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Grain companies busy expanding storage capacity

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As the grain companies in Western Canada fight it out with the railroads over the huge backlog in grain shipments this year, they have been busy developing additional storage capacity in the network.

On Thursday, the CWB (formerly the Canadian Wheat Board) announced construction of its second state-of-the-art Prairie grain elevator in less than three weeks. It's about 65 kilometres east of Saskatoon near Colonsay, Sask.

Earlier this month, Viterra Inc. announced construction of a new elevator in Kindersley, Sask., and $100 million in enhancements of its Vancouver port terminal.

On Wednesday, Cargill announced the expansion of its elevator in Morris, Man., increasing its capacity by 200 per cent.

Ian White, the CWB's CEO, said there is more infrastructure expansion to come from the former federal Crown corporation.

"We aim to be relevant... a significant grain company," White said. "I won't disclose how many facilities that will require, but I would say we would be looking to add facilities across the Prairies that give us that sort of scale."

The challenges of moving the 70-million-tonne-plus 2013 grain harvest has made clear there is plenty of room for added handling capacity in the system.

White said he believes that's the case, adding it's the consensus within Canada's grain-handling industry.

"We all believe either we have to upgrade the number of facilities we have and increase the level of storage or build new facilities to cater to the future of the grain industry," he said.

The CWB's 42,000-tonne elevator under construction near Colonsay, Sask., is scheduled to open in time for the 2015 harvest.

It is adjacent to the Canadian Pacific railway's main line and will feature a car-loading rate of up to 1,600 tonnes per hour with a 134-car loop track.

Last month, CWB started construction of an elevator with a 33,900-tonne capacity west of Portage la Prairie in Bloom, Man. That one is on the CN main line. The CWB is spending $25 million to $35 million on the two elevators.

White said the CWB's new terminals will be more efficient and quicker for farmers to deliver and for the railroads to unload.

He said he believes there will be other opportunities for new construction and/or acquisitions.

Earlier this week, Jeff Vassart, Cargill Canada's president, said in a statement regarding its Morris elevator expansion: "We recognize the need for more storage and additional care spots for the entire value chain to maximize opportunity."

In addition to the recently announced expansions of the grain-handling network infrastructure, Richardson International said last summer it would spend $40 million upgrading its crop-input centres across Western Canada and $120 million expanding its Vancouver grain terminal.

Viterra is spending $20 million upgrading four other elevators in Saskatchewan in addition to the 34,000-tonne-capacity elevator in Kindersley.

The CWB's new elevator construction is part of the company's privatization strategy. Last November, it acquired Mission Terminal in Ontario and Les âlévateurs des Trois-Rivières in Quebec.

As well, it is expecting delivery of two Equinox-class lake vessels this year that could be operating as early as the end of this summer.

White said the CWB will have no trouble meeting its mandate to provide a business case to Ottawa no later than mid-year 2016 and be privatized by 2017.

"We do believe we will be well ahead of that schedule," he said. "I can't say much more now, but we are looking to put our privatization plans to the government in 2014. Then we will say where the process goes from there."

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