The Churchill Marine Tank Farm and associated assets are also part of the deal, according to an Arctic Gateway Group release.

Pulse and durum processor AGT Foods and Ingredients and Toronto-based Fairfax Financial Holdings had held the other 50 per cent of the assets, up until the transition earlier this month, the partnership said.

“A tremendous amount of hard work has seen northern communities reach this critical milestone,” Churchill mayor and OneNorth co-chair Mike Spence said in the news release. “Together with our partners we are taking the next important steps to realize our vision for a national Arctic trade corridor.”

The OneNorth consortium of Indigenous and northern communities said it’s committed to the long-term success of the rail line and trade corridor.

The port and rail line have seen a significant turnaround since 2018, the partnership said, citing work to establish a local governance structure, which includes leadership from across northern Manitoba, to form the partnership.

“Our communities are ready to step up,” OneNorth co-chair and Opaskwayak Cree Nation Onekanew (chief) Christian Sinclair said. “We have a multi-generational socioeconomic development vision that will take this work forward as a truly northern Canadian success story.”

Under a 2018 partnership agreement supported by the federal government, AGT and Fairfax assisted OneNorth leadership in taking the Arctic Gateway Group through a “critical transition.”

Since then, passenger and freight rail service have been restored and port services have fully resumed for both import and export, including six cargo re-supply vessels for Nunavut.

Regina-based AGT will continue to provide management services during the transition period and plans to negotiate a terminal handling agreement to ship grain through the Port of Churchill.

Health and safety upgrades were undertaken on all operations, and environmental remediation and decommissioning of the former fuel tank farm was undertaken with the installation of new tanks., the partners said.

“We are very proud of all that we have accomplished over the past two and a half years with our partner, OneNorth,” AGT CEO Murad Al-Katib said in the same release.

“The long-term economic and social impact of this critical national infrastructure corridor will provide benefits to Canadians for generations.”

The port and railway had faced an uncertain future when its previous owner, U.S.-based rail operator OmniTrax, closed the rail line in 2017, after sections were washed out in high water.

After three years of no rail traffic to or from Churchill, OmniTrax sold the line to the Arctic Gateway Group consortium.

Compared to other Canadian grain-handling ports, Churchill is plagued by a much shorter shipping season, and the rail line is hampered by the shifting whims of the northern tundra.

However, loading at Churchill shaves off significant travel time for grain vessels bound for major export destinations such as in Europe, relative to ports in southern Canada such as Thunder Bay.

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“We’ll have an active program on durum wheat and lentils going into the Mediterranean,” said Al-Katib, who’s also CEO of Regina-based AGT Foods, one of the group’s major partners.

There will be four vessels coming to Churchill this season, the same number as last year, he said. In 2019, about 137,000 tonnes of durum and lentils past through the port, which marked the first grain shipments in four years, according to the Hudson Bay Route Association.

Al-Katib said work is being carried out to stabilize the track bed. When under the ownership of Omnitrax, there were a number of washouts along the route that cut Churchill’s only land link. It wasn’t until the Arctic Gateway Group acquired the line and the port, that the link was re-established.

“We remain very optimistic that when we go forward into 2021 and beyond, that Churchill can start to get back into that eight- to 10-vessel range,” Al-Katib said, noting the group is working with the federal and provincial government to achieve that goal.

Shipments of grain through Churchill began to drop after 640,000 tonnes in 2013. The following year saw a 17.1 per cent decline, followed by a 65.2 per cent dive in 2015 before ending altogether due to the washouts.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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“We’re in the early days of harvest, so it would be very normal to expect the first vessels to arrive in the first half of September,” said Al-Katib, who’s expecting a September-October shipping season.

“Things are looking good on yields and quality, so there should be an opportunity to durum, lentils, and maybe [Canada Western Red Spring wheat] as well, going through Churchill,” he added.

At this time, Al-Katib didn’t say how much in grain and pulses would pass through Churchill this year, noting that it’s a public-use port.

“It depends on who steps up and does what. We have the capacity and space,” he said, noting the railway is ready for this season’s shipments.

“There was a good, slow melt in [northern] Manitoba this year, so the tracks are in good shape.”

The latter was a grave issue for the port’s viability a few years ago, when sections of the railway south of Churchill were washed out by high water. Omnitrax, the line’s owners at the time, was reported to have refused to foot the costs for repairs without sufficient government assistance.

After three years of no rail traffic to or from Churchill, Omnitrax sold the line to an AGT-led business consortium, the Arctic Gateway Group, which includes a number of northern Manitoba communities.

While Churchill is plagued by a much shorter shipping season, and a rail line hampered by the shifting whims of the northern tundra, the port is much closer to major export destinations such as in Europe, relative to ports in southern Canada such as Thunder Bay.

During the 2019-20 marketing year Churchill there were 137,200 tonnes grains and pulses that passed through its port. Of that, almost 75 per cent was amber durum and the rest was lentils, according to the Canadian Grain Commission. In 2015, the year before the line was closed, 184,600 tonnes of grain were shipped via Churchill.

Ten years ago, about 659,000 tonnes were shipped through the port, according to the Hudson Bay Route Association.

That said, Churchill pales in comparison to a year-round port such as Vancouver, or a spring-to-fall port such as Thunder Bay — but Canada’s only major northern port has an important niche role.

“With a big crop coming, we need all of the ports in Canada. This is why we believe Churchill is a great surge port for the Canadian grain sector,” Al-Katib said.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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“Happy to report the successful completion and departure of the first grain vessel of the season from Churchill,” Arctic Gateway said on Twitter and Facebook.

The vessel arrived at the port on Aug. 25, but loading was delayed due to adverse weather, according to reports.

Arctic Gateway described the shipment as “a really important first step in re-establishing the Port of Churchill as an important part of Canada’s position as an agricultural export leader in the world.”

When reached, Arctic Gateway officials declined to comment and said they would not provide any details on the cargo beyond the available social media posts on what was a “commercial transaction.”

According to Canadian Grain Commission data, there were 35,400 tonnes of durum and 11,500 tonnes of lentils in storage in Churchill as of Sept. 1.

Online tracking data shows a cargo ship named Federal Satsuki left Churchill on Saturday, with Sarroch, on the Italian island of Sardina, its next port of call. The vessel has the capacity to carry 43,561 tonnes of grain.

The Port of Churchill, on the shores of Hudson Bay in Manitoba, is Canada’s only deepwater Arctic port and a typical season runs from late July through October.

OmniTrax, the previous owner of the port and rail line servicing it, abruptly halted grain shipments in the 2016 season, after fewer than 200,000 tonnes moved through the facility the previous year. Grain movement had slowed since the demise of the Canadian Wheat Board’s single desk in 2012.

Sections of the rail line washed out in 2017 and were left in disrepair until the Arctic Gateway Group took over in 2018 and began repairs.

AGG is a partnership of First Nations and other northern communities, Toronto financier Fairfax Financial Holdings and Regina-based pulse processor AGT Food and Ingredients.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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Rehabilitation efforts at North America’s only deep-water Arctic port are still underway, but there are expectations business through the facility will eventually include grain as well.

OmniTrax, the previous owner of the port and rail line servicing it, abruptly halted grain shipments in the 2016 season, after less than 200,000 tonnes moved through the facility the previous year. Grain movement had slowed since the demise of the Canadian Wheat Board’s single desk in 2012.

Sections of the rail line washed out in 2017 and were left in disrepair until the Arctic Gateway Group (AGG) took over in 2018 and began repairs. AGG is a partnership of Indigenous First Nations and other northern communities, Toronto financier Fairfax Financial Holdings and Saskatchewan-based pulse company AGT Food and Ingredients.

“It’s great to see goods arriving by freight train to the port and loaded for export,” Churchill Mayor Mike Spence said in a release, adding “we have a lot of work to do to continue the reinvestment in the Churchill port and Hudson Bay railway, but today is a great day.”

Elden Boon, head of the Hudson Bay Route Association, which advocates for moving grain through the facility, had heard of modest grain shipments slated for this season.

“We’re optimistic,” said Boon, adding “we knew that things were in pretty dire straits when (AGG) took over.

“When we look down the road, two, three, or four years, I think we’ll see significant amounts (of grain) through there,” said Boon, adding “Churchill has always been a surge port… In years of high production, we always saw larger shipments out of Churchill, and I’m assuming it will continue down that road.”

The HBRA is holding its annual meeting in Flin Flon Aug. 6-7. “This will be the first positive one we’ve had for three years or more,” said Boon.

AGT Foods has previously said it expects to see wheat, canola, lentils and other commodities shipped through the railway and port.

While future grain shipments are a consideration, the current focus is on the Arctic re-supply business and on repairing the rail and port facilities, Omer Al-Katib, director of corporate affairs and investor relations with AGT Foods, said Wednesday.

“We’re taking a very measured approach on what’s being done,” he said.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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Ottawa’s pledge follows the Aug. 31 announcement of a deal for a private/public partnership group to buy the Hudson Bay Railway line, which has been closed since May last year due to damage from washouts and flooding.

The Arctic Gateway Group is taking over ownership of the line from U.S. shortline operator OmniTrax, which since 1997 had owned the port and grain terminal facilities at Churchill, Man. and Canadian National Railway’s (CN) rail line northeast from The Pas, Man. to Churchill.

Repairs to the rail line are underway, the government said Friday, with crews working “seven days a week, from sunrise to sunset, making best efforts to restore the rail service before winter 2018.”

The financial terms of Arctic Gateway’s deal with OmniTrax weren’t disclosed, but Friday’s announcement is the first to lay out the specifics of the federal contribution to the new ownership group’s business plan.

The total federal investment of $117 million will flow through Western Economic Diversification Canada.

Of that, $74 million will be provided over three years (2018-19 to 2020-21) to the Arctic Gateway Group for “acquisition and repair” of the Hudson Bay rail line and the port assets at Churchill.

The remaining $43 million will be paid out to Arctic Gateway over 10 years (2018-19 to 2027-28) for “operations and enhancing the commercial viability” of the rail line, port terminal assets and the Churchill Marine Tank Farm.

On top of that investment, the federal government has put up a further “repayable contribution” of $10 million, due 150 days from closing, as bridge financing until Arctic Gateway can “secure their own loan on commercial terms.”

Arctic Gateway Group, under the terms of the arrangement, will not provide dividends for at least 10 years, the government said. Thus, “the shareholders have no immediate returns on equity and intend to reinvest into the companies and northern Manitoba.”

Restoring the Hudson Bay rail line in time for winter would allow freight traffic such as food, fuel and other goods to resume to First Nations and communities en route. The government on Friday described the line as a “critical piece of transportation infrastructure” for almost 30,000 people along the line and in the Kivalliq region of Nunavut.

Supports for food and fuel delivery will remain in place until the rail line is operational, the government said. International Trade Diversification Minister Jim Carr, a Winnipeg MP, said Friday that “all efforts will be made to restore service before winter freeze-up.”

The rail line, completed in 1929, and the port facility, built by 1931, were set up to serve northern communities and provide an alternate shipping route into and out of Western and central Canada.

From a seagoing export perspective, railing grain from certain areas of Saskatchewan and Manitoba up and out through Churchill, rather than east to Thunder Bay, is believed to shave up to three days off voyages to some ports in Western Europe.

Churchill’s grain handle faltered, however, in the five years after the deregulation of its main customer, the Canadian Wheat Board.

OmniTrax shut down the Churchill port facility and laid off its staff before its 2016 season. After the 2017 washouts, the company declared force majeure and indefinitely suspended rail operations, saying it wasn’t prepared to pay for repairs without government assistance.

Regina-based AGT Food and Ingredients, one of the members of the Arctic Gateway Group and a major pulse crop processor and supplier, has said it aims to have “further port access” for its export shipments once the Port of Churchill is reopened.

The port’s ice-limited shipping season, typically July through October, has been a benefactor of global warming in recent years, but warmer weather also makes the rail line, much of which is built on permafrost, less stable. — Glacier FarmMedia Network

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Regina-based pulse processor AGT Food and Ingredients is one of the members of the Arctic Gateway Group, which on Friday confirmed a deal to buy the railway, port and related assets from U.S. shortline rail operator OmniTrax. Financial details of the deal remain undisclosed.

Among the three Arctic Gateway partners, Missinippi Rail LP — a partnership between Mathias Colomb Cree Nation, Fox Lake Cree Nation, Opaskwayak Cree Nation, Tataskweyak Cree Nation, War Lake First Nation, York Factory First Nation and municipalities along the rail line — gets a 50 per cent ownership stake in the group and “board appointments commensurate with this interest,” according to Grand Chief Arlen Dumas of the Assembly of Manitoba Chiefs.

AGT and Toronto investment firm Fairfax Financial Holdings get the remaining minority stakes in the group.

According to AGT, the group’s deal involves “multi-year contribution agreements” with the federal government to support the share purchase, repairs of the port and rail line.

The deal also calls for Fairfax and AGT will operate the rail line and port facilities under a 99-year operating agreement, AGT said.

AGT also noted the deal “will not obligate AGT to incur any material expenditure” or “any material additional to indebtedness.”

“Though the investment isn’t material for AGT from a capital expenditure perspective, we feel the ability to add further port access is important for our long-term plan as the recovery of markets for Canadian agricultural products continues in the coming years,” AGT CEO Murad Al-Katib said in a release.

Fairfax president Paul Rivett, on Arctic Gateway’s behalf, noted in a separate release that the deal calls for a “long-term support package through Western Diversification and Export Development Canada” to acquire the assets and implement its first phase.

That phase, he said, will be “to repair the rail line (and) undertake safety and rehabilitation upgrades to the port and the railway assets to efficiently operate freight and passenger services to the northern communities and the port.

The group, he said, has awarded a contract to Brandon, Man. rail services company Cando Rail and Alberta soil stabilization and ground reinforcement firm Paradox Access Solutions to get repairs underway. “We are racing against time to attempt to restore services prior to the winter season,” he added.

Churchill Mayor Mike Spence, speaking in Arctic Gateway’s release, described the deal as “historic,” adding “I don’t think there’s another model out there in Canada that would fit into this equation.”

The Hudson Bay Railway, which runs from the northwestern Manitoba communities of The Pas and Flin Flon northeast through Thompson to Churchill, hasn’t operated since May 2017, following flooding and washouts along the stretch between Amery and Churchill.

The rail line, completed in 1929, and the port facility, built by 1931, were set up to serve northern communities and provide an alternate shipping route into and out of Western and central Canada. Denver-based OmniTrax had bought the government-owned port and Canadian National Railway’s (CN) rail line in 1997.

From an export perspective, railing grain from certain areas of Saskatchewan and Manitoba up and out through Churchill, rather than east to Thunder Bay, is believed to shave up to three days off voyages to some ports in Western Europe.

But Churchill’s grain handle declined in the five years after the deregulation of its main customer, the Canadian Wheat Board. OmniTrax shut down the port facility and laid off its staff before the 2016 grain shipping season.

The port’s ice-limited shipping season, typically July through October, has been a benefactor of global warming in recent years, but warmer weather also makes the rail line, much of which is built on permafrost, less stable. — Glacier FarmMedia Network

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Federal Trade Diversification Minister Jim Carr and Northern Affairs Minister Dominic LeBlanc announced the Arctic Gateway Group Limited Partnership has bought the Hudson Bay Rail Co., the Hudson Bay Port Co. and the Churchill Marine Tank Farm from U.S. shortline company OmniTrax for an undisclosed sum.

The Arctic Gateway Group is a private/public partnership including the northern communities’ consortium Missinippi Rail Ltd. Partnership, Toronto investment firm Fairfax Financial Holdings and AGT Limited Partnership, an arm of Regina pulse crop processor AGT.

The Hudson Bay rail line, which runs from the northwestern Manitoba communities of The Pas and Flin Flon northeast through Thompson to the Port of Churchill, Man. on Hudson Bay, hasn’t operated since May 2017, following flooding and washouts along the stretch between Amery (about 45 km northeast of Gillam) and Churchill.

The railway’s operator declared force majeure and an indefinite suspension of operations on the line on June 9 last year, later saying repairs would cost as much as US$60 million and it wasn’t prepared to pay without government assistance.

The Canadian Transportation Agency (CTA) in June this year ordered the Hudson Bay Rail Co. to get repair work underway by July 3 at the latest.

In response to statements from HBR that actual repairs wouldn’t begin without a cash infusion — either from proceeds of a sale of the business, or from federal funding — the CTA on Aug. 21 issued a “show cause” order. It required the company to show by Aug. 27 why the agency shouldn’t find HBR had failed to comply with the June order.

HBR had been in talks toward a sale earlier this spring, resulting in what the federal government described in late May as an agreement in principle, but HBR announced July 3 that its “transaction has fallen apart,” then announced a week later that negotiations with the proposed consortium had “resumed.”

Government officials on Friday said “construction crews have been mobilized” and work would begin “immediately” and repairs, adding “all efforts will be made to restore the rail service before winter 2018.”

In the meantime, the government said, “community support programs for food, fuel and economic development will remain in place until rail service resumes.”

“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,” Paul Rivett, director of the Arctic Gateway Group, said in Friday’s release.

The group’s partners, he said, “are committed to working with the government of Canada, provinces and the private sector to build an Arctic gateway for Canada to the world.”

Financial terms of the group’s deal were not released Friday.

Phase one of the project, Rivett said, “will be to repair the rail line (and) undertake safety and rehabilitation upgrades to the port and the railway assets.”

The group, he said, will “do all we can to restore service expeditiously and safely,” but added “we are racing against time. We will immediately begin our work to make the broader project also a reality.”

“We are hopeful the repair of the rail line can occur as soon as possible so that service can be resumed before freeze-up,” Manitoba Premier Brian Pallister said in a separate statement Friday.

“However, we want to reassure the people of Churchill and the surrounding northern communities that we have already made the financial commitments and logistical arrangements necessary to ensure propane resupply for the winter.”

The rail line, completed in 1929, and the port facility, built by 1931, were set up to serve northern communities and provide an alternate shipping route into and out of Western and central Canada.

Restoring the line in time for winter would allow freight traffic such as food, fuel and other goods to resume to Churchill and other communities near the line, but a deal comes too late to allow Prairie grain exports out of Churchill during the 2018 shipping season.

From an export perspective, railing grain from certain areas of Saskatchewan and Manitoba up and out through Churchill, rather than east to Thunder Bay, is believed to shave up to three days off voyages to some ports in Western Europe.

But Churchill’s grain handle declined in the five years after the deregulation of its main customer, the Canadian Wheat Board. OmniTrax shut down the port facility and laid off its staff before the 2016 grain shipping season.

The port’s ice-limited shipping season, typically July through October, has been a benefactor of global warming in recent years, but warmer weather also makes the rail line, much of which is built on permafrost, less stable.

Denver-based OmniTrax had bought the government-owned port and Canadian National Railway’s (CN) rail line from The Pas to Churchill in 1997. The federal government has said its funding commitments in a 2008 agreement with OmniTrax called for the company to maintain and operate rail service through to Churchill until 2029. — Glacier FarmMedia Network

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