Paul Bickford
Northern News Services

Hay River (Jan 23/06) - After months of speculation, the Mackenzie Northern Railway leading into the Northwest Territories has been sold and is back in Canadian hands.

The Canadian National (CN) Railway, which operated the line until 1997, has bought it back from RailAmerica along with two other Alberta lines for $26 million. The deal could see CN pay RailAmerica an additional $4 million depending on future revenue growth.

Canadian National is again the owner of the Mackenzie Northern Railway having purchased the line, along with two others in Alberta, from RailAmerica for $26 million. - NNSL file photo

"It's a good fit for us, we know there is already a solid traffic base," said Jim Feeny, CN's senior manager of public and government affairs. "We're going to make the investment to allow these lines to handle more traffic."

The Canadian rail giant plans to spend $40 million over the next three years upgrading the lines, "with the bulk of that going to the Mackenzie Northern," he added.

In Hay River at the northern tip of the line, news of the sale to CN and its plans for future improvements were met with excitement.

"This is great news for the Town of Hay River," said Greg Stevens, town manager.

"They have deep pockets and if they get the track upgraded it will be great with the pipeline coming."

Poor track conditions are precisely why RailAmerica decided to get rid of the Mackenzie Northern, Central Western, and Lakeland & Waterways lines, the last of which serves oil sands-rich Fort McMurray, Alta.

"They needed some capital investments," said RailAmerica spokesperson Susan Wright Greenfield, adding the company decided it would rather sell the three lines and use that money to make improvements to its U.S.-based holdings.

"The Mackenzie Northern Railway is a good property," she said. "Of the three, it's the busiest and generally speaking it produces the highest revenues."

Annually the NWT's rail link, which runs from Hay River 966 km south to Smith, Alta, carries roughly 33,500 carloads of freight.

"Heading north into the NWT, its mainly building supplies and fuel," said Feeny.

Track improvements will mean the line can handle increased capacity in terms of either weight and speed, he said, adding he could not comment further on any of capital investment plans.

"I've heard the trains need to slow to 10 km-h around Manning, Alta.," said Stevens.

That will certainly need to improve if the proposed Mackenzie Valley Pipeline moves forward.

At a recent community meeting, project proponents and representatives of the Town of Hay River estimated the mega-project would result in about a 13 per cent increase in rail car movements at the peak of construction.

Last June, Yellowknife-based Braden Burry Expediting was rumoured to be engaged in talks to buy the Northern railway.

"We looked at it and it just wasn't right for us for a number of factors," said Gordon Stewart, the company's chief executive officer.

"I think CN will do a hell of a job with it."