Canada: Canada Malting Company Limited to buy Mariapolis elevator owned by Delmar Commodities Ltd.

A Winkler-based grain company and Canada’s largest maltster are working on a deal which could ensure the future of a southern Manitoba shortline railway currently up for sale, Manitoba Co-operator posted June 29.

Canada Malting Company Limited is offering to buy an elevator at Mariapolis currently owned by Delmar Commodities Ltd., the Co-operator has learned.

Mariapolis is located at the western end of an 80-mile stretch of rail track owned and operated by Southern Manitoba Railway.

Southern Manitoba Railway (SMNR) was listed for sale in early April. If no buyer is found, the company could apply to the province to have the rail line abandoned.

It’s considered unlikely that Canada Malting would buy a grain facility on the line if it were unsure of the railway’s long-term future.

“I would think that would be an important component,” said Steve Van Wagenen, SMNR’s general manager.

Van Wagenen said he has talked to several prospective buyers for the rail line, including Delmar Commodities and Canada Malting.

“I’ve talked to them and others,” he said from his office in Salt Lake City, Utah, adding, “There’ve been no firm discussions about purchase as of yet.”

Brian Sawatzky, senior grain co-ordinator for Canada Malting, declined to give details of the impending Mariapolis elevator purchase.

“We’re going to do everything in our power not to allow the line to be pulled up,” was all he would say from his office in Calgary.

Martin Harder, president of Delmar Commodities, said his company has been negotiating with Canada Malting since March to sell the Mariapolis elevator for an undisclosed sum.

The two parties have signed a letter of intent and the deal has 45 days to close, Harder said last week. If it goes ahead, Canada Malting could take possession August 1.

Canada Malting has facilities across Canada, but is headquartered in Vancouver, Washington (near Portland, Oregon). Its U.S. parent, C&T Malt, bills itself as one of the largest malting companies in the world, holding other companies in the U.S., U.K. and Australia. C&T is jointly owned by food companies ConAgra and Tiger Brands.

The Mariapolis facility would be Canada Malting’s first rural delivery point in Manitoba.

About 500 cars of malting barley annually would come down the line, Harder said.

“They’re planning on bringing barley into there from all over western Manitoba and into Saskatchewan.”

Delmar Commodities, established in 1995, handles over 260,000 tonnes of grain and other commodities a year, according to its web site. It owns three storage facilities along the SMNR line. These include the former Manitoba Pool elevator at Jordan Siding and the former UGG elevator at Mariapolis. Last year the company moved an unused elevator from La Riviere to Somerset, also on the rail line.

Harder said selling the Mariapolis facility is part of a plan to keep the line operating.

“It’s favourable as far as an attempt to create more traffic. Ultimately the value of the facility is less if you don’t have a rail line.”

Both Harder and Sawatzky expressed confidence the elevator deal will go through.

“I’m quite confident, but at the same time it’s never a deal until you see the tail lights, as they say in the car business,” Sawatzky said.

Van Wagenen said 500 extra cars “would definitely be a benefit” to SMNR. But the added traffic would not be enough by itself to keep the line open, so the railway is still up for sale, he added.

“It probably would not in and of itself change where we are right now because of the downturn in traffic over the last several years.”

SMNR bought the old Canadian National Railway line, which had been slated for abandonment, in 1999. The line interchanges traffic with CN at Morris.

But SMNR isn’t profitable today, due to a combination of rising fuel costs and low grain deliveries resulting from two straight years of poor crops in the region, said Van Wagenen.

“When the traffic volumes have decreased substantially and your costs are going up and your revenue is going down, obviously it changes the whole game.”

The asking price for SMNR is “several million dollars,” according to Van Wagenen.

He said a commercial sale is the company’s first preference. If that doesn’t work out, the line will be offered to the municipalities, then to the province. If there is still no buyer, the company can apply to the regulators to discontinue service.

SMNR is a privately held company owned by Kern W. Schumacher, a resident of Phoenix, Arizona. Schumacher is involved in other railroad lines and related businesses.

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