The rising cost to build a new canola crush plant at Yorkton, Sask. won’t stop James Richardson International (JRI) from doing so after all.
The Winnipeg grain company announced Friday that its board has approved “immediate construction” of the canola processing plant it announced for Yorkton in September 2006.
JRI never formally shelved its plans, but as the company said Friday, “the unexpected and dramatic escalation of construction costs required JRI to review its engineering specifications and satisfy itself as to the strength of its costing estimates before moving forward.”
The review will delay the Yorkton plant’s expected start-up date. JRI told reporters in September 2007 that it planned for a late 2009 start-up, but JRI’s chairman Hartley Richardson said Friday that it now expects its plant will start production “in the second quarter of 2010.”
A project of this scale “requires a proper mix of
caution and optimism,” Richardson said in JRI’s press release, which also officially named the company’s contractors, engineers and equipment suppliers for the project.
“Given the escalation in the cost of building materials and labour, along with the volatility in agricultural commodity prices, it was important that we satisfy ourselves of the project’s long-term viability.”
The plant, with a planned processing capacity of 840,000 tonnes of canola per year, is expected to triple JRI’s canola oil production. The company currently crushes canola at its Canbra Foods plant at Lethbridge, Alta.
JRI president Curt Vossen said the new plant will be an important addition to the company’s canola oil business. “Over the past several years, we have witnessed a significant increase in the demand for vegetable oil generally, and canola oil specifically, on a global basis for food and biofuel,” he said.
“The construction of the Yorkton processing plant will
allow us to better meet the existing and future needs of our world-wide customer base.”
Unmentioned in JRI’s release is the other major canola crush plant proposed for the area. The Canadian arm of French commodity firm Louis Dreyfus announced plans for an 850,000-tonne capacity plant at Yorkton at the same time as JRI’s announcement in 2006.
Dreyfus, which sold a 40 per cent stake in its Yorkton project to Japanese commodity firm Mitsui and Co. in late 2007, said at that time that it planned to start construction this spring for a summer 2009 start-up.
Yorkton (pop. 16,700), which is about 180 km northeast of Regina and 170 km west of Dauphin, Man., is considered the hub of what’s seen as a particularly strong canola-producing region in eastern Saskatchewan and western Manitoba.