Deal reached between Manitoba groups, Omnitrax for ownership of Churchill rail line

The tracks have sat flood-damaged and idle for more than a year, but now a deal has been struck to bring ownership of the Port of Churchill and the rail line to the northern Manitoba community on the shore of Hudson Bay back into Canadian hands.

Agreement in principle still needs legal issues sorted before repairs to tracks damaged by flooding last year

The northern Manitoba town of Churchill lost its rail link to the south in late May 2017. (Submitted by Omnitrax)

The tracks have sat flood-damaged and idle for more than a year, but now a tentative deal has been struck to bring ownership of the Port of Churchill and the rail line to the northern Manitoba community on the shore of Hudson Bay back into Canadian hands.

Two groups representing northern communities and First Nations — One North and Missinippi Rail LP — joined forces with Fairfax Financial Holdings and now have an agreement in principle to buy the beleaguered assets from American company Omnitrax, the federal government announced Wednesday afternoon.

Fairfax, a Toronto-based investment company, announced last November it would partner with One North and Missinippi Rail in an effort to buy Omnitrax's northern Manitoba assets.

The recently formed buying group consists of Fairfax Financial Holdings, AGT Food and Ingredients, Missinippi Rail Limited Partnership and One North, the Wednesday release said. Missinippi and One North will operate together as Missinippi Rail Partners.

"So it is really the perfect partnership that blends local community, international understanding of trading commodities and the production of those commodities themselves. It's a very, very good day for Churchill, for northern Canada," said Jim Carr, Winnipeg South MP and natural resources minister, in an interview with CBC Information Radio.

The arrangement includes the participation of 30 First Nations and 11 non-First Nation communities in northern Manitoba and seven Kivalliq communities in western Nunavut, along with Fairfax and AGT, the government said.

"Indigenous people will have a stake in all of this, their voices will be clearly at the table and they too will be very much a part of what we know will be an exciting future for Churchill and the north," Carr said.

Specifics of the deal, including the financial details, federal government support and a timeline, were not announced Wednesday.

Fairfax president Paul Rivett and Omnitrax owner Pat Broe negotiated the agreement, but there are a number of legal issues to complete before the sale is finalized.

Churchill Mayor Mike Spence calls Wednesday's agreement a 'historic partnership involving Indigenous and northern communities with industry leaders.' (Sean Kavanagh/CBC)

A statement sent by Omnitrax Canada on behalf of president Merv Tweed called the agreement the "best outcome for all stakeholders."

"We are very pleased to see an agreement in place that will ensure the long-term operations of the rail line," the statement reads. Omnitrax looks forward to "a smooth transition of ownership."

The agreement has been a long time coming for Churchill mayor and One North co-chair Mike Spence. He's been lobbying for a deal since Omnitrax began cutting rail service to his community nearly two years ago.

The first priorities will be to finalize the acquisition and begin rail line repairs, Spence said Wednesday.

He called the tentative deal a "milestone."

"Well, I think we're just about there. It's still a work in progress, but I'll tell you what, we've hit a major point," he said.

He said One North is looking forward to working with its partners.

"We all knew coming from the prime minister last year that we had a strong federal partnership throughout this process, and they have demonstrated that they share our vision," he said. "It's in the best of our national interest."

"The people of northern Manitoba have long understood the value of the rail line," Carr said in a government statement released Wednesday.

"This agreement in principle allows those most affected to have a direct stake in the future and long-term interests of their communities."

Ottawa took Omnitrax to court over its refusal to repair the tracks last year, but later removed Omnitrax Inc. from its statement of claim.

The rail line to Churchill was washed out by a flood in May 2017.

Denver-based Omnitrax refused to repair the tracks, saying it couldn't afford the cost and had been trying to sell the northern port and rail line.

The company estimated the cost of repairs at between $40 million and $60 million.

A firm timeline on when crews can start repairs to the track must wait until some of the legal issues are worked out between the buyers and Omnitrax. (Mike Spence/Town of Churchill)

Residents along the line and in Churchill, a town of 900 approximately 1,000 kilometres north of Winnipeg, have faced increasing costs for all sorts of commodities, including heating fuel and gasoline.

Prime Minister Justin Trudeau said last year it was Omnitrax's responsibility to do the work and get the line open. The federal government offered subsidies to northern residents to help with rising costs.

Wednesday's announcement also has significance for First Nations along the rail route.

"Bold investments into much needed infrastructure will create long-term socioeconomic growth for the North," wrote Opaskwayak Cree Nation Onekanew Chief Christian Sinclair, who is also a co-chair of the One North group.

"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."

Manitoba Premier Brian Pallister said in a written statement he was "very pleased" to see the agreement and praised the work of the federal government and the consortium in reaching it.

"Obviously we need to understand the details of this agreement more fully," the statement reads. 

Pallister reiterated the government's support for Churchill and said the province will continue to work with northern communities, the new partnership and the federal government.

A firm timeline on when work crews can get on the rail tracks and start repairs must wait until some of the legal issues are worked out between the consortium and Omnitrax.

About the Author

Sean Kavanagh

Provincial Affairs Reporter

Born and raised in Winnipeg, Sean has had a chance to live in some of Canada's other beautiful places (Whistler, B.C., and Lake of the Woods, Ont.) as well as in Europe and the United States. In more than a decade of reporting, Sean has covered some of the seminal events in Manitoba, from floods to elections, including a stint as the civic affairs reporter responsible for city hall.