September 25, 2018

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Deal reached to transfer Churchill rail line, port to local consortium

OTTAWA — The federal government has at last brokered a deal to transfer Churchill’s port and railway from Denver-based Omnitrax into local hands.

Effective Friday, the Hudson Bay Railway, Port of Churchill and the town’s marine tank farm are owned by Arctic Gateway, a consortium that involved two northern Manitoba groups, Toronto financier Fairfax and Saskatchewan-based grains giant AGT Foods.

Railway repairs are to start “immediately,” the federal government said in a news release. Assuming normal weather patterns, Churchill should have adequate rail service for both passenger trains and light freight before the November freeze-up.

More repairs will be needed in the spring to allow heavier cars that transport grain or propane. (The provincial government is finalizing an October sealift of propane for the town.)

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OTTAWA — The federal government has at last brokered a deal to transfer Churchill’s port and railway from Denver-based Omnitrax into local hands.

Effective Friday, the Hudson Bay Railway, Port of Churchill and the town’s marine tank farm are owned by Arctic Gateway, a consortium that involved two northern Manitoba groups, Toronto financier Fairfax and Saskatchewan-based grains giant AGT Foods.

An aerial view of the rail line and Via station is shown in Churchill, Manitoba, Wednesday, July 4, 2018. The closure of the port and the rail line has resulted in economic hardship in the community. THE CANADIAN PRESS/John Woods</p>

An aerial view of the rail line and Via station is shown in Churchill, Manitoba, Wednesday, July 4, 2018. The closure of the port and the rail line has resulted in economic hardship in the community. THE CANADIAN PRESS/John Woods

Railway repairs are to start "immediately," the federal government said in a news release. Assuming normal weather patterns, Churchill should have adequate rail service for both passenger trains and light freight before the November freeze-up.

More repairs will be needed in the spring to allow heavier cars that transport grain or propane. (The provincial government is finalizing an October sealift of propane for the town.)

"We will commence the repairs and do all we can to restore service expeditiously and safely. We are racing against time," wrote Fairfax president Paul Rivett in a statement.

A construction company is preparing to "immediately" start repairs along the line, according to the federal government. It’s unknown whether a contract has yet been tendered.

Sources described the financial arrangement as a split between local groups OneNorth (co-chaired by Churchill Mayor Mike Spence) and Missinippi Rail (connected to Grand Chief Arlen Dumas of the Assembly of Manitoba Chiefs), as well as Fairfax and AGT, with support from Ottawa.

The deal means a complete pullout of Omnitrax from northern Manitoba, sources said. The deal includes offices in Thompson and The Pas, vehicles and rail cars. Arctic Gateway will own all its Hudson Bay Railway shares, which could mean its existing liabilities, such as legal responsibility in ongoing litigation.

It is unclear how much federal cash is involved, or whether Omnitrax is walking away with any debts or payouts. Omnitrax’s Toronto public relations firm did not immediately respond to a request for comment.

The area’s MP, Niki Ashton, said she was "relieved" to hear the news but that taxpayers ought to know how much in federal funds have been allocated, and whether Omnitrax is getting any cash.

"I hope that Omnitrax wasn’t paid even one dollar in this deal, after everything they’ve put the people of Churchill and northern Manitoba through," Ashton said in a Friday interview.

"I’m proud of the people of Churchill and northern Manitoba for standing up to Omnitrax," she said. "Too much time has passed; there’s already been damage done to Churchill and to our North."

Ottawa has faced sustained criticism that the town had become a fly-in community for 15 months, causing the cost of food to skyrocket and families to move south.

As the sole Manitoban in the federal cabinet, Trade Minister Jim Carr has been overseeing the government’s negotiations. He wrote Friday he was thrilled a deal had been signed.

"I want Canadians living in Northern Manitoba and Nunavut to know that the Government of Canada understands the importance of the line to their daily lives. Thank you for your patience and to the buying group for committing to begin work on the repairs," Carr wrote.

Premier Brian Pallister applauded Carr and the federal government for the deal, as well as residents of Churchill.

"They have endured challenging circumstances for a very long time and we have stood with them," he wrote. "We look forward to working with the federal government and the new ownership group on an ongoing basis as we move forward with our Look North strategy over the months and years ahead."

In spring 2017, heavy snowfall followed by a rapid melt washed out numerous sections of the Hudson Bay Railway, between Amery and Churchill, roughly a 250-kilometre stretch.

That summer, Omnitrax said it would not pay an estimated $43.5 million to repair the railway, because it had become "not economically viable." Until its 2015 dissolution, the Canadian Wheat Board ensured a steady amount of grain reached the Port of Churchill, after which Omnitrax had laid off most port workers.

Ottawa has led takeover talks since September 2017, which involved numerous near-deals, dozens of bureaucrats and unflattering leaks.

In a statement, Spence wrote he was thankful to his town, Ottawa and the consortium partners.

"This is an emotional and important day. It is a huge relief for our community and it is historic for northern communities. We have a lot more work to do, beginning with the repair of the rail line," he wrote. "We now turn towards building our northern assets into an arctic gateway and prosperity for northern Canada."

Dumas said the project is a tangible example of reconciliation, where First Nations are empowered to lead economic development:

"This is how it is done: not by saying ‘trust us’, but by putting up the support necessary to allow us to build the foundations necessary to be successful," he wrote.

dylan.robertson@freepress.mb.ca

History

Updated on Friday, August 31, 2018 at 6:32 PM CDT: Updates story

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