CP Rail to upgrade north line on resource demand

Wed Sep 21, 2011 3:11pm EDT
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By Nicole Mordant

(Reuters) - Canadian Pacific Railway (CP.TO: Quote) is spending C$300 million ($300 million) to improve its northern mainline across the Canadian Prairies to take advantage of strong global demand for potash and grains.

The upgrades on the line between the grain-trade center of Winnipeg, Manitoba, through Saskatchewan to Edmonton, Alberta, will allow it to handle longer, heavier freight trains, and will provide a better back-up if bad weather shuts down the railway's southern cross-Canada mainline, CP Chief Executive Fred Green said.

"It's been an aspiration for a long time but we couldn't find the collective business case because we already had a line across the continent," Green told Reuters in an interview.

The impetus to upgrade the line came from continuing strong demand from Asia for the crop nutrient potash and for Canada's two biggest crops, wheat and canola.

The province of Saskatchewan is home to much of the world's known potash reserves. The northern line heads from Edmonton south to Calgary and then west to the Port of Vancouver, a major gateway for goods destined for Asia.

Weather provided another push for the line. Earlier this year, CP, Canada's second biggest railroad, experienced a brutal six months of flooding and other weather disruptions on its network in Western Canada, which pummeled its earnings and stock price.

"You could argue that the weather experience was kind of the icing on the cake," Green said in a telephone interview from Montreal.

Work on upgrading the line started this spring and will take about 2-1/2 years to complete, Green said.   Continued...