CN to sell off Algoma Central Railway subsidiary, Huron Central Railway gets six-month extension
SAULT STE. MARIE – A last-minute deal has extended Genesee and Wyoming Canada (G&WC)’s operation of the Huron Central Railway (reporting mark HCRY) between Sudbury, Espanola and Sault Ste. Marie until June 30, 2021, allowing the railway’s stakeholders, parent company and all levels of government a six-month reprieve to find a long-term solution to save the rail line. Meanwhile, transcontinental rail operator CN has confirmed that it has initiated the process to sell the Algoma Central Railway (ACR) that runs between Sault Ste. Marie and Hearst and has an interchange with HCRY in Sault Ste. Marie.
Huron Central has six months to secure funding
G&WC president Rick McLellan said he was pleased with the six-month extension to ink a long-term deal regarding the freight-only line along Highway 17.
“Given the progress made in these negotiations and the clearly expressed willingness to come to an agreement, we have carefully considered and agreed to a request by the government of Ontario to postpone the planned end to HCRY’s operation on December 18,” he stated.
The announcement offers a break for the 43 people directly employed by the railway and thousands of other related jobs in the Northeast, as well as the economic viability of the communities that depend on those jobs.
G&WC has cited a target of $44 million to keep running trains on the line. Of that, it hopes the federal government will provide $22 million, the provincial government would contribute $16 million and G&WC itself would add in $6 million.
Canadian Pacific Railway owns the tracks between Sudbury and the Sault and G&WC operates it under the HCRY name through a lease agreement.
Despite the trans-Canada railway’s ownership and the financial benefits it receives by charging to ship freight cars to customers away from the HCRY, it does not contribute to the line’s upkeep.
The HCRY moves more than 12,000 freight carloads per year, much of which comes from Domtar in Espanola and Eacom in Nairn Centre. Both companies employ Islanders. The balance of traffic largely comes from Algoma Steel in Sault Ste. Marie.
If it secures a deal, G&WC would invest in upgrading the roadbed and crossings so trains could travel faster. A decade ago, trains were limited to speeds of 10 miles per hour on much of the 179-mile route but much of the track has since been upgraded to 25 mph zones.
Algoma-Manitoulin NDP MPP Mike Mantha, who serves as the official opposition’s critic for Northern Development and Mines, said the line has operated with temporary solutions for far too long.
“We welcome the last-minute commitment for (HCRY), but instead of doing this each year, let’s all sit down and figure out a long-term strategy for rail service in Northern Ontario,” the MPP said.
Estimates have shown the closure of the rail line would put more than 100 more trucks per day on Highway 17 between Sudbury and Sault Ste. Marie, though some of the railway’s main customers have said their operations may cease to be viable without rail service.
Sudbury-based Milman Industries Inc., which services mining and industrial sectors and has locomotive repair facilities in that city, has expressed an interest in taking over the line if G&WC pulls out.
That company’s executives have suggested that, rather than subsidizing an international corporation that makes hundreds of millions of dollars in net income each year across its North American operations, those subsidies should go toward a Northern Ontario-based company that has been developing long-term strategies to expand the service.
Milman Industries has already operated trains on the HCRY line under its Diesel Electric Services brand; its crews and equipment helped to complete the major rehabilitation work when HCRY received its first government stimulus funding a decade ago.
CN to sell Algoma Central Railway
In Sault Ste. Marie, HCRY interchanges with the ACR, the latter of which runs between Sault Ste. Marie and Hearst. That line may also be on borrowed time.
CN, which owns and operates the ACR as a subsidiary, has not run any freight traffic on much of the southern half of the line since mid-April. It is now running freight between Hawk Junction (near Wawa) and Hearst.
At an investors’ meeting this past summer, CN announced its intention to plan to sell “certain non-core lines in Wisconsin, Michigan and Ontario,” with industry publications reporting that many of the lines in question were brought into CN when it acquired Wisconsin Central Railway in 2001.
The ACR was part of that acquisition.
On December 14, a CN spokesperson confirmed to The Expositor that the company had initiated the process of selling that line.
“Interested parties have been contacted and the process is ongoing. Since it’s a commercial process, we will not comment further,” the spokesperson said.