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Algoma rail seeks to restore shipping volumes, assistance.

Algoma rail seeks to restore shipping volumes, assistance

Government support will be necessary to preserve Algoma Central Railway (ACR) if its shipping volumes are not increased soon.

However, the desperate situation is not unique for the northern railway company, according to ACR president Stan Black.

"We haven't been able to provide shippers with a (competitive) rate without government support since 1987," he admitted.

Three years of financial assistance from the federal government ceased in December 1989. Now the company hopes to receive assistance from the province until its main clients, Algoma Steel and the forestry sector, restore previous shipping volumes.

Approximately 75 per cent of the railway's freight revenue is normally derived from carrying iron ore to Algoma Steel Corp. from its sintering operation in Wawa.

Freight accounts for approximately 70 per cent of the company's revenues. The remaining 20 per cent is generated by Algoma's passenger and tour train services.

"We do a pretty respectable and efficient job, and have for the life of the railway," said Black.

Black told Northern Ontario Business that the railway is taking part in the fight to ensure that Algoma Steel's Wawa division is maintained, and it is also searching for other stable sources of revenue.

The province announced in January that a $5-million contribution from the Northern Ontario Heritage Fund would be given to ACR to help maintain the operation.

It was also announced that discussions between ACR and the province's Ontario Northland Transportation Commission (ONTC) were to take place.

There had been some speculation that Algoma would be taken over by ONTC in order to save it from closure. However, Black insisted that a takeover was not part of any upcoming negotiations.

Black would only say that ONTC will be acting on the province's behalf in an effort to secure ways of protecting Algoma Central Railway.

ONTC spokesman John Milne said a date has not been set for discussions.

Milne said ONTC will act solely as an adviser to the provincial government. However, he admitted that a takeover of the Sault-based railway company is possible.

"There are so many variables involved that it would be impossible to say," commented Milne.

In January Algoma MPP Bud Wildman said, "If it comes to a choice between curtailing service and/or looking at public ownership to ensure its continuation, we must take a very close look at the latter option because of the number of jobs that depend directly, or indirectly, on the railway."

Algoma Central Railway employs some 450 people on a full-time basis and hires an additional 100 seasonal employees during peak operating times, said Black.

It is estimated that approximately 2,000 jobs will be lost if both the Wawa ore division of Algoma Steel and the railway company are shut down.

Also at risk because of the financial difficulties of Algoma Steel and Algoma Central Railway is the Agawa Canyon train tour. Neither the tour nor ACR's regular passenger service could be maintained if freight revenues are lost.

The Agawa Canyon tour attracts about 100,000 passengers a year, but its equipment is aging and the parent company lacks cash.

PHOTO : A major share of Algoma Central Railway's revenues have been derived from carrying iron ore to Algoma Steel Corp. from its sintering operation in Wawa.
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Title Annotation:Focus On Sault Ste. Marie; Algoma Central Railway seeks government financial support
Author:McDougall, Douglas
Publication:Northern Ontario Business
Date:Apr 1, 1991
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