Ceres Global Ag Corp. recently announced that it is suspending its previously-announced canola crush project at Northgate, Saskatchewan. The company’s said the decision to pause the project is due to a variety of factors, including but not limited to, inflationary pressures resulting in higher costs than initially projected and shifting macroeconomic conditions.
Consistent with the foregoing, Ceres has taken the step of terminating an equipment design and supply contract relating to the project, in order to reduce project-related contract liabilities. Termination of this contract and suspension of the project will result in a fourth quarter impairment charge in relation to certain earlier expenditures made in connection with the project and which will be included when Ceres’ reports its fourth quarter and fiscal year-end results later this fall.
The company currently estimates that the impairment will be in the range of $25 million to $30 million. Ceres said it intends to continue to explore avenues to pursue a canola crush project of some form in the future but added that there is no guarantee that such a project will come to fruition or would be similar to the previously announced project.
Ceres is headquartered in Minneapolis, Minnesota, and together with its affiliated companies, operates 13 locations across Saskatchewan, Manitoba, Ontario, and Minnesota. These facilities have an aggregate grain and oilseed storage capacity of approximately 31 million bushels.