Canadian National Railway Co. (CNR) will revive a proposed C$5 billion ($4.99 billion) rail line in northern Quebec, a region rich in iron ore, once commodity markets recover, its partner in the project said.
Last month’s suspension of a feasibility study for the work is only temporary, Normand Provost, executive vice president of private equity at the Caisse de Depot et Placement du Quebec, said today after a speech in Montreal.
“This project isn’t dead,” Provost told reporters. “If you believe in the long-term potential of northern Quebec, the railroad is a must. We put it on the shelf temporarily because some companies put their mining projects on ice, but the day that projects will restart, you will need a railroad.”
Canadian National said in August that it would assess prospects for the line, then froze the work in February. Benchmark iron-ore prices last year averaged 23 percent less than in 2011, according to data from the Steel Index Ltd., amid concern that growth is slowing in China, the world’s biggest steelmaker.
Canadian National’s position hasn’t changed since Feb. 12, when the company said it was suspending a feasibility study on the line, Louis-Antoine Paquin, a company spokesman, said today in an e-mail.
Caisse de Depot is Canada’s largest pension-fund manager, with net assets of about C$176 billion. Provost oversees Caisse de Depot’s portfolio of private equity and infrastructure holdings, which was worth about C$24 billion at the end of last year.
Benoit Poirier, an analyst at Desjardins Securities Inc. in Montreal, said in a March 2012 note to clients that the proposed 800-kilometer (500-mile) 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. (LIM), New Millennium Iron Corp., Cap-Ex Ventures Ltd. and Alderon Iron Ore Corp. also had 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.
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