(Reuters circulated the following article on January 19.)
VANCOUVER, British Columbia — Canadian National Railway Co. said on Thursday it purchased three smaller Alberta railroads from RailAmerica Inc., re-extending its operations closer to the province’s developing oil sands.
Canadian National will pay C$26 million ($22 million) in cash with a provision to pay up to C$4 million more, depending on the amount of future business development. CN will also spend about C$40 million over the next three years to upgrade track on the lines to haul heavier freight.
Two of the railroads — the 600-mile (1,000-km) Mackenzie Northern Railway and 118-mile (190-km) Lakeland & Waterways Railway — were formed from branch lines in northern Alberta that Canadian National sold in the late 1990s.
“These lines became available because RailAmerica intended to divest them. We looked at them and said they make sense. We’re a different company than we were eight, nine years ago,” CN spokesman Jim Feeny said.
The lines carried about 50,000 carloads of freight last year and employed about 130 people, but CN said upgrading the northern Alberta lines will allow them to haul heavier materials needed for construction of oil sands and pipeline facilities being built in the region.
“This purchase will put us in a pretty good position to take advantage of that,” Feeny said.
Most of the capital expenditures will be done on the Mackenzie Northern, which runs between Smith, Alberta, and Hay River in the Northwest Territories.
Feeny said CN has no plans at this time to purchase other short-line railways in northern Alberta. The third railroad in the deal, is the 21-mile (34-km) Central Western Railway, which is primarily used to train new rail crews.