Canadian National Railway Co. suspended preliminary work on a C$5 billion ($4.99 billion) rail line in northern Quebec amid delays in mining projects.
The Montreal-based railroad said in August it secured the support of mining companies including Cliffs Natural Resources Inc. (CLF:US) to prepare a feasibility study on the proposed rail line. Cliffs Natural, based in Cleveland, said three months later it would delay part of its Bloom Lake mine expansion, citing volatility in iron ore prices and declining use of the mineral by North American steelmakers.
“The feasibility study is on hold and we haven’t determined whether we will resume it,” Louis-Antoine Paquin, a Canadian National spokesman in Montreal, said today in a telephone interview. “The pause is linked to several factors, including an evaluation of the timeline. We also have to evaluate with the mining companies which projects are on ice.”
Former Quebec Finance Minister Raymond Bachand unveiled the rail project last year. Benoit Poirier, an analyst at Desjardins Securities in Montreal, said in a March 2012 note to clients that the proposed 800-kilometer (500-mile) long line would probably cost about C$5 billion, with Canadian National contributing two-thirds of the amount, and could open as soon as 2017.
Labrador Iron Mines Holdings Ltd., New Millennium Iron Corp., Cap-Ex Ventures Ltd. and Alderon Iron Ore Corp. had also agreed to work with Canada’s largest railroad on the feasibility study. The proposed rail line and a terminal handling facility would serve the Quebec/Labrador iron ore range.
Canadian National was working with Caisse de Depot et Placement du Quebec, the country’s second-largest pension fund manager, on the project. Maxime Chagnon, a spokesman for Caisse de Depot, confirmed the decision in an e-mailed message. Montreal’s Le Devoir newspaper first reported the suspension.
To contact the reporter on this story: Frederic Tomesco in Montreal at firstname.lastname@example.org
To contact the editor responsible for this story: Ed Dufner at email@example.com