Huron Central Railway hopes to get its finances back on track.
Earlier this week, The Moose reported the company has said it needs money and assistance to keep the line between Sudbury and Sault Ste. Marie open.
This isn’t a recent problem.
Back in April of this year, city council in Sault Ste. Marie heard about the railway woes.
Genessee & Wyoming Canada, the parent company of Huron Central Railway Inc., claims it needs between $5 million – $6 million annually to keep its infrastructure in shape on its 278 km of rail line to, in turn, keep industry products and supplies running to the region’s major industries. The 44-employee rail carrier’s ask of federal and provincial funders is a combined $46 million over five years for the 278-kilometre of track.
Three major regional companies – Essar Steel in Sault Ste. Marie, Domtar in Espanola and Eacom in Nairn Centre – make up about 88 per cent of Huron Central’s business.
All three provided letters of support to the rail operator.
Company officials say while federal and provincial government infusions of cash between 2010 and 2015 have helped improve infrastructure along the rail line, Huron Central considers itself “in survival mode” because profits are insufficient to enable sustainable capital investment to maintain and rehabilitate the line.
Increased compliance costs like insurance and crossing regulations and the end of government funding have drained Huron Central’s finances, the report to council stated.
Huron Central says its current volumes don’t provide the additional revenue needed to keep the railway lines in shape.
It’s looking for public funding to help maintain the rail lines.
While the city couldn’t financially support Huron Central’s endeavours, it did unanimously pass a resolution supporting the company’s efforts to secure the funding necessary to provide the short line freight service between Sault Ste. Marie and Sudbury.
At that time, Louis Gravel, president of the company, called the support “critical.”
Moves have already been made asking the federal and provincial government for $8 million, he said. The financial backing is needed for another five years and it’s believed that a brighter future for the mining industry will result in increased shipping tonnage and more revenue for Huron Central to become self-sustaining.
Huron Central says its service provides lower costs for manufacturing customers to move its products as opposed to truck usage, decreases the cost of road maintenance, reduces environmental costs and provides safer roads.
Saving Huron Central also preserves direct and indirect jobs, ensures viability and sustainability of area industries and provides direct and indirect rail access to communities and First Nations says Algoma-Manitoulin MPP Mike Mantha.
This week,Tuesday, Algoma- Manitoulin NDP MPP Michael Mantha renewed the NDP commitment to keep Huron Central Railway rolling in order to save jobs in the Sault and Algoma region and said the Wynne Liberals need to stand up and do the same quickly.
The Huron Central Railway rail line is critical for steelmaker Algoma to get its products to market. In 2009, Huron Central had said it would stop operating the line between the Sault and Sudbury because major infrastructure improvements were needed to return the short-line rail to profitability.
It struck a one-year deal with the major stakeholders that would see the operations to allow officials time to seek funding for the much-needed improvements from higher levels of government.
Traditionally, the province does not fund railway infrastructure, but the plan was created to allow for its share of the funding.
Eventually both governments kicked in the money to ensure the infrastructure improvements on the tracks were made.
At that time, major users of the line, including Essar Steel Algoma and Domtar, needed to make commitments pertaining to usage levels and shipping rates while CP and Huron Central need to finalize agreements relating to sharing rates and lease agreements for the tracks.
Huron Central, which has leased the rail line since 1997, said it had lost money in the four years prior to the funding announcement, including $2.1 million in 2008.
