CORRECTED-UPDATE 1-CP Rail drops plan to push into Powder River

Mon Dec 3, 2012 11:52am EST
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(Removes superfluous second graph)

* Railway says will not extend line into Wyoming, Montana

* Option acquired under DM&E railroad purchase in 2007

* Thermal coal market appears in long term decline - analyst

* Decision came as no surprise; CP Rail stock slips on TSX

* New CEO Harrison to disclose turnaround plan this week

By Susan Taylor

TORONTO, Dec 3 (Reuters) - Canadian Pacific Railway will take a C$180 million ($181.2 million) charge to abandon plans to expand into the Powder River coal-mining region in the U.S. states of Wyoming and Montana, citing weakness in the thermal coal market.

Canada's No. 2 railway acquired the option to build a 260-mile extension into coal region of northeastern Wyoming and southeastern Montana as part of its C$1.48 billion purchase of the Dakota Minnesota and Eastern Railroad in 2007.   Continued...