Chinese firm eyes Churchill port

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This article was published 10/05/2018 (2743 days ago), so information in it may no longer be current.

A Chinese company with a wealth of port-operating experience and large agricultural interests is another possible suitor to buy the Port of Churchill.

Executives from Herun Group Co. Ltd., one of the largest firms in China, flew to Churchill last month to kick some tires.

Herun owns 11 ports worldwide and recently purchased a port in Brazil, China’s largest trading partner. It is also a processor of grains and oilseeds, so it has interest in Churchill on two fronts.

“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.

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

Herun has a genuine interest because it imports raw materials such as canola and soybeans for its crushing facilities in China. It has been mostly involved in oilseed crushing but is expanding its flour processing and is interested in Canadian grains, Ng said.

So that the port stays in Canadian hands, it would partner with the Manitoba Metis Federation, which would own a 51 per cent share.

Herun is willing to meet port owner Omnitrax’s asking price of $20 million without any government support, Manitoba Metis Federation president David Chartrand said.

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

The company in the lead position is Missinippi Rail and One North, a consortium of First Nations in partnership with Toronto-based Fairfax Financial Holdings Inc. It has been in discussions with Omnitrax and Ottawa since late last year.

But the head of Omnitrax Canada, Merv Tweed, told the Free Press last week the above buyers have only signed a letter of intent and that the company has received letters of interest from several other Canadian companies. “We are continuing discussions with a number of interested parties,” Tweed said.

Another potential buyer, a First Nations consortium called iChurchill, surfaced last week with an offer that includes using the northern port to ship grain, wood and possibly oil.

Ng conceded Herun is late to the party. “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, who was named 2016 Entrepreneur of the Year by the Association of Chinese Canadian Entrepreneurs.

Chartrand said he did not want to be seen as trying to upstage first nations in their attempts to buy the port, but talks have dragged on. Chartrand said he has been in discussions with Omnitrax for more than a year but MMF’s original partner was unwilling to cede 51 per cent ownership to the MMF. Herun has agreed to those terms, he said.

The MMF would also come up with some funds. “The MMF has cash to put up, too,” Chartrand said.

The chief financial officer along with another executive flew to Churchill about a month ago for a tour of the port. The president of Herun was also supposed to attend but was held over in the U.S. due to mechanical problems with his private jet, Chartrand said. He was travelling from Brazil, where he had signed documents to purchase the Brazilian port.

The purchase would include the rail lines, which would have to be repaired, as well as some land and buildings in locations like the northern town of Gillam. An estimated $46 million worth of repairs to the track is needed but that’s no different than the deal being discussed with other potential buyers.

Ottawa’s $5 million in maintenance payments to Omnitrax would have to be continued, too, Chartrand said.

Churchill Mayor Mike Spence, who co-leads One North, said he was unaware of the Herun visit and may have been away at the time. Omnitrax could not be reached for comment.

Ng said Herun realizes Churchill has a short navigation season but is looking to the future. “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.

Churchill’s port owned by Omnitrax ceased operations in August 2016. Churchill residents have been without rail service since the rail line was severely damaged by flooding last May. Omnitrax and the federal government are arguing in court over who is responsible for repairing the track.

bill.redekop@freepress.mb.ca