A Canadian consortium has purchased the Port of Churchill and the Hudson Bay Rail line from OmniTRAX.
The Hudson Bay Rail line and the Port of Churchill have returned to Canadian ownership after a deal was announced for the Arctic Gateway Group to purchase the assets for an undisclosed sum. Arctic Gateway Group is a public, private partnership comprised of Missinippi Rail Limited Partnership, Fairfax Financial Holdings and AGT Limited Partnership.
OmniTRAX purchased the port and the 627 mile long Hudson Bay rail line from the Canadian National Railroad in 1997, but was never able to expand its core business beyond grain and a handful of breakbulk cargo. After flooding forced the rail line to close in 2017 OmniTRAX declined its duty to bring the line back into service and tried to declare force majeure, arguing the estimated C$60M cost of repair work made the line unviable. It then tried to find a buyer for the assets.
The rail line is the only land transportation link to Churchill (there is no road) for supplies, so the outage left the area reliant on air freight and some ocean shipments. The government announcement said repair work would begin right away; “Construction crews have been mobilised and work will begin immediately. All efforts will be made to restore the rail service before winter 2018.”
The immediate priority is to get the rail line up and running to deliver food and fuel supplies to Churchill and surrounding communities, but restoring the port as a trade link to Manitoba is also on the agenda. “All those involved agree that this generational project has the potential to create northern jobs as well as ensure that northern communities have the goods and supplies they require, while at the same time restoring and increasing trade and export capacity for natural resources and agricultural commodities through a North Gateway,” said Paul Rivett, Director of Arctic Gateway Group.
In the past wheat was the mainstay of the ports business, and the Canadian Wheat Board (CWB) steered around 500,000t of wheat annually through Churchill, but the port lost this business due to market reforms. The CWB wheat export monopoly ended, and the subsidies that went to OmniTRAX to use Churchill were phased out. Grain exports stopped in 2015.
How the new owners will be able to overcome the economics of Churchill’s remote location, and the high maintenance cost of the railway line across muskeg and permafrost is unclear. While details are not known the Canadian Federal Government is putting up funding for both the purchase and the cost of repairs. “Fairfax/ AGT and the Consortium of First Nations and Communities are committed to working with the Government of Canada, Provinces and the Private Sector to build an Arctic Gateway for Canada to the world,” Rivet said.