There isn't enough business to justify rail line across Cape Breton, study finds

An engineer who helped author a 2023 study into the viability of a rail line across Cape Breton says there aren't enough businesses on the island that need to ship by train to justify fixing up the crumbling rail bed, bridges and tracks.

Dan MacDonald, of DMDE Engineering, said officials wanted to do a study to demonstrate the need for a functioning rail line without a container terminal project.

To do that, the rail company has said it needs to run at least 10,000 rail cars across Cape Breton Island every year.

At a public meeting in Sydney on Monday night hosted by the Scotia Rail Development Society on Monday evening, MacDonald said the study found existing companies could use just under 3,000 cars and a statistical analysis of trucking in Nova Scotia and Newfoundland and Labrador found there could be demand for another 3,000 to 6,000 rail cars.

"We're close," he said. "We got to 9,300, and I think we're only one big carrier or one big user of the railway to put that over the top and to develop the economic plan that would make it viable."

MacDonald said later in an interview the study officially found a range of 6,000 to 9,000 cars annually was possible.

"We think that once we have the rail here, you build it and they will come, that you'll get closer to the [9,300]," he said.

"I guess the 93 is a bit optimistic, but it's in the range and that's the number we've been quoting."

'We have to tell people what a great port we have'

MacDonald also said officials believe if they can find one more large rail user, they would have the numbers to convince the railway company that a line in Cape Breton would be viable.

He said they are looking out west to Saskatchewan to find a large shipper willing to use a new East Coast port.

"The Cape Breton Partnership has put in an application to Nova Scotia's Department of Economics to get funding to try and develop this business case, to see about potash, to see about canola, to see about grain," he said.

"This is just ideas we have here, and we need to market our port and our railway here. We have to tell people what a great port we have."

The Cape Breton Partnership is an economic development agency based in Sydney, N.S.

Novaporte officials have said they have everything they need including funding and a shipping company to start a container terminal project in Sydney Harbour except a rail line.

MacDonald said Novaporte's proposed container terminal could be that one big customer needed to put the rail car count over the 10,000 mark, but the company needs a commitment on the rail line, which he called a "chicken and egg" situation.

"If Novaporte got the container terminal, that's the one big customer. If the container terminal is delayed or doesn't come ... then we're looking for other possible big customers."

At Monday's meeting, Novaporte vice-president Kathleen Yurchesynagreed with others that the rail line needs another company to act as a catalyst to boost the business case.

The rail line has been unused since 2015, when then-owner Genesee & Wyoming applied to the Nova Scotia Utility and Review Board to abandon the line.

At the time, it said rail car traffic had shrunk to just under 500 rail cars a year, far fewer than the 10,000 needed to break even.

The provincial government intervened and declined to let the company abandon the line, but has subsidized it at a cost of more than $18 million to keep it from being lost altogether.

Despite that cost, the line has continued to deteriorate.

Last month, the government ended that subsidy, saying with CN as a new investor in the line, it would need to see a business case in order to continue the subsidy.

Local businesses say they would invest

A 2017 study found the rail line would need at least $100 million to bring it up to standards, but the province says that number has risen to $500 million.

MacDonald said he believes that number is closer to $200 million.

At the meeting on Monday, a handful of business representatives including manufacturing, seafood shipping and an auto dealer, spoke on a panel and agreed their businesses would like to have the option of shipping by rail and even said they would invest in the infrastructure if necessary.

"I think if this is going to happen, it's going to take investment at all levels," said Brad Jacobs, general manager of Colbourne Auto Group.

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