Haines railroad enthusiasts have a dream. Now they need an engine to drive it.
Economic study throws water on Haines rail plan 041614 NEWS 1 Capital City Weekly Haines railroad enthusiasts have a dream. Now they need an engine to drive it.
Wednesday, April 16, 2014

Story last updated at 4/16/2014 - 4:16 pm

Economic study throws water on Haines rail plan

Haines railroad enthusiasts have a dream. Now they need an engine to drive it.

On the last day of March, railroad consultants Kells Boland and Claire Derome of Whitehorse said a proposed railroad from Yukon mines to the port of Haines is not economically feasible without help from a government or a major commercial customer.

"This scenario doesn't really work under any circumstances unless someone really has a long-range vision," Boland said to a group gathered in the Haines Borough assembly chambers.

Boland was discussing an extension of the Alaska Railroad to Haines, but his words apply to all of the four scenarios he presented: Unless they can find a major customer, railroad backers' dream will remain a fantasy.

Skagway is the Southeast community best known for railroads. The White Pass and Yukon Route, built in 1898, continues to operate today.

While it was built to serve gold miners, its modern operation is strictly tourist-based. The railroad's managers have turned down requests by Yukon mines to haul ore concentrate, citing excessive wear caused by the heavy loads.

With no railroad to serve the Yukon metal mines, the Haines Port Development Council stepped in to fill the gap.

Headed by of Dave Nanny, Bill Kurz and Dave Berry, the council hopes to make Haines the industrial rail destination that Skagway can't be. Instead of going to Skagway on trucks, ore shipments bound for Asia would be taken by rail to Haines. Northbound trains could carry heavy mining equipment.

If that sounds far-fetched, just look at history, they argue. During the Klondike and Alaska gold rushes, various railroad companies considered Haines as a rail destination.

The most successful of these was the Alaska Midland Railroad, which began surveying a route from Haines to Fairbanks in 1907. When President Woodrow Wilson signed the Alaska Railroad Act in 1914, the Midland Railroad idea was dropped.

A resurgence in Yukon mining has led to a revival in railroad interest. Railroads can transport heavier loads more efficiently than trucks can, making mines more economically viable.

The initial costs of a railroad are far higher, as Boland said in Haines.

A rail line from Haines to Carmacks (picked because of its central location) would cost $3.6 billion to construct, he estimates.

That isn't commercially viable, he said, unless the Yukon government were to invest money into the railroad to get heavy trucks off its highways.

According to best estimates, a railroad would remove up to 300 trucks per day from Yukon highways, saving maintenance costs.

The second option would be to connect Haines to the Alaska Railroad, but Boland's study found that project would need a $2.6 billion government investment to break even - mining transportation wouldn't generate enough revenue.

The best bet for railroad backers is that a large, profitable industry will need a Yukon railroad and a port in Haines.

The two principal hopes are the Crest iron ore deposit and the tar sands of Alberta.

"This, at the end of the day, is probably our best option," Boland said of the tar sands.

Earlier this year, the government of Alberta announced it is spending $1.8 million to investigate the possibility of a railroad line from Alberta to Delta Junction in order to transport oil to the trans-Alaska pipeline.

With pipeline projects like Keystone XL and British Columbia's Northern Gateway tied up by environmental opponents, Alberta has begun looking at rail as an alternative way to get its oil to market.

Tar sands oil shipments would be more than enough to make a Yukon railroad feasible, Boland said, but those aren't likely unless pipelines are impossible - it's simply much cheaper to send oil through a pipeline.

The Crest iron deposit, located near the border between the Yukon and the Northwest Territories, is the second-largest iron deposit in the world.

Owned by Chevron, the high cost of developing the deposit has meant that the iron will stay in the ground for the near future, Boland said.

If markets change and the price of iron goes up, Crest would ship enough ore to make a Haines railroad viable.