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Way forward seen as Hudson Bay Railway dispute escalates

21 Nov 2017

CANADA: Investment group Fairfax Financial Holdings has expressed interest in partnering with the Missinippi Rail and One North first nations consortia to acquire the flood-damaged Hudson Bay Railway, the Port of Churchill and associated assets from short line group OmniTRAX, the federal government announced on November 16. Minister of Natural Resources Jim Carr said this would potentially ‘enable a sustainable business approach that results in a safe and reliable rail line’.

OmniTRAX purchased the 1 300 km HBR from Canadian National in 1997. In late 2016 it signed a memorandum of understanding for a possible C$20m sale to the Missinippi Rail consortium.

Catastrophic flood damage in May this year then led to an indefinite suspension of freight and VIA Rail passenger services on the 300 km of the HBR between Gillam and Churchill. The railway is the only land route to the port.

On October 13 Transport Canada demanded that services resume within 30 days, as it believed OmniTRAX was in breach of a 2008 deal under which the government agreed to provide C$20m for rehabilitation while OmniTRAX committed to operate and maintain the line until the end of March 2029. When services did not resume, the government announced on November 14 that it would begin legal action against OmniTRAX.

On the same day, OmniTRAX filed a claim for arbitration under the North American Free Trade Agreement, arguing that the government had hindered its plans to develop the business, not least through changes in the grain distribution market.

OmniTRAX Canada President Merv Tweed said the operator was ‘disappointed that it has come to this, after having attempted countless times over the past several months to find a viable long-term solution to the challenges faced by the HBR and the Port of Churchill’. He said ‘we believe we have exhausted all available options to facilitate the repair and transfer of the HBR, port and related assets. At every turn, our efforts have been stalled, obfuscated or ultimately sabotaged by the federal government. We view this NAFTA claim as a last resort. We remain open to the possibility of reaching an agreement with the federal government, should they demonstrate a willingness to come to the table.’

 

Meanwhile, Fairfax Financial Holdings is ‘optimistic about the prospects of northern gateways’, company President Paul Rivett said on November 16. ‘We have deep experience in infrastructure projects and have the necessary operational expertise to run short line railways in partnership with our investee company AGT Foods. The key is that the plan has to be viable and profitable in the long term as a business.’