Nova Scotia Terminal Project Gains Financing

Nova Scotia Terminal Project Gains Financing

The long-planned project to build a second container port in Nova Scotia got a leg up this month when the Maher Melford Terminal provided proof to the provincial government and the municipal government of Guysborough that financing for the $300 million terminal is in place, clearing the way for the two governments to buy the land where the terminal and the adjacent logistics park would be located.

“We showed them documents that we had the money in place to build the 315-acre container terminal and the first 215 acres of the logistics park and the rail corridor to the rail line,” said Richie Mann, vice president of marketing for Melford International.

The terminal project, which would have an initial capacity of 1.5 million 20-foot-equivalent units, is backed by Maher Terminals, which has a minority stake, the New York-based private equity firm Cyrus Capital Partners with a majority stake, and a number of other private equity and infrastructure investment funds not identified.

The project received the financial commitments from its investors because discussions with container lines have progressed to the point where they felt comfortable the terminal would have cargo commitments from at least one carrier before the start of construction.

“Our commitment to our investors is that we were not going to do a ‘build it and they will come’ terminal, rather that we were going to have cargo committed in order to secure financing,” Mann said.

The project planners are in talks with major carriers, but are not ready to announce any of the carriers that may call at the terminal in the future. “It’s sufficient to say that there is a high level of interest in a carrier becoming a partner in the project at this point,” he said.

With financial commitments from its investors, the terminal project will reimburse the provincial and municipal governments for their cost of buying the land along the 100-foot-deep Strait of Canso Strait, which separates Nova Scotia from Cape Breton Island.

Guysborough has already purchased or expropriated the property for the logistics park. The final cost of the land purchase by both government entities is still being assessed, but it is likely to be in the $6 million to $7 million range, which the project would pay back along with legal fees. The land acquisition would be finalized by year-end. “We hope to have title to the property by the end of the year,” Mann said.

Construction of the new terminal would begin once the project gets a firm commitment from a carrier to use the terminal, which Mann expects next year. The terminal will be the closest North American terminal to the big North European ports and to the Straits of Gibraltar, so the project’s management team expects it to attract business from carriers that serve routes to Southeast Asia and the Indian subcontinent via the Suez Canal, as well as the trans-Atlantic trade.

The terminal would mirror the Maher terminal in Prince Rupert, British Columbia, which is the shortest route from Asia to North America. It would use technology similar to that at the Prince Rupert terminal, which Mann said is so efficient that it would boost the annual capacity much higher than the targeted 1.5 million TEUs.

Part of the project involves construction of a 16-mile rail line from the terminal to Linwood Station in Nova Scotia, where it would link up with Rail America’s 100-mile short line to Truro, Nova Scotia, where it connects with CN Railway’s trunk line to Montreal and on to the Canadian and U.S. Midwest, which also carries containers from Halifax, Nova Scotia’s other container port. After the new spur is completed, CN would run intermodal trains right to the Melford terminal. Discussions have been held with major U.S. and Canadian retailers about using the terminal.

The estimated cost of the terminal and the rail line is about $350 million, Mann said. This is a relatively low cost for a new container terminal. The project has been able to keep costs down because the land is inexpensive and there is no need for dredging. The terminal would be built on high-quality aggregate, which would be leveled and pushed into the adjacent water, giving the terminal an additional 60 acres of land and a 60-foot berth.

The combination of low land costs, a labor force with no legacy agreements and the lack of a port authority would enable the terminal project to ramp up to the break-even point when it reaches “a couple of hundred thousand moves on an annual basis,” Mann said.

Contact Peter T. Leach at pleach@joc.com and follow him at twitter.com/petertleach.