Port of Churchill Sale Agreement in Place

port of Churchill

The Port of Churchill still vacant while the sale of the business is in limbo. Katie de Meulles photo.

There are no groundhogs in Churchill! So, there really cannot be a “groundhog” day. However, with the recent announcement of the Port of Churchill and the Hudson Bay Line being sold again there seems to be some confusion.

There apparently is another informal agreement that will reestablish ownership of the Hudson Bay Rail line and the Port of Churchill within the northern Manitoba community and keep the facilities under Canadian control.

One North and Missinippi Rail LP have joined forces with Fairfax Financial Holdings and come to an informal agreement to acquire the dormant assets from current owner Denver, Colorado-based Omnitrax.

Fairfax, a Toronto-based investment company, agreed to partner with One North and Missinippi Rail this past November, to purchase Omnitrax’s northern Manitoba assets.

The arrangement includes the participation of 41 First Nations and non-First Nation communities in northern Manitoba as well as seven Kivalliq communities in western Nunavut, along with Fairfax and AGT, the government said.

Omnitrax owner Pat Broe and Fairfax president Paul Rivett negotiated the acquisition, but there are multiple legal issues to finalize before prior to a finalized deal can be completed.

Churchill mayor and One North co-chair Mike Spence has been waiting a long time for this deal to materialize. Spence has been tirelessly lobbying for a deal since Omnitrax began reducing the frequency of rail service to Churchill nearly two years ago.
However, as we all have seen, this deal will not be official until papers have been signed and money exchanges hands. We have seen far too many deals or rumors of deals taken away with the tide of the Hudson Bay.

“Priority No. 1 will be rail line repairs in the very near future and to finalize the acquisition,” Spence wrote in a statement.

“This is a historic partnership involving Indigenous and northern communities with industry leaders that now positions the Port of Churchill as an Arctic gateway for future prosperity.”

The Hudson Bay rail line to Churchill was washed out by a flood runoff from two late spring blizzards in May 2017. Since then, Omnitrax has refused to repair the tracks and has been in an ongoing battle with the Canadian Government over responsibilities regarding the repairs. Initially, the costs of repairs were between $40 and $60 million. Omnitrax claimed it was unable to cover those high costs.

 

Canada Prime Minister Justin Trudeau stated last year that Omnitrax is responsible for getting the train line up and running again. While this is being settled, at this point most likely through new ownership, the federal government has been providing ongoing subsidies to northern residents to help defray escalating costs of goods shipped north.

Churchill Port and Hudson Bay Line Sold…Again?

Port of Churchill

The Port of Churchill has been a symbol of uncertainty in Churchill. Katie de Meulles photo.

 

A Manitoba First Nations group has formed a partnership with an independent company to establish the reopening of the rail line to Churchill and potential operation of the grain port in Churchill.

Heard that before? Well, this time we might be in for the real thing.

A recent press release confirms that a consortium of Manitoba First Nations, led by Peguis First Nation Chief Glenn Hudson, will partner with iChurchill Inc., a private Canadian company, entering into an acquisition agreement with Denver-based Omnitrax, to take over control of the Port of Churchill and the Hudson Bay Railway.

“The port has got all of the grain handling equipment and simply said, the first thing we want to do is resume that commercial activity,” said Louis Dufresne, president of iChurchill Inc., in a phone interview Friday.

Northern residents of the town of Churchill along with Indigenous leaders say the railway and port are crucial to the existence of towns and all First Nations in northern Manitoba.

Last May, a year ago, the Hudson Bay rail line owned by Denver-based Omnitrax sustained flood damage from the spring melt of two late-season blizzards. The damage was estimated at nearly $60 million and Omnitrax balked at its contract to repair the damage and therefore reopen the train line to Churchill. Soon after, a native group under the name Missinippi Rail LP, a consortium of about 15 Manitoba First Nations, signed an informal agreement to purchase the port and rail line for $20 million. Further strengthening their offer and position, the group enhanced their buying power by joining with One North, a group representing First Nations and communities served by the Hudson Bay line.

Hudson Bay track line

Photo by Major MacLachlan (www.zambonista.com/hbr/) [Public domain], via Wikimedia Commons

With that deal seemingly dormant and not gaining any momentum, this new one is being praised by Manitoba Premier Brian Pallister.

“Hopeful always when I hear these announcements, but of course like the people of Churchill, I just really would like to see the rail line rebuilt and the port reopened with solid commitments with whoever is going to take charge of the ownership that they are committed for the longer term.”

Now, iChurchill Inc. is hoping to formalize and seal the agreement by mid-June in order to commence repairs and reopen the line in time for the fall polar bear season. These details have not been confirmed by Omnitrax as of yet,

Communities have been suffering for a year now with increased costs of transporting goods to the outlying towns in the north. The isolation has touched everyone’s lives in every community. With another end of this dilemma in sight, people have been given hope once again.

iChurchill Inc. is expected to release more information today regarding plans for repairing the rail line and potential reopening of the port at a Winnipeg press conference.

Any new agreement would need approval from the federal government. Federal Natural Resources Minister Jim Carr is expected to release a statement Friday.

New Player May Facilitate Port and Rail Sale

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.

Port of Churchill

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.

V. Prem

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.

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