Thursday, June 26, 2014

Canadian grain broker acquires Saskatchewan short line

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As part of its transformation from government marketing monopoly to privatized competitor, the Canadian Wheat Board (CWB) has become the imminent owner of a work-worn 125-mile (200-km) short line connecting Saskatchewan growers and an Alberta petrochemical producer to a Canadian Pacific interchange at Swift Current.

Majority ownership of the Great Sandhills Railway comes with the CWB’s acquisition of the locally owned Great Sandhills Terminal business announced June 23. CWB executives are declining to state the strategic objective of the deal, or whether it will seek to spin off the railway operation from the grain terminal operation at Leader, Sask. They are withholding comment before the deal is approved by shareholders sometime in August. The total purchase price, include the railway, is C$17.5 million.

Great Sandhills Railway is CP’s former Empress subdivision, divested in poor condition to local owners in 2009 for C$6.1 million. Derailments are not uncommon, including one a year ago involving four tank cars loaded with butane. That incident has not previously been publicly reported by the railway or by provincial or federal regulators who authorized the on-site flaring of the tank car contents. The wrecked cars were still lying beside the line as late as October 2013. A toppled grain hopper from a previous nearby derailment was also left unrecovered.

Substantial investment in track rehabilitation will be necessary to keep trains on the rails, particularly the butane and propane movements from the Spectra Energy plant just across the Alberta boundary.