OmniTrax blames provincial, federal governments for loss of 2016 shipping season

OmniTrax Rail says a lack of interest from both the federal and provincial governments has derailed the future for the port of Churchill and the rail line connecting the town to southern Manitoba.

OmniTrax says government of Manitoba still owes port nearly $2M for 2015 season

OmniTrax says it's spent $80 million on the port and rail line. (Sean Kavanagh/CBC News)

OmniTrax Rail says a lack of interest from both the federal and provincial governments has derailed the future for the port of Churchill and the rail line connecting the town to southern Manitoba.

The Denver-based company declined an interview but did provide answers in an email to a series of questions posed by CBC News. The company maintained weeks of silence after workers at the port facility got lay-off notices in July.

OmniTrax says port is not closed

In response to why the company chose to shutter the port OmniTrax CEO Kevin Shuba wrote, "The port is not closed. The grain terminal has been suspended for the 2016 season. There are people employed and services running through the port."

Shuba went on to say there was simply no business for the terminal.

"There was not a single committed contract for grain this season so operation of the grain terminal was not economically viable and we made a business decision based on those facts,"  he said.

Company has unpaid bills from government of Manitoba

Since it took over the rail line and port in 1997, OmniTrax was the beneficiary of millions of dollars in subsidies and grants from both the federal and provincial governments. The company says there are no service subsidies in place for the 2016 shipping season and they are owed $ 1.74 million from Manitoba for the 2015 season.

A statement from Cliff Cullen, Manitoba's minister of Growth, Enterprise and Trade says OmniTrax is "incorrect" and  "the process around the 2015 agreement signed by the previous NDP government is ongoing. OmniTrax's claims invite a number of questions and are currently being reviewed by auditors as part of the process."

OmniTrax also claims neither level of government has done anything of substance to find a solution to the problems. When asked what efforts had been made by either Ottawa or Manitoba, Shuba wrote, "None to date."

OmniTrax contends the federal government has been slow to react to a potential sale of the rail line and port to a consortium of First Nations.

"Ongoing to date Chief Arlen Dumas [Chief of Mathias Colomb First Nation] has not had a response from the federal government in relation to the submission he made in May of this year," Shuba wrote.

Shuba explained why OmniTrax was silent after the lay-off notices went out, pointing to the relationship between the company and both levels of government. 

"After over two years of discussions with both the province and the federal government it was evident there was no interest in working together to create a long-term strategy. As such we made a business decision based on the facts in front of us," Shuba wrote.

Shuba also responded to Premier Brian Pallister's comment that OmniTrax was using the closure as a leverage tool for more money. "Not sure what the premier is referring to," he said. 

Shuba said OmniTrax has spent millions upgrading both the rail line and the port. 

"OmniTrax has invested $80 million in the railroad and port since taking ownership. These improvements are in part responsible for the significant improvement in the assets. Hudson Bay Railroad freight speed has increased 25 per cent and derailments have decreased 71 per cent over the past three years.  The port has had significant security, safety and efficiency improvements over the last several years," Shuba wrote.

That answer is the opposite of what some Churchill residents told CBC News, who said both facilities sorely needed maintenance. It also contradicts what a senior executive in Canada's grain industry asserted in July. The source spoke of a steady decline in the condition of the rail line and the port facilities.

The company was also asked what would it take for Omnitrax to re-open the port and return the line to regular service. 

"The grain season for 2016 has passed. Solutions now need to be focused toward the 2017 season," Shuba said. 

If those solutions include more money for the company, it isn't coming from the government of Manitoba. 

"Our new government has been perfectly clear. We are not interested in continuing to subsidize the operations of OmniTrax with money taken from Manitoba taxpayers," Cullen said in a statement. 

Relationship with Omnitrax 'complicated': feds

A spokesperson for Navdeep Bains, minister of Innovation, Science and Economic Development, says the federal government hasn't received any proposals or requests from OmniTrax, despite having reached out to the company.

"With OmniTrax, it's been more complicated," said the spokesperson, but added that the government was "open to working with the company" and made efforts to work with local stakeholders. 

Ottawa was never given any signal from the company that it intended to layoff workers at the port terminal or cut rail service, the spokesperson said, and that it was "many days" after the workers received their notices that the company responded to communications from the government.

The company has also not taken advantage of $4.6 million in federal subsidies available this year to move grain through the port. 

The spokesperson said the federal government has been in touch with the Mathias Colomb First Nation on the proposal to purchase the rail line and port terminal and added a deputy minister from Western Economic Diversification Canada is in Churchill looking for solutions.