Richardson buys further into Peace grain handle

(Dave Bedard photo)

Canada’s second biggest grain handler has made another play to expand its handle in northwestern Alberta’s Peace region, this time buying from an independent player.

Richardson International announced Wednesday it will buy the Great Northern Grain terminal and crop input business at Nampa, Alta., about 26 km south of Peace River, for an undisclosed sum.

Edmonton-based Great Northern Grain, which also operates producer car loading services plus a smaller grain terminal at Killam, Alta., recently finished an expansion at Nampa, adding 2,500 tonnes of storage capacity, a new grain cleaning building and new cleaning equipment.

The Nampa terminal’s holding capacity is now 17,300 tonnes, with a 75-car rail spot made up of a 52-car spot and 23-car spot and an overhead bridge to transfer product, allowing it to load 50 cars (about 4,000-4,500 tonnes of grain) in a 12-hour period, for shipping on Canadian National Railway (CN).

The Great Northern facility also comes with an 8,400-square-foot crop protection and seed warehouse, for retailing crop input products, Richardson noted in its release Wednesday.

Richardson on Wednesday also pledged to start work this spring on an additional expansion at Nampa, boosting the terminal’s storage capacity by 14,000 tonnes and increasing the rail car spot to handle 104-car unit trains.

Winnipeg-based Richardson said it will also add retail fertilizer services to the facility’s offerings, by putting up fertilizer storage and a 200-tonne per hour blending system. The terminal expansion and fertilizer facilities are expected to be complete by fall, the company said.

Employees now working for Great Northern Grain at Nampa facility “will be offered the opportunity to join the Richardson team,” the buyer said.

“Presence”

Richardson noted this deal, expected to close by Feb. 9, marks its fourth acquisition in the Peace in the last two years, including the purchase of crop input centres at Falher, Fairview and Manning in 2010 and near-complete construction of a 20,000-tonne fertilizer storage shed with rail receiving at its Dunvegan facility at Rycroft.

The Dunvegan fertilizer shed, including 200-tonne per hour blending capability and a 300-tonne per hour distribution rate, is to serve as the distribution centre for Richardson’s other Peace-region sites, the company said.

“The Nampa facility will now give us a presence in both the eastern and western parts of the region and we look forward to providing greater service to customers,” Darwin Sobkow, Richardson’s vice-president for agribusiness operations, said in the release.

Costs for the expansions at Nampa also weren’t disclosed in privately-held Richardson’s release. In a 2007 level-of-service complaint to the Canadian Transportation Agency against CN, Great Northern Grain estimated it would cost about $800,000 to boost the Nampa facility’s car spot from 73 to 100, and another $4 million-$5 million for the extra storage, cleaning capability and equipment to be able to load a 100-car train in 24 hours.

“Even if this investment were made, however, the reality of the industry is that no single elevator facility will ship 100 cars each week for 42 consecutive weeks into the same corridor,” Great Northern Grain said in 2007, referring to CN’s GX 100 advance products program, in which CN distributed 100-car trains to grain companies that contracted to book the cars for consecutive weeks.

“In fact, even large grain companies that use CN’s GX 100 product use multiple originating elevators in order to meet the 42-consecutive-week requirement into the same corridor.”

Related stories:

Richardson Pioneer maps out $25M in site work, July 5, 2011

Richardson buys input dealer in Alta. Peace region, July 13, 2010

Richardson buys Peace-region input retailers, April 15, 2010

Richardson buys Peace-region ag input facility, Feb. 8, 2010

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