CWB takes direct stake in Prairie grain handling

The grain company formerly known as the Canadian Wheat Board has made its first hands-on play in the Prairie grain handling game.

Winnipeg-based CWB on Tuesday announced an agreement to buy the grain handling and port terminal assets from the Soumat arm of Toronto’s Upper Lakes Group Inc. (ULGI) for an undisclosed sum.

The deal, expected to be closed by year’s end, will give CWB full shareholding control of three ULGI companies: Winnipeg-based Mission Terminal, and two Trois-Rivieres-based firms, Les Elevateurs des Trois-Rivieres and Services Maritimes Laviolette.

CWB CEO Ian White, in a release, described the deal as “a first step in building and securing CWB a strong position in the grain marketing supply chain.”

Mission Terminal’s assets include its 136,500-tonne capacity grain terminal on the Mission River at Thunder Bay, Ont. The Thunder Bay terminal, owned until 1999 by Saskatchewan Wheat Pool (now part of Viterra) and later expanded, handles about 1.5 million tonnes of grain per year.

Since 2008, Mission Terminal has also owned a 5,800-tonne capacity primary elevator on Canadian Pacific Railway track at Alexander, Man., about 25 km west of Brandon.

CWB also gets Mission Terminal’s equity stakes in three producer-car loading facilities: White Mud Trading Co., at Frontier in the southwestern corner of Saskatchewan; Willows Grain Co. at Willows, Sask., about 15 km east of Assiniboia; and the Boundary Loading Group of four facilities on the Boundary Trails Railway line.

Mission Terminal also has equity stakes in five shortline rail operations: the Great Western Railway, Great Sandhills Railway and Long Creek Railway in southern Saskatchewan, and the Boundary Trails Railway Co. and Lake Line Railway in southern Manitoba.

In all, White said, the Mission Terminal operations “will let CWB source grain directly from farmers and move it right on to the ships docked at the East Coast.”

Les Elevateurs des Trois-Rivieres (ETR), meanwhile, would give CWB a receiving, storage and loading facility on the St. Lawrence River, with storage capacity for 110,000 tonnes of grain, 78,000 tonnes of alumina (aluminum oxide) and 20,000 tonnes of fuel coke.

ETR’s facility provides a grain unloading rate for grain of 2,000 tonnes per hour via two marine towers, and handles about six million tonnes of grain per year.

It’s able to take grain by ocean ship, laker, rail or truck and can also unload vessels of up to Panamax size. With 35 feet of water at its berth, it can allow ocean vessels leaving the Seaway system loaded with grain to top off at deeper drafts.

Services Maritimes Laviolette provides stevedoring — that is, ship loading and unloading — and related services for ETR.

Noting its standing long-term relationships with all three companies, CWB on Tuesday described the deal as the start for building “a more vertically integrated company.”

CWB, White said, for decades has been “building a prized, international brand based on our reputation for quality and service with domestic and international customers. With this acquisition, we will bring these same brand qualities to our grain-handling and port operations.”

Analyst Chuck Penner of Winnipeg’s LeftField Commodity Research told Reuters’ Rod Nickel on Tuesday that the deal, given CWB’s relationship with Mission Terminal — led by former Canadian Wheat Board CEO Adrian Measner — is not surprising.

In terms of Prairie grain handlers with physical infrastructure, “there really aren’t that many small players for (CWB) to pick off,” Penner said. “They have limited opportunities that way.” –– Network

Related stories:
CWB ready to compete, expecting to be profitable, Feb. 7, 2012
Upper Lakes sheds stake in bulk shipping, Feb. 28, 2011
Mission Terminal buys Man. elevator, July 26, 2008

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