Ottawa considers financial backing for deep-water port in Nova Scotia

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The Canadian government is weighing financial backing for a new deep-water container port in Nova Scotia, a surprising development at a time existing ports in Eastern Canada are processing far less cargo volumes than they can handle.

Prime Minister Justin Trudeau’s government is considering committing public money for the long-talked-about Melford International Terminal project just southeast of Port Hawksbury, N.S., according to Transport Department officials. The level of aid being sought by the project’s private-sector promoters is unclear but information obtained by The Globe and Mail suggests the government is evaluating a pledge in the range of $175-million.

The Melford project, which includes a 315-acre container terminal and 1,500-acre logistics park located on the Straight of Canso, has been on the drawing board since about 2007 but has never taken off. The developer is Melford International Terminal Inc., a group whose directors and officers include several Nova Scotia businessmen as well as Dan Bordessa, vice-chairman of Cyrus Capital Partners, a New York City-based hedge fund, according to a corporate filing.

“This is a serious proposal, with serious asks, with serious stakeholders,” said Mike Kelloway, a Liberal Party MP for the riding of Cape Breton-Canso, which would host the Melford port. “The government of Canada is looking at it really hard.”

The prospect of a major new privately controlled port threatens to shake up Canada’s established maritime system and its network of 17 major port authorities, which fall under federal control but set their own strategy and commercial direction. It also set up a potential battle on the East Coast as ports push to win more business and adapt to industry shifts, including a dramatic increase in the size of container ships over the past decade.

Estimated costs for the first phase of the Melford project top US$350-million, meaning federal money could make up a significant portion of the financing.

Nadine Ramadan, spokesperson for federal Transport Minister Omar Alghabra, confirmed the promoter submitted a funding application for the project under the government’s $4.6-billion National Trade Corridors Fund. She declined to say whether a final decision has been made to approve it.

There appears to be strong support within the Liberal government for the Melford development – mirroring enthusiasm for the project among local political leaders in a region of Canada that has been economically challenged for years. Eight of Nova Scotia’s 11 elected members of Parliament are Liberals.

“People have been waiting a long while” for this, said Neil DeCoff, a councillor for the Municipality of the District of Guysborough, which includes Melford. “The benefit is the work. It’s the jobs.”

Still, there is significant skepticism about the need for such a facility, particularly one that would tap public money while operating outside the public port authority system. Although they would not speak on the record, some shipping industry players questioned the wisdom of adding more container handling capacity in Eastern Canada at a time existing capacity is nowhere near its limit at the competing ports of Halifax, Saint John and Montreal.

Phase One of the Melford project would include two ship berths and equipment that could handle 1½ million 20-foot equivalent units, or TEUs, a year, according to a description of the project in a 2010 news release. A TEU is the measurement of a standard 20-foot shipping container.

Halifax, which stands to be most affected by Melford, has the ability to handle 1.2 million TEUs a year but only half of that is being used. The ports of Montreal and Saint John have excess capacity as well and all three ports also have plans to add more container handling volumes in the years ahead. In sum, there is an estimated 1.3 million TEUs of excess container capacity at the moment at Canada’s major eastern ports.

A Quebec government official said the province is concerned about the Melford project and what the addition of a new player means for existing facilities. The Globe is not naming the official as they were not authorized to speak publicly on the matter. Montreal is waiting on a decision from the federal government to a request for additional financing worth $150-million to help fund its own container terminal expansion project in Contrecoeur.

Spokespeople for port authorities in Halifax and Montreal declined to comment on the project. Saint John representatives could not be reached. Mr. Bordessa of Cyrus Capital did not return a request for comment.

Melford International has pitched the project as a Canadian northeast gateway that offers shipping companies a “faster and better alternative for North American origin-destination containerized cargo.” It would boast ice-free, deep-water docking with no draft restrictions, specifically to accommodate the largest container ships.

The promoter has no current website but an archived version of a previous website site says Melford would be the closest North American deep-water mainland port to Europe, Asia and the Indian subcontinent via the Suez Canal. The project would incorporate advanced technologies and layouts to give the port speedier processing times than existing facilities, the website says.

A report for the Nova Scotia government by infrastructure consultancy CPSC published in 2018 concluded that the ability of Halifax to handle ultralarge ships is limited and that greenfield container terminal projects in the province could offer significant operating efficiencies. But it said: “Any new terminal development is risky and should be driven by firm commitments from private-sector industry stakeholders who fully understand the shipping business and are prepared to shoulder most of the risk.”

Richie Mann, a former cabinet minister in the Nova Scotia government in the 1990s, has been the face of the project as Melford International’s vice-president of government affairs and marketing. He did not return requests for comment from The Globe but told the CBC this past February that global shipping conditions have been moving in Melford’s favour as trade routes shift from the Pacific Ocean to the Atlantic and some West Coast ports suffer from congestion.

“This project makes a lot of sense” and can be beneficial to Canada, he told the broadcaster.

Mr. Kelloway echoed that view. “It’s not a zero sum game” between Canadian ports, he said in an interview Friday. “Friendly competition can spark new opportunities.”

Since the Corridors Fund was launched in 2017, Transport Canada has announced 130 projects and committed $3.7-billion to marine, air, rail and road projects, according to the department’s website. The biggest federal funding commitment to date is $135-million for the Yukon government’s North Klondike highway corridor upgrades.