Quebec rail plan stirs hope, concern in Canada's iron belt

Mon Jul 9, 2012 12:11pm EDT
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By Susan Taylor and Julie Gordon

TORONTO (Reuters) - Canada's biggest railroad wants to build a C$5 billion ($4.8 billion) rail line to ship iron ore from isolated northern Quebec to port, a crucial link that could transform Canada into the world's third-largest producer of steel's main component.

Canadian National Railway Co's (CNR.TO: Quote)'s 800-kilometer (500 mile) project, backed by Quebec's public pension fund, is still years away from becoming a reality. Indeed, the 2017 projected start-up date looks ambitious, given the complexity of negotiations that lie ahead.

The junior miners needed to fill the rail cars want to keep a lid on transport costs, and some have even floated the idea of building their own rail line rather than signing on to CN's plan.

The proposed railway also faces an intensive consultation process with governments and local native groups before work can begin. Assuming those talks are successful, construction over the rugged terrain would take three years to complete.

Stretching from the Port of Sept-Iles on the St. Lawrence River to north of Schefferville, on the border between Quebec and the province of Newfoundland and Labrador, the line will pass numerous mining projects in the Labrador Trough - a geological formation rich in iron ore.

There are already two rail lines in the region but their capacity is insufficient to meet demand from planned new mines in northern Quebec and Labrador.

The Quebec government says the region represents potential private investments of more than C$20 billion.

The privately funded rail project is just one piece of Quebec's far-reaching Plan Nord, a 25-year plan that targets C$80 billion in public and private investments to develop a resource-rich area of 1.2 million square km, roughly the size of South Africa, with mining, renewable energy and infrastructure.   Continued...