TORONTO (miningweekly.com) – Canadian National Railway (CN) has suspended the feasibility study for the construction of its proposed rail line and terminal handling facility to serve the Quebec/Labrador iron-ore range, owing to current market realities forcing project developers to defer expected project start-ups.

The feasibility study was started in August 2012 by CN and its partner La Caisse de dépôt et placement du Québec (the Caisse), along with a group of six mining companies. CN said the study had progressed “steadily” over the past several months.

CN had won backing from a group of mining companies to study the feasibility of a proposed C$5-billion rail link in northern Quebec to ship iron-ore from the isolated region.

Canada's biggest railroad company had previously said it would shelve the plan unless more miners signed up. Among the miners that participated in the study were Cliffs Natural Resources, Labrador Iron Mines Holdings, New Millennium Iron, Alderon Iron Ore and Cap-Ex Ventures.

A joint review of the project, together with the mining companies, had indicated that mine construction schedules and diverging needs for each specific individual project would make it difficult to obtain the critical volumes of iron-ore necessary to support the building of new rail and terminal infrastructure by CN.

The decision by some miners in the region not to join the group of mining companies supporting the CN infrastructure project was also a factor in the much-lower-than-projected iron-ore volumes that were expected to be shipped in the foreseeable future.

"We have invested considerable effort and resources towards the feasibility study, but in light of the circumstances, CN has concluded that it is not advisable to continue with the feasibility study at this time," CN executive VP and CFO Luc Jobin said.

The Caisse president and CEO Michael Sabia agreed, saying "we understand that conditions in the global economy prevent undertaking the project at this time. As a long-term investor, the Caisse remains open to participating in infrastructure projects that will facilitate the development of Northern Québec, always in partnership with an experienced partner that can minimise the operational risks."

He added that “the Caisse is convinced that the long-term structural trends in the global economy will be favourable to the development of Québec's natural resources sector".

CN - Canadian National Railway Company and its operating railway subsidiaries - spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, with connections to all points in North America.