Dubai-based logistics company DP World Ltd. is negotiating for a contract to operate a new container terminal that will increase the Montreal Port Authority’s capacity by more than 50%.

The new Contrecoeur terminal will sit on the St. Lawrence River, just northeast of the city of Montreal, Canada’s second-largest urban area. Construction may start as soon as September on the project, which is expected to cost nearly C$1.6 billion ($1.2 billion) and has a target date for completion in 2029. 

“There’s a competitive process going on and we’re definitely in discussions,” DP World Canada Inc. chief executive officer Douglas Smith told Bloomberg News. 

DP World is one of the world’s largest operators of container ports, and it has a strong link to Quebec — the Caisse de Depot et Placement du Quebec is among its largest financial partners. La Caisse holds stakes in several DP assets, including 45% of the Canadian subsidiary. 

The terminal project has been under consideration since the 1980s, when the port authority bought the land in Contrecoeur, and has been the subject of detailed planning for a dozen years. Costs ballooned and demand fluctuated, but the governments of Canada and Quebec now want to see it built as part of efforts to increase trade with Europe amid trade tensions with the U.S. — committing more than half a billion dollars to the project.

“It checks a lot of boxes,” Charles Emond, chief executive officer of La Caisse, said in an interview. “This is something that would be considered strategic in Quebec. We like infrastructure, we’re good in ports, we have expertise, we have the operator.”

The Port of Montreal’s current capacity of 2.1 million containers annually may be fully reached by 2030, and the new terminal would be able to handle 1.15 million containers of volume. 

A spokesperson for DP World in Canada said that “while we see strong potential for developing logistics infrastructure in Montreal that drives economic growth and long-term value, we have no announcements to share at this time.” 

Prime Minister Mark Carney promoted the Contrecoeur terminal project this week during a press conference, along with a potential port expansion in Churchill, Manitoba, that might eventually be able to export liquefied natural gas. 

“The No. 1 focus of this government is to build that infrastructure, and particularly infrastructure that helps us deepen our partnership with our European partners,” Carney told reporters in Germany.

The Montreal Port Authority has said the trade war with the U.S. led companies to reassess export markets in the first half of the year, with 22% more goods going to China during the period. Exports to Spain and northern Europe also rose.

“The expansion of the Port of Montreal in Contrecoeur is a major strategic asset for increasing the resilience and fluidity of supply chains throughout Eastern Canada. In this perspective, we are currently in discussions with a private partner and investor, whose identity will remain confidential until an agreement is signed,” said Renee Larouche, director of communications with the Montreal Port Authority. 

Montreal is Canada’s biggest eastern container port and its second-largest overall, after Vancouver.