Thursday, December 24, 2015

First Nations groups may buy northern Manitoba railway

At present the Hudson Bay Railway(HBR) is owned by Denver-based OmniTRAX, which also owns the port of Churchill. The HBR was formed in July of 1997 by OmniTRAX to purchase Canadian National Railway lines to Churchill and also to Flin Flon and Lynn Lake.

A group of First Nations communities in the areas through which the rail line passes have sent a letter of intent to OmniTRAX. Omnitrax confirmed it received the letter of intent to purchase the Port of Churchill and Hudson Bay line. There will now be a 45-day period of due diligence before the sale can be completed. Both the federal and provincial governments would be asked to support the groups.
Churchill, Manitoba, on Hudson's Bay is Canada's only deep-water northern port. The port ships mostly grain from the prairies. There is an arctic studies center near the town. Tourists interested in viewing polar bears often visit the town. Canada's VIA passenger train service runs a train from Winnipeg to Churchill. The route is far from direct, going from Winnipeg in the east of Manitoba to The Pas almost on the Saskatchewan border, and then northeast to Churchill. The train will stop at many isolated small communities on demand. It spends five hours in the main northern city of Thompson. The entire trip takes about 40 hours. The one way economy fare is aboiut $267.75. That is Canadian money so if some Americans want to spend Christmas in Churchill it is not that expensive.
There is no road service to Churchill so the rail is the only land link to communities to the south, although there is air service. The Manitoba Transportation Minister Steve Ashton and his federal counterpart Marc Garneau met earlier in December as the Manitoba government looks for federal help to keep the railroad and port in operation.
Ashton said at the time: "Churchill is critical. It's a strategic trade corridor. It's the only arctic deep water seaport. The future for Churchill involves further investments and increasing the scope of those investments — not just focusing on the short-term nature. I believe OmniTrax is serious about looking for a new owner and I do believe there's huge potential if the federal and provincial governments are prepared to be there. We are. I can't speak for the federal government but I'm optimistic following the discussions we had today."
The New Democratic Party(NDP) is the governing party in Manitoba. Opponents always characterize it as socialist. If so it is of the modern kind. It would never think of having the government take ownership of the line even though it will need to subsidize any private operator. The role of socialist governments these days is to privatize and impose austerity in the interest of capital, as with the radical Syriza socialist government in Greece. To even suggest that public ownership might be a good idea is left to the CEO of the US-based Omnitrax which wants to sell the line and port or close it down:OmniTRAX Canada president Merv Tweed indicated that service could be discontinued if no new buyer were found. He also suggested governments could have the railway operate as a utility, presumably with regulation of rates and some form of subsidy in poor years.
To survive, the port storage facilities will need to be expanded and the rail line upgraded. OmniTRAX is faced with a huge decline in grain shipments through the port this year. Costs to maintain the lines are high, as they cross hundreds of kilometers of bog and permafrost. Derailments have from time to time disrupted both rail and passenger service. Omnitrax contemplated shipping crude oil to Churchill but decided against it after opposition from aboriginal groups, environmentalists and even the Manitoba government.
The Manitoba government said it had already received notices of interest from a number of potential investors including Mexican companies and even a group from India. Ownership by Manitoba First Nations would probably be the best solution but there is no way anyone will be able to operate the railway and port successfully without considerable subsidies from the government. The government could also take an ownership position. No doubt OmniTRAX realized it was going to require huge expenditures to keep the railway and port operational. At least with First Nations ownership, the owners will be interested in provision of service for the communities that depend on the line. Foreign investors would simply be looking for a good return on their capital. The other northern line of the OmniTRAX-owned Hudson Bay Railway running from The Past to Lynn Lake is already owned now by a First Nations group since 2006 and is called theKeewatin Railway.

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