U.S. ag commodities firm Ceres Global Ag’s plans for a canola crush plant in southeastern Saskatchewan are now on indefinite hold.
Minneapolis-based Ceres said Friday it’s suspending the crush project it announced in May last year and will terminate a related equipment design and supply contract, so as to reduce “project-related contract liabilities.”
The proposed plant had been expected to be up and running by summer 2024, adjacent to the company’s grain terminal near the North Dakota border at Northgate, Sask., about 60 km southeast of Estevan.
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Ceres had said in May 2021 it expected to spend US$350 million to build the plant, with capacity to handle 1.1 million tonnes of canola per year. The company had also said it was “engaged in discussions with other interested financial and industry players to fund the project.”
On Friday, however, Ceres said its decision to suspend the project was due to “a variety of factors, including but not limited to, inflationary pressures resulting in higher costs than initially projected” as well as “shifting macroeconomic conditions.”
Ceres said Friday it still plans to “continue to explore avenues” toward some form of canola crush project in the future — but emphasized in a release that “there is no guarantee that such a project will come to fruition or would be similar to the previously announced project.”
Meanwhile, however, Ceres said it expects to take an impairment charge on its fourth-quarter and year-end results this fall in the neighbourhood of $25 million to $30 million, due to terminating the equipment supply and design contract and suspending the project.
That charge, Ceres said, will be “in relation to certain earlier expenditures made in connection with the project.”
Aside from its grain hub at Northgate, Ceres’ other existing assets in the Canadian crops business include its Welland Canal grain terminal at Port Colborne, Ont.; the grain handling and soybean crush assets of Manitoba grain firm Delmar Commodities; and a former Cargill grain elevator north of Tisdale, Sask. It also holds minority stakes in Canterra Seeds and Saskatchewan shortline Stewart Southern Railway. — Glacier FarmMedia Network
