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.

Canadian Government Removes Omnitrax from Lawsuit

 

Hudson bay rail line

The HBRC will be solely responsible for any damages and costs to repair the rail line. Omnitrax photo.

The parent company of Hudson Bay Railway Company (HBRC), US-based Omnitrax, is off the hook for any damages lost in a pending lawsuit. HBRC will be solely responsible to the federal government if they are found liable for not repairing the washed out rail-line that links Churchill with the south of Manitoba. In May 2017 the tracks were washed away in nearly 20 locations rendering the stretch of tracks useless until millions of dollars are allocated for repair.

Omnitrax’s claim that HBRC is a separate entity has been upheld and thus the Federal Government of Canada has removed its name from the lawsuit.

Soon after two late spring blizzards began to melt, the tracks suffered severe damage in multiple locations. Omnitrax, based in Denver, Colorado, refused to spend an assessed $60 million for repairs. The company claimed economic hardship with regards to the project and was faced with the federal government threatening to sue after the 30-day start deadline elapsed.

The government filed a lawsuit this past November naming Omnitrax and HBRC as defendants. Under a 2008 agreement, Transport Canada indicated that Omnitrax was responsible for keeping the railway running through 2029. As a result, the lawsuit is seeking to recoup $18 million that was an original part of the terms to operate the port and rail line. However, the company has claimed the damages resulted from unforeseeable circumstances or “act of God” thus releasing them from their obligation to repair under their contract with the government.

Omnitrax counsel Jamie Kagan acknowledged that the Attorney General of Canada and Omnitrax have agreed to remove the parent company’s name from the lawsuit and relieve them from any judgment for damages. Any fault and levy of damages will now only be filed against HBRC.

“Our view has always been that this is a political action mainly brought for the purposes of PR and not for a legal remedy, and it appears that the Government of Canada, when pushed, ultimately agreed and has withdrawn the allegations against Omnitrax Inc.,” Kagan said in an interview after the hearing.

“As the private owner of the line, Hudson Bay Railway Company -which also conducts business under the name OmniTRAX Canada- had the obligation to repair the rail line when it was damaged,” a spokesperson for Transport Canada said in an emailed statement.

Churchill residents and business people have been faced with increasing costs for everyday supplies as most now are transported by air. Government subsidies have deferred costs to some extent though some residents have been forced to relocate to Winnipeg or other locations as a result.

Omnitrax is still trying to work out a purchase and sale agreement with a group comprised of northern Manitoba First Nations. Those talks have stalled since the disaster last spring.

Churchill Gas Prices Subsidized

Churchill fuel prices

The deMeulles Auto Gas Bar in Churchill reflects the price of gas prior to the rail line washout. Dale deMeulles photo.

Churchill’s gas prices have been reduced by fifty cents a litre thanks to the federal government accessing the economic stimulus fund once again. With petrol prices nearing the $10/gallon mark, this latest reprieve will keep the cost at about $8/gallon. And we complain about gas prices when they reach $3/gallon or more? Kind of puts things in perspective a little, eh?

With federal findings of a probe of Omnitrax, owner of the Port of Churchill facility and the defunct Hudson Bay Line, due to be released soon, residents are enduring rising prices and increased isolation leading to economic strife.

Last week, Natural Resources Minister Jim Carr confirmed that the Ottawa government would allocate $132,870 for Exchange Petroleum to lower gasoline prices to prior levels before the Hudson Bay Rail Line was devastated by flooding last May. Shipping on the railway was the only way to keep costs for supplies and fuel low. Now, ten months later, the pressure is causing long-time residents to move south in search of a more affordable lifestyle.

In September 2016, Ottawa approved the Churchill and Region Economic Development Fund, intended for the diversification of northern Manitoba’s economy following Omnitrax laying off most of the port’s workforce that summer. Businesses have benefitted from the money by offsetting rising shipping costs of materials shipped by barge or airplane.

Last December Carr visited Churchill and announced the government would add $2.7 million to the existing $4.6 million relief fund. After seemingly turning a blind eye to the issue the federal government now is coming to the rescue.

The new windfall of cash will be transferred to Exchange Petroleum, owner of the Calm Air fuel-storage tanks located at the Churchill airport. These tanks are being used due to issues with the port’s storage tanks related to the viability of winter storage of the fuel.

Churchill Port tank farm.

Churchill Port tank farm is unable to store fuel for the town through the winter. Churchill Tank Farm photo.

“This project is a great example of how collaboration and partnerships can help lessen Churchill’s acute economic hardships, restore a quality of life, and keep its entrepreneurs in business,” Exchange CEO Gary Bell wrote in a statement.

Churchill Mayor Mike Spence expressed thanks to Ottawa for its leadership and funding while conveying optimistic thoughts that rail line repairs would commence in the spring.

“This announcement means real savings for residents and businesses of Churchill during these difficult economic times,” Spence wrote. “It’s important to also give a great deal of credit to Exchange Petroleum who stepped in last fall.”

 

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.

Port of Churchill Sold – Again!

In a surprising merger of two competing groups from the north, they have now joined forces to purchase the Port of Churchill and the Hudson Bay rail line. This development could be a last-ditch effort to pressure the federal government to initiate track repairs before the long, cold winter sets in.

Grand Chief Arlen Dumas, an acting representative of Missinippi Rail LP, has declared that his former group,  Mathias Colomb First Nation, will no longer seek ownership of the Port facilities and rail operations. He has shifted his focus to working with other parties in a bid to acquire the port and its assets currently owned by U. S. company Omnitrax.

Sun is setting on the chance to repair the Hudson Bay Rail Line. Don Wilson photo.

Dumas offered $20 million to Omnitrax as chief last June. Omnitrax accepted and the two parties signed an agreement to transfer the port, rail and marine tank farm. The Assembly of Manitoba elected him grand chief of Chiefs in July and the prior agreement dissolved.

Another set of suitors also signed the letter to the PMO. Chief Christian Sinclair of the Opaskwayak Cree Nation and Churchill mayor Mike Spence head up the coalition called One North.

“It’s got to be a mutually combined business model that will work for everybody’s interests,” Sinclair said, adding his understanding is Ottawa is ready to go with some form of a plan, but details have to be worked out.

Christian Sinclair

Chief Christian Sinclair heads a group that will purchase the Port of Churchill. CBC photo.

Concerning the port and rail purchase, Chief Christian Sinclair stated recently “if we can send a man to the moon, I’m sure we can fix a rail line.”

Federal Natural Resource Minister Jim Carr released a statement on Friday saying Ottawa has made Omnitrax aware that the company is responsible for repair costs.

The government issued a release of its own that stated they have “formally demanded” the Hudson Bay Railway Company repair the Hudson Bay Rail Line per a 2008 agreement with the federal government. According to the government the agreement “requires the company to operate, maintain and repair the entire Hudson Bay Railway Line in a timely manner with diligence until March 31, 2029.”

Omnitrax staff have defended themselves by calling the rail line “a public utility,” and state they are unable to pay for the repairs.

Since late May, when floods damaged multiple sections of the rail line,  Churchill residents have been without rail service from the south. Estimates between $20 and $60 million have left groups fighting to find who is responsible for the bill. Meanwhile, food prices have skyrocketed leaving locals frustrated regarding the future of the town.

Mike Spence Churchill mayor

Churchill Mayor Mike Spence says Omnitrax and Ottawa have to work out a deal. Sean Kavanagh CBC photo.

At this point the “repair train has left the station” so to speak. Sinclair had previously said time is critical and he could be in Winnipeg “within hours” to sign what is necessary to move ahead. However, as we near the end of September, it would take a mammoth effort to complete repairs before the winter is upon us.

 

Pin It on Pinterest