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Churchill charts a new course as infrastructure cash starts flowing

Renewed optimism surrounds the Port of Churchill and how it could be developed into a transportation hub
Hopes are running high for the Port of Churchill, but securing grain traffic for the facility faces obstacles, including lack of interest from grain companies, which have their own terminals on the West Coast and at Thunder Bay.

It’s been decades since there’s been this kind of optimism around the Port of Churchill and how it could be developed into a transportation hub.

The money is flowing. Last month, Manitoba premier Wab Kinew announced $60 million in provincial and federal funds to get the Hudson Bay Railway between The Pas and Churchill back up and running reliably, as well as upgrade the port. That brings combined federal and provincial investment in the port up to $293 million since 2018.

The new funding “means jobs will be maintained,” said federal northern affairs minister Dan Vandal.

”This means mining and forestry opportunities will open up, including, of course, critical minerals, which are essential to our country’s north. Manitobans, through the Bay Line communities, will have the opportunity to position themselves as a true gateway to the Arctic and a true gateway to the world.”

For the agriculture sector, it could mean a closer seaport than the Port of Vancouver.

The port’s recent history has been messy, with the sole rail line linking Churchill with the rest of the province plagued by service disruptions. In 2018, it was announced that U.S. company Omnitrax had sold the port and rail line to a private-public entity dubbed Arctic Gateway Group, after the American company said it was unable to shoulder the cost of rail repairs.

At the time, Churchill had been cut off from land transport for months due to flood damage to the tracks in May 2017. The new owners included AGT Food and Ingredients, Fairfax Financial Holdings, Missinippi Rail Ltd. Partnership and a group of local communities. Those local communities later transitioned to full ownership in 2021.

Later in 2021, it was announced that the port would be taking a two-year hiatus while rail tracks were rehabilitated.

The high-water mark for Churchill’s grain shipments happened in 2006, when 621,000 tonnes moved through the port’s terminals. Its viability at the time depended almost completely on grain from the Canadian Wheat Board, and wheat accounted for 90 percent of the site’s traffic. Upon the demise of the CWB’s single desk selling authority in 2012, volumes began to slide. Operations ceased in 2015.

In 2019, following the sale of the port and rail line, grain shipments restarted amid much fanfare, only to fall prey two years later to the 2021 hiatus.

Churchill Mayor Michael Spence said grain traffic will return, but the plan is for the port to be less reliant on a single commodity.

“We are a port community and one of the commodities that we all know has been historically shipped through the Port of Churchill is grain, but we will diversify. We will look at other products as well,” he said.

According to some experts, those “other products” will have to do a lot of heavy lifting. Regaining grain traffic will not be easy.

“There’s a possibility it might never come back,” said Quorum Corp. president Mark Hemmes.

His company has been monitoring Canada’s grain handling and transportation system since 2001.

One of the big obstacles keeping Churchill from securing grain traffic will be lack of interest from grain companies.

“The big companies like Richardson, Viterra, P&H/Patterson and Cargill, they’ve all got facilities in Thunder Bay, Vancouver and Prince Rupert,” said Hemmes.

That makes Churchill less attractive.

Other issues include the northern port’s short season, higher insurance costs and a longer car cycle. The car cycle for grain cars going to Churchill is 20 days, Hemmes noted, compared to 15 for Vancouver and about 12 for Thunder Bay.

“You’re never going to get a 50 m.p.h. track up there,” he said.

“That’s not going to happen. You’re riding trains overtop of muskeg.”

He hasn’t personally been on the Hudson Bay Railway, but he has travelled on other lines that pass over muskeg.

“If you’re in the middle of the summer and the top three or four feet of the road bed are now thawed, you can sometimes see the wave of the rail in front of the locomotive,” he said.

Kinew, however, argues that there are agricultural areas from which shipping to Churchill makes a lot of sense.

“We know there’s a lot of interest for grain producers in The Pas area. There is a real desire to get goods to market here,” he said.

Barry Prentice, professor of supply chain management at the University of Manitoba’s Asper School of Business, said Kinew is correct, but that interest doesn’t guarantee grain will move through Churchill.

“We’re back to the commercial reality,” he said.

“Where’s that grain being collected? Who’s collecting it and do they want to put it through Churchill?”

It’s likely that the railway has never been self-sustaining, Prentice noted.

A few years ago, he ran some basic numbers on what it would take for the line to stand on its own merit economically, based on data from the Canadian Railway Association on rail traffic and maintenance costs. That exercise suggested the Churchill rail line would have to run about two million tonnes of product a year.

Getting passenger and resupply trains going would be a step in the right direction, and that traffic is now moving and growing.

At February’s funding announcement, Spence reported that resupply traffic has grown about 160 percent in the last three years. There has also been talk about Churchill becoming a resupply hub for Nunavut.

Critical minerals, however, is the sector generating buzz among those with a stake in the port’s rebirth.

The federal government defines critical minerals as “minerals that are essential to modern-day technologies, including renewable electricity, batteries, electronics and electric vehicles.”

According to the provincial government, Manitoba’s geology includes 29 of the 31 minerals on Canada’s 2021 critical minerals list, including lithium, graphite, nickel, cobalt, copper and rare earth elements. It’s also a sector on the rise, attracting millions of dollars of federal investment into research, development and exploration through the Canadian Critical Minerals Strategy.

The Arctic Gateway Group negotiated a deal with Hudbay Minerals late last year to move 20,000 tonnes of zinc concentrate mined by Hudbay Minerals Inc. Spence expects that to start happening this summer.

Prentice, however, noted that 20,000 tonnes amounts to just one shipload and is a far cry from what is needed for self-sufficiency.

Kinew also raised the idea of shipping hydrogen sourced from Manitoba’s hydro elective power grid. That process would use hydroelectric power to separate hydrogen from water, which would then be converted to ammonia for easier transport.

Oil and gas are a more contentious possibility, but neither Kinew nor Spence are ruling it out. Both did say, however, that environmental considerations must be given their due in the future operation of the port.

It’s not the first time moving oil through the Port of Churchill has been brought up.

In an effort to make up for lost revenues after the end of the CWB gravy train, Omnitrax floated a plan to ship 300,000 barrels of Alberta crude oil in 2013. The idea was met with derision from environmental groups.

Manitoba’s NDP government at the time also dismissed the idea. Then-environment minister Steve Ashton was quoted by the Canadian Press as saying, “our advice to Omnitrax would be, go back to the drawing board on this.”

The port is under federal authority, and the province could not stop the plan, but Omnitrax scuttled it itself a year later.

In April 2022, during a speech in Winnipeg, federal Conservative leader Pierre Poilievre also extolled the virtues of getting Alberta oil to sea via Churchill.

Prentice said the Arctic Gateway Group could indeed make up shortfalls by shipping petroleum products, but the social acceptance of such a practice is another matter entirely.

“What I think they have to wrestle with a little bit is, are they going to be a tourist port or are they going to be a commercial, heavy, industrialized port?” he said.

It’s more about optics than the actual risk of environmental disaster, he suggested. Because the train moves so slowly through the area, even if it derailed, he expects there would be little risk of an oil car being punctured.

Potash has also been mentioned as a possible opportunity, with most potash mined in eastern Saskatchewan.

“Certainly, the volume is there,” said Prentice.

“But if you’re starting to move potash, you have to build a handling terminal to move it through.”

In fact, aside from grain, just about any new commodity will require at least some infrastructure development.

“There’s no way for this to work without investment,” said Prentice.

“If the willingness was there to spend whatever it takes to make it work, it would work.”

Prentice also said that bold steps are needed to ensure the future of the port.

“If we built a railway properly in the first place, you know, we wouldn’t be having this same conversation because we wouldn’t be worrying about continuously spending money to keep it from sinking in the muskeg,” he said.

He also expects that the problems with maintaining northern railways are going to get worse. The section of line from Gillam to Churchill is sitting on a frozen peat bog, he noted.

“As climate change continues, that will become more active all the time.”

He suggested it might be time to look for a new rail path, one that would run more on the bedrock of the Canadian Shield.

“If you want a permanent solution, you’ve got to spend money to get a permanent solution. If you want to keep putting on bandages, you can keep this thing limping along,” said Prentice.

“I don’t think it can be self-sustaining without a pretty big investment of capital to get there.”

Prentice also said he’d like to see Churchill become a container port.

“When the Churchill rail line was built, the only thing we actually exported from Western Canada — the only thing that mattered — was wheat,” he said.

“We have a very diversified economy today, and if we’re going to live in the 21st century, things are moving by container.”

Containers could also help move more grain through the port.

Arctic Gateway Group did not respond to requests for comment as of press time.