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Comtrax group expects to offer choice for Southeast producers

Service, alternatives, variety, flexibility. These were some of the terms floated out to a small but interested audience of potential investors who were attracted to a public information meeting conducted by Comtrax Logistics Solutions on Dec. 12.
mark bratrud comtrax dec 2016
Mark Bratrud

Service, alternatives, variety, flexibility.

These were some of the terms floated out to a small but interested audience of potential investors who were attracted to a public information meeting conducted by Comtrax Logistics Solutions on Dec. 12.

Some of the principal promoters for Comtrax made their way to the Microtel Inn to present facts and potential uses of, and investment in, the logistics hub they expect to build on property between Weyburn and Midale.

The main commodity to handle, process and move to markets would be grains, oilseeds and lentils, said Mark Bratrud, one of the original directors who led the discussion in Estevan along with Dan Cugnet, another principal in the project. They explained they are just two of an original team of eight who were cobbled together to serve as point personnel from an original group of about 30 interested investors who had met earlier in the year to get the project moving. That team is now conducting a series of 11 meetings throughout southeast Saskatchewan, mostly in the geographic sphere of influence, which would be about 120 miles in any direction.

Access to a main railroad line was imperative, said Bratrud.

“We thought the CPR would be one of the toughest ones to sell on the idea, but they have become one of our biggest supporters, which was a bit of a surprise for me,” said Cugnet, who pointed out the current stable of about 24 commodity terminals in southern Saskatchewan, are actually owned by just three main grain-handling companies, which leaves the door open for Comtrax to engage not only producers but also major commodity companies who want to gain a presence in southeast Saskatchewan.

Comtrax would provide processing, grading and shipping services for other commodities such as crude oil, aggregate and fertilizers among other things, using a loop track on an original 25 acre site capable of loading 50,000 bushels per hour using two terminal driveways, or 134 cars in eight hours. They would be able to unload eight cars in one hour. The original property sketch included up to 95 more acres for future developments and expansion. The total railcar loop would accommodate up to 260 cars using the loop and ladder combination, the men explained.

“It would run on a business model of fee for service for grain, pulses, oilseeds … any handling and processing. It would have the flexibility to isolate any particular shipment with an issue, without holding up anyone else,” said Cugnet. The terminal condo segments could be sold or leased to commercial grain traders.

The crude oil transloading unit would offer more flexibility and alternatives for oil producers, said Cugnet who provided some video snapshots that indicated how southeast Saskatchewan crude could be moved by rail to a wider market base at a cost that would be comparable to pipeline charges, adding that information he had been able to gather, points to a pipeline glut between 2019 and 2029 as oil production in the region is expected to climb.

“With all the pipeline debates and wars and hundreds of regulatory hurdles to get over, I see the pipeline industry not having enough capacity, even if all their proposed lines get approved,” he said.

The commodities hub they intend to build will cost approximately $75 million and the promoters are seeking $30 million from potential investors and they will complete a feasibility study and business plan. Cugnet said that is the most difficult part of the promotion because they want to keep local producers in the driver’s seat. The rest of the capital would come more easily from major corporations who are anxious to gain a voice and presence in the region and are currently blocked by the three main corporate grain handlers.

“We would plan a 60,000 tonne workhouse and storage room with two separate cleaning lines and grain drying capability along with a pellet plant and those special bins for problem products,” said Bratrud.

The location is vital, the men said. It needed to be central to grain and oil gathering operations with no natural barriers like large bodies of water or deep valley and be close to the border while having access to a reliable labour pool. That’s why southeast Saskatchewan filled the bill on all counts, Cugnet said.

A series of business investment plans for potential investors, designed by the accountancy firm MNP was also introduced to the audience. It pointed out various options that could be used to gain equity in the operation. “There are different ways to invest and several pretty flexible options,” said Bratrud.

In the meantime, the original working group of eight will be expanded by four or five more members from the original group of 30, as the feasibility study and business plan move into a reality stage.

“We want to make sure all areas are represented and heard during the planning stages and we are engaging professionals when it comes to the business plan. We have some expertise within the group, but we still need to have them come in to form that structure,” said Bratrud. The partnership(s) with the interested corporate community would be entertained once the original investors and partners were on board.

“Everyone will start equal. No one has lined pockets early. We want ownership and we want to do it with a large group of friends, neighbours and investors,” said Cugnet. “Yes, there are risky dollars at the start, during the feasibility stage, but costs won’t be huge. We need to get local interest up to get us to the next stage. We have hit 20 per cent of our target ($30 million) already. If it turns out that we can’t go with the big plan, then we bring it back to see where you want to go,” Cugnet said.

Several potential investors and producers made additional queries before the two-hour meeting adjourned with the Comtrax team armed with a few more names and addresses of possible participants.

Before leaving, Cugnet told Agri News and the Mercury previous meetings held in Regina and even in some smaller communities attracted between 12 and 80 interested producers and potential investors, so they were feeling more confident that this version of a logistic hub would definitely find a niche in this area of Saskatchewan.