Uncertainty surrounding the mining sector compelled
Canadian National Railway Company
) to shelve the feasibility study for the construction work of a
rail line in northern Quebec. The proposed rail line along with a
terminal handling plant was to be set up to serve the iron ore
range in Labrador.
Canadian National Railway partnered with La Caisse de depot et
placement du Quebec (Caisse) and a consortium of 6 mining firms
to initiate the feasibility study in Aug, 2012. The study
included the assessment of expenses and other engineering factors
for the rail network plus related infrastructure. The rail line -
almost 497.1 miles long - was supposed to extend from the Port of
Sept-Iles on the Gulf of St. Lawrence to a mining field, north of
Although the evaluation process was making a steady headway, the
ongoing market volatility led to delays in mine development
projects across the Labrador Trough. An analysis of the current
scenario revealed that there is a shortage of iron ore in the
region due to mine construction schedules and other projects.
Hence, Canadian National Railway will face difficulties in
getting hold of the necessary amount of iron ore for the
construction of the new rail and terminal unit.
Further, a few miners in the territory opted not to join the
other mining groups supporting Canadian National Railway in the
project. This resulted in lower-than-expected volumes of iron ore
available for the rail line project that is estimated to cost
approximately C$5 billion.
A top-level executive of Canadian National Railway commented that
management was highly upbeat regarding this project. But, keeping
in view the current economic circumstances, they decided to drop
the assignment until the picture turns favorable.
Montreal, Canada-based Canadian National Railway remains
committed to enhance transportation services in North America.
Recently, the company announced a C$1.9 billion capital
investment plan targeted toward building infrastructure,
equipment and technology that will drive safety and quality
service for the rail.
Canadian National Railway - which operates along with other
players such as
Union Pacific Corporation
) - currently retains a Zacks Rank #3, implying a Hold rating.
Other Railroad Stocks
Other stocks worth considering within the sector are
Genesee & Wyoming Inc
) -that holds a Zacks Rank #1 (Strong Buy) and
Canadian Pacific Railway Limited
) - that carries a Zacks Rank #2 (Buy).
CDN NATL RY CO (CNI): Free Stock Analysis
CDN PAC RLWY (CP): Free Stock Analysis Report
GENESEE & WYO (GWR): Free Stock Analysis
UNION PAC CORP (UNP): Free Stock Analysis
To read this article on Zacks.com click here.