Canadian indigenous groups and others purchase Hudson's Bay railway

A tentative deal has been reached to bring both the port of Churchill and the rail line from the port on Hudson's Bay south to the Pas back under Canadian ownership after the US company Omnitrax refused to repair flooded and damaged tracks.

Indigenous groups and others involved in the deal

The Canadian federal government announced that a number of First Nations many of whom depend on the rail line and also groups representing northern communities, One North and Missinippi LP, have joined up with Fairfax Financial Holdings to purchase the port and railway from Omnitrax. Fairfax, an investment company based in Toronto had announced back in November 2017 their intent to try along with others to purchase the railroad There are 30 First Nations and 11 communities in northern Manitoba as well as others participating in the project.

Specifics of the deal have such as financing, and a timeline have not been announced.

Omnitrax owner Pat Broe and Fairfax president Paul Rivett negotiated the agreement but a number of legal issues need to be completed before the deal is finalized.

Churchill Mayor Mike Spence calls the agreement historic

Spence said: "This is an historic partnership involving Indigenous and northern communities with industry leaders that now positions the Port of Churchill as an Arctic gateway for future prosperity...Priority No. 1 will be rail line repairs in the very near future and to finalize the acquisition." Spence is also co-chair of One North. Spence has been lobbying to purchase the port and rail system from Omnitrax since the US company began cutting service to his community almost two years ago.

Jim Carr Manitoba Natural Resources Minister said: "The people of northern Manitoba have long understood the value of the rail line. This agreement in principle allows those most affected to have a direct stake in the future and long-term interests of their communities."

Christian Sinclair, Chief of "Bold investments into much needed infrastructure will create long-term socioeconomic growth for the North. We see immediate opportunities to support the success and growth of the business, creating opportunities for OCN and for all of our partners in northern Manitoba."

Lack of a rail line isolates Churchill

The lack of a rail line has created great hardships for the eight to nine hundred inhabitants of Churchill. Omnitrax shut down both the port and major railroad operations in August of 2016. It continued to bring goods and passengers until the damaging floods in May of 2017. The company has not repaired the line and insists it has not the money to repair it.

The only way out of the town is by air which is very expensive. A return flight to the Manitoba capital city Winnipeg is about $1,200. The town attracts some tourists in winter to see polar bears which are common in the area- as shown in the appended video- and also to see fantastic displays of northern lights. However, tourist numbers have dwindled drastically since the rail link to the south has been closed. There are no roads into the town connecting them to the south. The costs of basic foodstuffs has also skyrocketed. Many are leaving the town.

Omnitrax taken to court by federal government

After Omnitrax refused to repair the tracks last year, the Canadian government took Omnitrax to court. Omnitrax says it simply cannot pay up to $60 million to repair the line. However, a consultant puts the cost at more like $43.5 million. The federal government has offered subsidies to northern residents to help with rising costs to those affected by the rail closure.

At least now, the railway and port will be owned by those in communities served by the railway and are interested in seeing that it does not shut down as it did before because it was no longer profitable for a large US corporation Omnitrax.

Previously published in Digital Journal

Rail service to northern Manitoba port of Churchill suspended

The northern Manitoba town of Churchill has lost its only rail service into the town as OmniTrax the Denver-based company that owns the rail line into the community from the south announced that the rail bed was washed away in 19 locations.

Five workers in Churchill were let go as a result of the service suspension. Business owners in the town say that there could be more layoffs. The owner of the 31 room Tundra Inn and hostel, Belinda Fitzpatrick said that it was upsetting and heartbreaking to layoff the 5 workers. She had intended to open a seasonal restaurant next week but the suspension of rail service caused her to drop her plans. She describes the rail line as the lifeline to the community. There is no road into the community from the south. The road ends at Gillam near where there is a large hydro development. The rail service ends there now as well. Churchill is a further 300 km from Gillam.

Omnitrax describes the damage as catastrophic and said that the damage would be not fixed until the earliest next winter and perhaps even next spring. Another Churchill business owner Dale de Meulles who with his wife have run Churchill's hardware and lumber store for 14 years has said the situation is nerve-wracking. He may soon have to close his store. He said he did not know if the business would survive. The store depends upon supplies being brought in by rail. He has already warned staff about layoffs. He said about 10 of his staff will lose their jobs. There were already layoffs last year when Omnitrax suddenly just decided to close the port.

Port employees made up about ten percent of the population and was by far the largest employer. The company was not making the profits it expected. Residents hoped that the federal and provincial governments would act to keep the port open but to no avail. Governments provincial or federal of whatever stripe follow basically neo-liberal policies that support private enterprise but on the whole try to avoid having to provide subsidies to corporations who cannot make profits without considerable subsidization. De Meulles still had hope:"As a Churchillian, we will never give up. We've [had] so many hurdles in front of us and we keep jumping over them, but we need help this time."

Rhoda, de Meulles wife, wants the Liberal Federal Government to send in the military to help clean up and reopen the railway. There is a massive amount of damage from spring weather including at least five damaged bridges, and 600 culverts to be inspected at 19 different locations. Meanwhile, Fitzpatrick is contacting guests who have booked at the Tundra hotel for the summer to see if they can come in by air. This would be more expensive than the train. However, she has already had some cancellations and expects up to 90 percent of guests who had planned to come to cancel.

The main hope for Churchill is the Missinippi Rail Consortium a group of northern Manitoba First Nations who are in the process of purchasing the port of Churchill and the rail line from the Pas Manitoba to Churchil from Omnitrax. The residents of Churchill plus the first nations, many of whom are dependent on the rail line, along with some western wheat farmers who see the port as an alternate northern route for shipping grain may have enough political clout to persuade the federal and provincial Canadian governments to invest sufficient funds to upgrade the railroad and reopen the port.

The rail line to Churchill from The Pas was started in 1927 by the federal government but problems with finance and engineering difficulties because of the terrain led to its being completed in March of 1929 with traffic started on in September of the same year. It became part of the Canadian National Railway System. There was an extension of the line to Flin Flon in 1928 and this was extended to the mining town of Lynnn Lake in November of 1953. CN was government-owned, having been a Canadian Crown corporation until it was privatized in 1995. The Lynn |Lake extension was bought by a group of aboriginal nations some time ago to form the Keewatin Railway. Ownership of the port of Churchill and the railway to Churchill by aboriginal groups with the support of Churchill residents and some prairie wheat farmers makes sense. The railway can then serve those who have a stake in the railway rather than shareholders in a giant foreign corporation such as Omnitrax whose main interest is providing a good return on investment. The problem will be to see whether the federal Canadian and Manitoba provincial government have the slightest interest in serving these stakeholders. The reaction of the Conservative Manitoba Government is not very helpful.

Mike Gagne, director of operations of the Manitoba Emergency Measures Organization (EMO) said:"Right now we have no immediate action to take.Unless you gather information, do a fulsome assessment, it's really difficult to know what immediate action you could take, because these are complex issues and looking at the amount of goods and materials and services that you need to sustain, there isn't something that you can figure out over a weekend." Surely immediate action could be taken to assess the damage. There have been arrangements made with Calm Air to have additional flights from the northern city of Thompson to Churchill.

Barry Prentice, who is a transportation economist at the University of Manitoba. He noted that the section of the track from Gillam to Churchill had always been a problem since it is built over permafrost that makes the ground unstable every spring. He said that there had to be a decision to reroute the railroad or build a road. Prentice said: "Is this fix going to be the fix, or is it just going to be another in a series of endless fixes for a route that was never actually likely to be a sustainable route? I think it's time to step back from this immediate problem and ask the ... serious question: do we really need a rail line to Churchill ... and if so, should we not maybe look at a different route to get there and solve the problem once and for all?" Prentice said that climate change could make things even worse during the coming years. Whatever is planned in the future the two two main levels of government need to support those who are the main stakeholders, those served by the railway now.

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.

Harper plays down talk of an election

Interesting that Harper, who stresses Canadian sovereignty, in cahoots with the supposedly leftist premier of Manitoba Gary Doer are helping out a US firm that has bought out the railway to Churchill and the Port facilities! In turn the Colorado firm complains to Harper that if the Wheat Board Monopoly is ended his firm will be screwed because grain exports are the bread and butter of the line and port. Of course Harper is bound and determined to end the Wheat Board monopoly!

Harper plays down talk of election
JOE FRIESEN

October 6, 2007

CHURCHILL, MAN. -- On a chilly, windswept day in Churchill, Manitoba, Prime Minister Stephen Harper came face to face with a polar bear and emerged bullish about his government's prospects.

After meeting a bear from the safety of a tundra buggy, a wide-tired elevated bus used by polar bear tour companies, Mr. Harper issued a challenge to his opponents.

"I'm putting forward a plan to govern," Mr. Harper said. "If the opposition wants an election, they'll have to force an election."

Earlier, Mr. Harper gave a glimpse of the uncertainties that come with leading a minority government. A keen student of history, he said he was disappointed not to have been able to visit York Factory, a 17th-century Hudson's Bay Company trading post not far from Churchill.

Print Edition - Section Front
Enlarge Image

More National Stories
The inside story of Vancouver's safe injection site
Message of pride draws support
Dion seeks safe way through Harper's minefield
They helped win the war, but lost their homeland
Gallery awarded $4.5-million in bitter art dispute
Pine beetles won't face controlled burns this fall
Go to the National section
Manitoba Premier Gary Doer, who was walking alongside Mr. Harper, quickly offered to bring the Prime Minister back for a tour of York Factory in the summer. Mr. Harper chuckled and said unfortunately he couldn't guarantee anything, given the current political situation.

In many ways, though, the machinations of election-obsessed Ottawa seemed a long way from the Prime Minister's mind yesterday as he spoke with conviction about the North and Canada's claim to sovereignty in the Arctic.

He and Mr. Doer were in Churchill to announce $68-million in funding for scientific research into the effects of climate change in the Arctic, as well as major upgrades to the Port of Churchill and the rail line that connects it to the south.

"Scientific inquiry and development are absolutely essential to Canada's defence of its North," Mr. Harper said. "They enhance our knowledge of and presence in the region and as I've said so many times before about our Arctic: Use it or lose it is the first principle of sovereignty."

The Port of Churchill, a deep-water port with access to the Arctic and impressive air and rail links, was overlooked by the federal government when it was deciding where to build military infrastructure to assert Canada's claim to the Northwest Passage - much to the dismay of Mr. Doer.

Yesterday, Mr. Doer, an NDP Premier, praised Mr. Harper adding: "At the last premiers meeting, we all spoke in favour of the strong and determined stand to not just talk about Arctic sovereignty but to demonstrate it by our presence throughout northern Canada."

The two governments hope that the added infrastructure funding will help OmniTRAX, the Colorado-based company that bought the port and rail line in 1997, to expand and diversify its business. At the moment the port, which employs about one-third of the town's work force, is used almost exclusively by the Canadian Wheat Board to ship grain overseas, and OmniTRAX has said it believes the port won't be economically viable if the government follows through on a promise to end the wheat board monopoly on grain sales. But yesterday Mr. Harper said that whatever happens with the wheat board, the port will have customers.

"The government of Canada will ensure this port is used and that there are shipments," Mr. Harper said.

Later this month, for the first time, a ship from the Russian-based Murmansk shipping company will arrive in Churchill carrying cargo for import. Many here hope it's the beginning of stronger links and flourishing trade between the two Arctic neighbours.

As the climate changes, and the water in the Far North becomes easier to navigate, they believe Churchill could become an alternative to congested coastal ports, part of a mid-continent trade corridor linked by rail and road to the U.S. Midwest.

The Prime Minister also announced funding for 26 scientific research projects as part of $150-million in funding for the International Polar Year, including money for studies on how polar bears and seals are adapting to climate change.