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

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.