Agreement in principle reached to save east rail line

NEWS RELEASE

CITY OF SAULT STE. MARIE

************************* Efforts to retain permanent rail line between Sault Ste. Marie and Sudbury result in agreements in principle

In mid June 2009, the Huron Central Railway (HCR) announced that it would no longer operate the short line railway from Sault Ste. Marie (SSM) to Sudbury because of the economic downturn and the lack of government support for badly needed capital improvements.

Service between McKerrow and SSM was scheduled to terminate on August 15, 2009, with the remainder of the line set to close Oct 31, 2009. Canadian Pacific, the owner of the line, indicated that if another operator could not be found, it intended to close the line permanently.

In July 2009, a meeting of stakeholders from Sudbury to SSM agreed that a working committee, consisting of representatives of Essar Steel Algoma, Domtar (Espanola) and the City of SSM would work to address this most serious issue.

The working committee was able to arrive at an interim agreement with HCR that guarantees continued operation of the short line railway until August 14, 2010.

Key components of this agreement were a $1.5 million contribution for essential capital investment from each of FedNor and the Northern Ontario Heritage Corp. and commitments from Essar Steel Algoma and Domtar (Espanola) towards the operation of the rail line.

The City of SSM allocated up to $250,000 towards administration of the interim arrangement and negotiation of a final agreement.

Once the interim agreement was in place, the working committee focused its efforts on the development of a long term solution.

This complex arrangement involved considerable effort and commitment on the part of the major customers (Essar and Domtar), HCR, Canadian Pacific who own the line, and the City of SSM which played a coordination and facilitation role.

The working committee is pleased to announce today that all necessary preliminary agreements have now been achieved in principle.

Full implementation, however, remains dependent on the finalization of terms for the $30 million one-time infrastructure funding commitment which is to be shared by the Provincial and Federal governments.

Both governments have provided written assurance that this funding will be forthcoming through the Provincial/Territorial Base Fund agreement (PTA).

All parties are hopeful and confident that the signing of the PTA is imminent and that HCR will then be able to negotiate a mutually satisfactory long-term agreement with government.

Time remains of the essence in the finalization of this historic partnership between governments, railways and industry.

Speedy completion will ensure the survival of this essential component of Northern Ontario’s transportation infrastructure.

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