Port of Churchill to ship Prairie grain for first time in years as it pushes for expansion

Century-old port is being modernized, and a major expansion proposal has been recommended to the Major Projects Office

Prairie grain will travel north to the Port of Churchill for the first time in six years this week as operators vie to expand commodities exported from the Hudson Bay gateway, site of a proposed multibillion-dollar expansion. The shipments will move via the Hudson Bay Railway and be exported to overseas markets later in the summer, according to a press release from port owner Arctic Gateway Group. “It’s a huge milestone for us to get agricultural products and grains back to the Port of Churchill,” Chris Avery, chief executive of AGG, told The Globe and Mail on Wednesday.

The century-old port is currently being modernized, and a major expansion proposal has been recommended to the Major Projects Office. The federal and Manitoba governments provided $262.5-million in funding toward the planning and design of the strategy, as well as upgrades to the port and rail line. The site currently exports small volumes of critical minerals and ships hardware and building supplies for communities and industry in Nunavut.

It expects to start exporting potash from a small Manitoba mine in the coming years. “Looking forward in our current geopolitical situation, we see that the port today is once again a strategic asset for Canada,” said Mr. Avery, who declined to comment on which company will be shipping grain out of the port. Grain volumes had plummeted since 2012 when the Canadian Wheat Board ended.

The CWB had subsidized the terminal through managed logistics and incentives to farmers who stored grain on site. AGG, owned by 29 First Nations as well as local governments in Manitoba and Nunavut, bought the port and railway in 2018 and has since upgraded the infrastructure. It plans to make improvements on the more than 1,000 kilometres of track leading to the terminal.

The port is touted as a way to connect producers, processors and exporters in Saskatchewan and Manitoba to the Arctic trade corridor, providing access to Europe and beyond. Climate change means that the northern shipping season – currently around four months long – is lengthening. This is also good news for grain farmers across Western Canada, said Murad Al-Katib, CEO of AGT Food and Ingredients, a grain exporter that had an ownership stake in the port until 2021.

The volume of exports flowing through the Port of Churchill will be small in comparison to what passes through other major gateways such as the Port of Vancouver, said Mr. Al-Katib. But that doesn’t mean it can’t be a useful trade corridor, especially because it is open during harvest. “It’s important that Canada recognizes that we need to ship using all our gateways at the time where we need it most.”

But the association representing Canada’s major grain exporters – the Western Grain Elevator Association – has long argued that the port is an unfeasible corridor. The routing of grain through the Port of Churchill is not a good investment for the Canadian taxpayer for several reasons, said Wade Sobkowich, executive director of the association. Foremost: The port is not open long enough.

Year-round consistency in supply lines is key to grain buyers, he said. The facility also cannot be profitable unless it is capable of exporting more than one million metric tonnes during its 90-day shipping season, he added. Because of limited track infrastructure and storage capacity, it would take close to 100 days to bring in the required volume.

The rail costs are also higher because of the infrequency of movement to the port. The costs of insuring double-hulled polar vessels are steep, driving costs even higher. “If people want to do business through a port – and they can pencil it in economically – then by all means do it.

The concern we have is the federal government and provincial government throwing taxpayer dollars after taxpayer dollars to prop up a port that otherwise wouldn’t be working.” But if the project is a matter of national interest, that should overcome challenges posed by the trade route and justify the expense, said John Corey, president of the Freight Management Association of Canada. The Port of Churchill may not be the most efficient grain route in the country, but usage will promote and justify investment, both private and public.

“If your overall objective is to open up the north to have a presence there, then yes, it’s not going to be efficient. It’s not going to be as cost effective. But it may fulfill other objectives that the government has besides the efficient movement of grain.”