The Government of Canada has allocated up to $7.8m (C$10.5m) to the Huron Central Railway in Northern Ontario, as part of the National Trade Corridors Fund.
Furthermore, the Government of Ontario will provide additional funding of up to $7.8m (C$10.5m) for the project.
With funding from both governments, the total investment in the project reaches $23.4m (C$31.5m).
The funding will be used for the rehabilitation of crucial rail infrastructure to enhance the usable life of the track.
It will also help Huron Central Railway sustain operations as a viable freight service between Sault Ste. Marie and Sudbury.
The infrastructure upgrade is expected to enhance the reliability of the Northern Ontario rail service while reducing the travel time of railcar traffic.
It is also said to help increase carload volumes in commodity sectors and reduce supply chain congestion.
Canada Transport Minister Omar Alghabra said: “Improvements to the Huron Central Railway infrastructure between Sault Ste. Marie and Sudbury are essential to Northern Ontario.
“The collaboration developed between the Government of Canada, the Province of Ontario and Huron Central Railway Inc. to upgrade the railway is a positive example of how we can come together to build fluid and reliable internal trade corridors.”
Last June, the Canadian Government granted C$24m ($19m) for 147 projects across the nation under the Rail Safety Improvement Programme.