With little time to waste a new player has surfaced in the crucial sale of the Port of Churchill to two independent First Nations groups in the north. Investment firm Fairfax Financial Holdings from Toronto hopes to partner with One North and Missinippi Rail LP to wrest ownership from Denver, Colorado-based Omnitrax and set forth in motion the extensive repairs to the Hudson Bay Line damaged by severe flooding last May.
The Port of Churchill may be under new ownership soon. CBC News photo.
The new prospective partner will also bring a financially sound backing and a strong business base to the deal that Churchill officials and residents hope will secure access to the south and free them from isolation.
According to reliable sources, a negotiator for the federal government, former clerk of the Privy Council Wayne Wouters, has brokered a deal with the two potential owners.
“This development has the potential to contribute to an arrangement supported by First Nations and communities in northern Manitoba,” Natural Resources Minister Jim Carr said in a statement released Thursday.
“This would enable a sustainable business approach that results in a safe and reliable rail line.”
Paul Rivett, president of Fairfax Financial Holdings, said “we are optimistic about the prospects of northern gateways.” stated in a press release.
“The Churchill rail corridor and the Port of Churchill are important pieces of infrastructure for northern communities and to the economy of Canada. Partnering with First Nations and communities is the right model for this investment,” Rivett said.
He said Fairfax will rely on a company it has invested in, AGT Foods, to develop a plan that is “viable and profitable in the long term as a business.”
Earlier this week, Ottawa responded with an $18-million lawsuit against Omnitrax after it filed filed a claim for damages against the federal government under the rules of the North American Free Trade Agreement.
The head of the Fairfax, V. Prem Watsa, has been characterized as the “Warren Buffet of Canada” often investing in troubled companies and turning them into a positive entity. Watsa invested in BlackBerry and Fairfax has significant holdings in several other companies.
Fairfax Financial CEO and chair V. Prem Watsa.CBC News photo.
Omnitrax signed a memorandum of understanding with First Nations Consortium Missinippi Rail in June and then joined forces with One North to strengthen interests in purchasing Omnitrax’s Manitoba assets.
Churchill Mayor Mike Spence, in a written statement to CBC News, said transferring the port and rail line to a stable, strong northern regional ownership group is the highest priority. He is behind the efforts to find a partner to purchase the assets one hundred per cent.
“I am pleased that there are outstanding companies that also share this vision. We now need the negotiations expedited and [to] ensure our preparations for repairs to the rail line and port are ready for the 2018 season,” wrote Spence.
Owner and operator Omnitrax has shut down the Hudson Bay Rail line for the forseeable future due to flooding causing destruction of the tracks. Estimates for reopening are now being projected as far out as next spring.
The “unprecedented and catastrophic” damage will take months to repair, said Peter Touesnard, chief commercial officer at OmniTrax, the Denver-based owner of the rail line that brings supplies into Churchill. “Until we are able to get people physically on the ground and do a proper inspection, it’s difficult for us to truly know [how long repairs will take],” Touesnard.stated.
The closure is also straining the local economy and workforce preparing for the summer beluga whale season. Businesses are being forced to consolidate their work staff as the number of tourists traveling to Churchill this summer will be drastically reduced. News of at least five layoffs so far has spread and more are expected soon with the official announcement of the rail line suspension.
Tundra Inn owner Belinda Fitzpatrick in front of her restaurant. Hannah Manczuk photo.
Belinda Fitzpatrick, owner of the Tundra Inn had to deliver the bad news to five workers last Saturday. “Quite heartbreaking,” said Fitzpatrick. “It was really upsetting.”
Plans for a seasonal restaurant at the Tundra Inn slated to open next week had to be put on the back burner. Other businesses are facing the same challenges as the the closure becomes a reality.
Fitzpatrick has been calling guests and seeing if they are able to fly to Churchill instead. However, cancellations have been coming in and she estimates she will lose a majority of travelers planning to stay at the inn and hostel.
OmniTrax is reporting unprecedented and catastrophic damage to the rail line caused by heavy flooding resulting from heavy snow pack left over from two massive March blizzards. The company says the track gravel bed has been washed out in 19 locations along the line. At least five bridges have visible damage and assessments of 600 culverts and around 30 more bridges will need to be examined for structural integrity.
Flooding in the Churchill area and south along the rail line have forced its closure. Ricci O’connor photo.
“While the Hudson Bay Railway requires significant seasonal maintenance, the extent of the damage created by flooding this year is by far the worst we have ever seen,” Touesnard said.
Fuel for the town is an especially critical commodity, and while the port could be used, at least during the ice-free season, winter will pose another extreme hurdle and potential emergency for all of Churchill.
Home Hardware in Churchill under stress from the rail line closure. Facebook photo.
Dale de Meulles and his wife Rhoda have run Churchill’s hardware and lumber store for the past 14 years and with the train out they will be unable to stock lumber and other building and home supplies sufficiently. Although competition in town is not there, they will have a tough time meeting expenses and payroll for 10 staff people without money coming in.
“We don’t know how we’re going to survive, to be honest,” said Rhoda de Meulles.
Dale de Meulles gives two months as a deadline for the layoffs. Last year’s Port of Churchill layoffs have already put pressure on the workforce in the town and the rail closure will continue that strife. Seasonal workers will also be hit hard without the tourism dollars coming in.
“We’re trying our best to keep them,” he said. “They gotta feed their families just like everybody else.”
“We’re just trying to survive.”
“As a Churchillian, we will never give up,” de Meulles said. “We’ve had so many hurdles in front of us and we keep jumping over them, but we need help this time.”
Tank farm and Port of Churchill in Churchill, Manitoba.
With all the talk surrounding the news of Omnitrax closing the Port of Churchill prior to the heart of the 2016 grain season, thus displacing nearly 200 jobs from Churchill to The Pas, nothing has come from the mouths of the company’s spokespeople.
Two weeks have passed since Omnitrax shut the port down and issued dozens of workers in Churchill alone their pink slips. However the premier of Manitoba, Brian Pallister, has not been contacted by the company or heard anything regarding the negotiations to sell the port to a first nations group. He has portrayed the lack of communication as a “mystery” and a “challenge” in the relationship between the government and Omnitrax.
Omnitrax has not made any statements or held any press conferences regarding the move and this has many officials in Canada baffled since the closure has drastically affected lives that rely on the employment as well as those in communities that live along the Bayline, also under the companies ownership. The rail line is key in supplying northern communities with goods and food products. Many settlements are not accessible by roads and rely heavily on the train as their main supplier. Omnitrax has plans to reduce the amount of freight to be shipped along its Bayline route. Although the train line remains operable, many are anxious as to its future viability in this situation
Oil transportation and shipping through the port has been a recent, hot issue initiated by Omnitrax. However, the initiative fell apart last year as overwhelming public resistance and outcry over the idea forced the company to back down. Some, including this writer, believe Omnitrax had its profit seeking sights set on this plan since day one. Now that the oil issue seems “dead in the water”, pardon the pun, the company has hit the road and headed back to Denver, Colorado.
Omnitrax had received a three dollar per tonne subsidy last year from Manitoba’s former NDP government but with the new Progressive Conservative party lead by Pallister, now in office no such bailouts were sanctioned for this year..
“The approaches that have been taken too often in the past have been alarmist and crisis in orientation, and that is not the nature of how we are going to build a stronger northern economy and stronger communities.” stated Pallister.
The situation is intriguing and continues to develop as this story is published. Stay tuned for updates from Churchill.
The Port of Churchill sale expected to go through soon.
Anticipation of Manitoba’s port of Churchill and the Hudson Bay rail-line sale going through is building. The deal involving current owner Omnitrax from Denver, Colorado and a group of Manitoba First Nations are expected to finalize the sale in the short term. Omnitrax is opting out of the grain shipping business as a result of decreased numbers. After the Canadian Wheat Board dissolved and government incentives dried up, the shipping quota dwindled to 186,000 tons this past fall season- about a third of the average total for past seasons. It just seems as if Omnitrax’s heart wasn’t in the business as shipping totals have fallen consistently over the last few years. Hopes are high that a localized group with more alliances will spur growth and provide consistent employment for more local people in Churchill. Stay tuned for updates!
Port of Churchill grain shipping operation on the Churchill River. Port of Churchill photo.
A First Nations group based in Northern Manitoba is in the process of buying the Port of Churchill and Hudson Bay rail line from OmniTrax, a Denver ,Colorado based company. The town known as the polar bear capital of the world has been struggling to keep the ancillary business viable in these changing times.
The First Nations group provided a letter of intent for the purchase of the port and the Hudson Bay line – the stretch of track from The Pas to Churchill – as soon as both sides complete necessary research on the transaction.The rail line is the lifeline that connects all the small communities that have no road access in the region.
“It’s a group of communities along the line and others that, you know, over the period of time have always believed the railway was theirs. This now can become a reality based on current negotiations,” said OmniTrax president Merv Tweed. With the invested interest that the group has to keep the rail line running smoothly as a means of access to their remote communities, train service there and onto Churchill should thrive for the distant future.
At this juncture of the negotiations the buying group nor the purchase price of the assets has not been specifically identified.
“They’ll make their own statement in their time,” Tweed said.
For the next 45 days OmniTrax and the First Nations group will engage in a “due diligence period in which both parties will work together to ensure that a purchase becomes a reality,” a news release from Omnitrax stated. Omnitrax has agreed to work with the First Nations group for the next several years to facilitate a smooth transition. However, given the lack of success that Omnitrax has had in managing the port and increasing the shipping quota, this new regional rooted infusion might be a time to try new strategies for building the business and attaining higher levels of success.
OmniTrax acquired and began operating the port and rail line in 1997, though a reduction in grain shipments has placed financial strain on the operation. An attempt to diversify and specifically ship oil through the port was met with voracious public outcry which inevitably killed the initiative. The operation just seemed dead in the water after that battle this past year.
All these factors combined spurred the company to announce earlier this month plans to sell the operations. A quicker than expected sale agreement and local interest in the growth of the operation has instilled high hopes for the next phase in the life of the Port of Churchill. The operation employs roughly 100 local workers.