Cape Breton rail line saved from scrap heap for at least 1 year

The company that ended its freight railway service through Cape Breton in 2015 will not seek to formally abandon the line between St. Peters Junction and Sydney for at least another year, following a deal reached with the province.

Province reaches deal with Cape Breton and Central Nova Scotia Railway to reimburse up to $60K per month

Freight service was discontinued between St. Peters Junction and Sydney in October 2015. (Joan Weeks/CBC)

The company that ended its freight railway service through Cape Breton in 2015 will not rip up its line between St. Peters Junction and Sydney for at least another year, following a deal reached with the province.

Cape Breton and Central Nova Scotia Railway Ltd. stopped running trains on the 160-kilometre stretch in October 2015 because there are so few customers. It had sought to formally abandon the line.

While the new deal, announced Friday, preserves the railway line itself, there's no indication from either the company or the province that freight service will resume.

In exchange for not applying to abandon the portion of the rail line, the rail company will be reimbursed by the province for up to $60,000 a month for certain expenses, according to a government news release.

What is covered under deal?

Expenses related to preserving the line will be covered, such as salaries, insurance, security and building maintenance. Costs for repairs or improvements won't be reimbursed.

Invoices must be filed monthly to qualify for expense reimbursement, said Business Minister Geoff MacLellan.

He said the rail line is a critical piece of infrastructure needed for a proposed container terminal in Sydney.

"Their commitment to not abandon the rail line and leave the tracks whole is critical for the port partners in Sydney as they sell this potential project to the world, because it doesn't exist without a rail line," said MacLellan.

A study released two years ago looked at the impact economic projects in Cape Breton would have on the potential to provide rail traffic in the next three to five years. It found that with the exception of a container terminal, none were likely to generate enough rail traffic.

Other projects looked at included the Donkin Mine, Provincial Energy Ventures, International Iron Benefication and the possibility of intermodal traffic converting to rail.