Update on Sault-Sudbury rail link

NEWS RELEASE

THE CORPORATION OF THE CITY OF SAULT STE. MARIE

************************** Stakeholders continue efforts to establish permanent rail line between Sault Ste. Marie and Sudbury

SAULT STE. MARIE - In mid-June 2009 the Huron Central Railway announced that it would no longer operate the short line railway from Sault Ste. Marie to Sudbury because of the economic downturn and the lack of government support for capital improvements.

Service between McKerrow and Sault Ste. Marie would terminate August 15, 2009 with the remainder of the line closing October 31, 2009.

Canadian Pacific, the owner of the line, indicated that it intended to close the line permanently if another operator could not be found.

On July 14, 2009, at a meeting of stakeholders in Sault Ste. Marie, it was agreed that a working committee consisting of representatives of Essar Steel Algoma, Domtar Espanola and the City of Sault Ste. Marie would be established to address this issue.

On September 16, 2009, a further meeting of stakeholders was held in the City of Sault Ste. Marie Council Chambers.

In attendance were affected industries, communities, and First Nations; Federal and Provincial staff; and political representatives.

Attendees were apprised of progress to date.

Decisions were made regarding the steps which would need to be taken to arrive at a long-term solution.

Progress to date

The working committee has arrived at an interim agreement with Huron Central Railway Inc. that guarantees the continued operation of the short line railway otherwise scheduled to close on August 15, 2009.

In support of this agreement NOHFC has announced a contribution of $1.5 million towards essential short term capital investment.

It is anticipated that FedNor will soon announce a similar contribution.

Essar Steel Algoma and Domtar Espanola have made commitments to support the operation of the rail line and the City of Sault Ste. Marie has allocated up to $250,000 towards administration and negotiation of a long-term agreement.

An application has been submitted to the Federal and Provincial governments for support for a $12 million infrastructure project to be completed by March 31, 2011.

Next steps

- Gaining a commitment from Canadian Pacific that it is prepared to enter into a long-term contract with Huron Central Rail or another acceptable short line operator.

- Selecting a short line operator which will operate the line for the long term beyond August 15, 2010.

- Submitting a proposal to the Federal and Provincial Governments for a project consisting of an additional $21 million capital infrastructure.

- Those in attendance were pleased with the progress to date and supportive of proceeding in the manner outlined by the working group.

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