Officials with a short-line railway company in southern Alberta say Ottawa’s decision to invest more than $4 million in regional railway infrastructure will provide a huge boost to the local economy and to rural communities.
Last week, the federal government announced a $4.2 million funding package that will be used to upgrade track, build new railway sidings and expand an existing railway transload facility owned by 40 Mile Rail, a short-line railway company based at Foremost, Alta.
The federal funding will be augmented by nearly $5 million worth of private funding, pushing the total investment to more than $9 million over the next three years.
When the upgrades are complete, the locally owned railway company will be able to handle unit grain trains and move as many as 15,000 rail cars per year at maximum capacity, said Lorne Buis, director of procurement for the railway.
“I see this as not only an infrastructure investment but as an economic boost for the whole area,” said Buis.
“Whether an investment like this brings five families in or 50 families into the area for new jobs and new opportunities, it will definitely help our local communities. It will create employment or maybe it will put a few more kids in our schools to make them more viable. Any way you look at it, the spinoffs will be immense.”
40 Mile Rail is a locally owned short-line that consists of approximately 72 kilometres of track between Stirling Junction, southwest of Lethbridge and Foremost, Alta.
Local investors acquired the line, formerly a Canadian Pacific Railway branch line, in early 2016.
Apart from drought, which has affected grain production, track capacity has been a major challenge for the railway.
Since it opened for business, the company has moved 500 to 600 cars per year. However new business opportunities in the oil and gas, and wind power industries have highlighted the need for additional rail capacity, including new sidings and additional car storage.
The railway currently has a 28-car railway siding at Skiff, Alta., about 25 kilometres west of Foremost. It also has a railyard with limited capacity at Foremost but other than that, there is no space to store loaded rail cars or to assemble cars into larger unit trains, which are preferred by Class 1 railway carriers including Canadian Pacific and Canadian National.
The new funding package will enable the railway to upgrade its facilities and build two or three new sidings at various points along the 40 Mile Rail route.
Buis said the need to expand rail capacity became more urgent when the railway landed contracts to off-load components for three wind farms under construction in the area.
Incoming trains that carry towers, blades and other wind generation components have been arriving at Foremost from Colorado and Texas.
Lack of rail-car storage capacity and passing lanes have restricted the railway’s ability to transload the components efficiently and have limited the railway’s capacity to handle other commodities while incoming wind trains are being unloaded.
“Currently, when a tower train comes in with 70 cars, we basically can’t do anything else on our line until it’s out of the way,” Buis said.
“We’ve been managing through the summer… but it would sure be nice if we had the spots that would allow us to handle other commodities simultaneously, or assemble unit trains.”
Buis said short-line railway companies often have a tough time securing investment capital because commercial lenders have limited experience lending to the railway industry.
“To try to get financing for operations, it’s really tough. But with (federal funding) in place, you can go to a bank and you can show them that you’ve got a 46 percent equity stake in the investment already.”
Last week’s funding announcement was Ottawa’s second investment in the Western Canadian short-line industry in less than a month.
Earlier in August, Ottawa announced a $12.4 million federal investment in a pair of short-line expansion projects near Burstall, Sask., and Unity, Sask.
“We are excited for Forty Mile Rail,” said Perry Pellerin, a short-line railway executive and president of the Western Canadian Short Line Railway Association.
“They saved their line from certain extinction and have quickly built an economic powerhouse, spurring development for not only their community but also for southern Alberta.”