China Firm Enters Ring to Buy Port

Churchill Port, Churchill , Manitoba

Port of Churchill grain shipping operation on the Churchill River. Port of Churchill photo.

Just when you thought the Port of Churchill and accompanying Hudson Bay Line were in a negotiated sale…again…another potential suitor has arisen to acquire the assets and begin shipping from the port.

Executives from Herun Group Co. Ltd., a Chinese company with massive agricultural interests as well as a wealth of port-operating experience, visited Churchill a month ago to gather more information and inspect the port facility. The company is one of the largest firms in China and seemingly has the financial clout and long-term experience in the shipping industry to offer a long-term solution to keeping the port and train line open.

Concerns that the Port of Churchill would fall into foreign hands and their primary interests would be alleviated by an agreement with the Manitoba Metis Federation and thus have that group own 51 percent of the company. Herun has also agreed to pay the $20 million price to Omnitrax without relying on any additional support from the Canadian government according to Manitoba Metis Federation president David Chartrand.

“Herun made it very clear they’re prepared to come up with a substantial amount of cash,” he said.

Herun owns and operates 11 international ports and recently closed a deal to acquire a port in Brazil, the country China trades the most with. Since Herun also processes various grains and oilseeds, interest in Churchill’s port facility is paramount.

“To me, in order to make this situation work for the railroad and Port of Churchill, you really need to have a company that is in the business,” said Joe Ng, chairman of JNE Group of professional engineers based out of Hamilton, which arranged the tour.

Port of Churchill. Claude Daudet photo.

“Otherwise, new people come in and after two years they can’t utilize the rail and port and they bail out.”

Herun’s interest stems from the fact that it imports raw materials such as soybeans and canola for its China crushing facilities.

Missinippi Rail and One North, a consortium of First Nations and Toronto-based Fairfax Financial Holdings Inc. are also in partnership to purchase the facilities. Omnitrax and Ottawa have been in negotiations with each other since late last year.

However, Omnitrax Canada President, Merv Tweed, reported that the latter group has only signed a letter of intent and Omnitrax has received inquiries from several other Canadian companies. “We are continuing discussions with a number of interested parties,” Tweed said.

A most recent inquiry and potential buyer, another First Nations group named iChurchill, appeared this past week with a comprehensive proposal that includes utilizing Churchill’s port and rail line to ship wood and possibly oil in addition to grain.

Ng conceded Herun is not first in line with their new proposal. “We’ve come in late so we have to wait until other people finish talking. It’s no different than a lineup at a counter,” said Ng, the 2016 winner of Entrepreneur of the Year awarded by the Association of Chinese Canadian Entrepreneurs.

Any new deal with the prospective buyers would include the damaged rail lines, as well as some buildings and land and in other northern towns like Gillam. The estimated $46 million in track repairs would be covered by the company that ends up purchasing the facilities. The governments annual $5 million in maintenance payments currently paid to Omnitrax would continue with the new owner.

Even though Churchill has a pretty short shipping season, Herun is looking ahead to the future according to Ng. “As far as they’re concerned, the world’s turning warmer every year, and there might be longer and longer shipping seasons as years go by,” he said.

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