Canadian National suspends study on $4.9bn Quebec rail project

11 February 2013 (Last Updated February 11th, 2013 18:30)

Canadian National Railway (CN) has suspended preliminary work on a feasibility study for its proposed C$5bn ($4.9bn) rail link in northern Quebec due to delays in mining projects following a drop in ore prices.

CN freight train in St. Justin, Quebec

Canadian National Railway (CN) has suspended preliminary work on a feasibility study for its proposed C$5bn ($4.9bn) rail link in northern Quebec due to delays in mining projects following a drop in ore prices.

CN had been working on a feasibility study since August 2012 with a group of five mining companies, including Labrador Iron Mines Holdings, Cliffs Natural Resources, New Millennium Iron, Cap-Ex Ventures and Alderon Iron Ore.

The proposed rail line and terminal handling facility would serve the iron ore producers at the Quebec-Labrador border.

Canadian pension fund manager Caisse de Depot et Placement du Quebec had signed a deal to provide funds for the study.

CN spokesman Louis-Antoine Paquin said that the feasibility study has been paused rather than abandoned.

"The proposed rail line and terminal handling facility would serve the iron ore producers at the Quebec-Labrador border."

"There’s a pause because we’re evaluating certain timetables and also it has something to do with some projects of mining companies that they seem to have put on hold at the moment," Paquin said.

The feasibility study was intended to assess the cost and engineering parameters of the proposed rail network and its associated infrastructure.

The 800km rail line would link the Port of Sept-Iles on the Gulf of St. Lawrence to a mining region north of Schefferville, Quebec.

Expected to be launched in 2017, the project is predicted to generate more than C$2bn ($2.01bn) in annual revenue for CN.

Iron ore prices fell to $86.70 a tonne in September 2012, compared to $180 a tonne in September 2011, although the price has now recovered to $155 a tonne, according to Reuters.


Image: CN’s study on the proposed 800km rail line between the Port of Sept-Iles and Quebec’s iron ore mining hub has been paused as miners delay projects due to low prices. Photo: courtesy of CN.