to move grain to foreign markets. The head of G3 has said the port's short shipping window and the railway's ability to handle only shorter trains provided "challenges."
Mr. Tweed said the change at CWB had no bearing on the decision to sell.
The railway and the port have "always needed government support," he said. "I think the challenge in the last few years is we are seen as an American company and I think governments have some resistance to be seen supporting financially companies other than Canada's."
The Hudson Bay Railway traverses muskeg and is notoriously unstable.
OmniTrax in 2014 abandoned plans to haul crude oil on the railway to ship on Hudson Bay, a reversal welcomed by safety advocates who pointed to frequent derailments.
Meanwhile, the port is iced in for about eight months every year.
OmniTrax said the deal requires the support of the provincial and federal government, which subsidizes upkeep of the railway and port.
OmniTrax is owned by Broe Group, a U.S. private equity company. Its short lines include the Carlton Trail Railway, which operates from Saskatoon to Prince Albert, and about 18 other railways in the United States.
Eric Atkins