Competitive Rail Access...Critical in the North

One of the key factors in the development of the Ring of Fire, is the transportation system to get the ore out of the region.  Without getting into the argument of where that ore should be processed, (and I think this ore body is big enough that it makes sense to invest in a fair amount of infrastructure as close to the region as possible) it has been determined that rail is a preferable option to road.  

The fact that the study used to confirm rail's superiority was commissioned by the company who has spent the most to secure a rail route does not diminish the obvious fact that rail can handle a much higher volume of heavy traffic than a road.  There are a few assumptions in the rail scenario that may raise an eyebrow in rail circles (like the 55 mph train service on a railbed newly constructed in Northern Ontario weather conditions) but overall the assumptions are valid.  

In the rail option, close to 100 110-ton capacity rail cars can be hauled by 3 engines and 2 crew members, compared to the same amount of ore hauled on the road by 157 70-ton trucks which also includes 157 engines and 157 drivers.  That overwhelming efficiency supports the conclusion of the study, regardless of the perceptions and assumptions.  Neither does it take an engineer to assess the environmental superiority of the rail option.

The operations of the railway, including locomotives and rolling stock, are not well defined and will require much more detail as the plan unfolds, but it is the operator of the railroad that needs to be figured out as soon as possible.  The 15% provision for profit margin means that a private operator could be involved, but the public/private argument needs to be heard in its entirety before that decision is made.

The argument supporting a private operator would be buttressed by the need to provide an efficient operation which can be demonstrated by the existence of a profit margin, which is easily benchmarked.  The public ownership side of the equation is not so easily explained though.  It is possible to demonstrate the efficiency of a public operation, but one has to carefully compare the operations with similar industry benchmarks while fully explaining the effects of any public policy that may provide benefits, but impact the operation.

 In the rail industry, the configuration of the system has led to some shippers being subjected to the revenue whims of the rail transportation provider.  The effect of this hard squeeze by the powerful rail company on the captive shipper has led to government intervention by way of the Fair Rail Freight Service Act, which was passed in Dec 2012 after a lengthy review process.

 This piece of legislation may remedy the situation faced by captive shippers, but it is a legislative solution to a problem that can be avoided by providing real competition in the first place.  This solution rules out either of the major roads operating the line and rather than relinquish control of the rail system to a shortline operator who is ultimately under the thumb of their connecting Class 1 carrier, the operation of ONTC by the Ontario Provincial government stands as a shining example of what public ownership of a regional line can accomplish.

 The paper mill in Kapuskasing was able to be saved by ONTC in taking over the Northline when CN abandoned the region in 1993, and the subsequent development of the Agrium mine at Opasatika was only possible because that line was still there.  Further to that, when ONTC told Lecours in Calstock that they would have to relocate to Hearst for rail access, since the line between Hearst and Calstock had deteriorated to a point where service was impossible, Lecours went after the government for line rehabilitation money.  The Liberal government funded the line upgrades through the ONTC and the operation in Calstock was saved.  That intervention and subsequent economic benefit to the locality was only possible because it was a public operator in charge.

 If stakeholders want to have maximum control over the transportation of the ore, and the jobs associated with it, they need to find a way to ensure a public railway operator is found.  Luckily, such a plan already exists and is awaiting evaluation by the Ontario government.  It is the "New Deal" involving the James Bay Lowlands Port Authority and it is gaining support from stakeholders in the region.  

 ONTC is already subject to federal rail legislation and the port authority concept, clarifies the federal government's role in a provincial rail company.  The federal/provincial relationship in the oversight of ONTC has led to confusion in the past, and this plan overcomes that.  The fact that the plan has First Nation support also puts it well ahead of any other in a situation where further delay will have devastating ramifications.

 The Ontario government needs to step up to the table and participate in making this plan a reality to give real impetus to an economic recovery that has thusfar refused to ignite.