Teamsters Canada Rail Conference

Ontario Northland, a small regional railway owned by the Ontario government, said yesterday it would be implementing some aggressive cut-cutting strategies to help weather a downturn in its business since one of its key customers - the Kidd Creek mine near Timmins, Ont. - went on strike earlier this month.

The news kicked off some speculation Wednesday that the provincial government might consider putting the railway up for sale again.

In 2003, Canadian National Railway Co., the country’s largest railway, attempted to buy Ontario Northland, but eight months of negotiations fell through after the Ontario government insisted on job guarantees for its workers.

Kidd Creek currently accounts for about a third of Ontario Northland’s business. After the mines workers went on strike in early October, it caused a major drop in the railway’s business.

Steve Carmichael, Ontario Northland chief executive, said Tuesday the railway would reduce train starts, defer training and hiring, and other capital and non-essential spending for the duration of the strike.

“Kidd Creek is one of our major rail freight clients and, as a result, this disruption will have a significant impact on our bottom line.” he said, announcing the measures.

The tough times at the railway also had some speculating that the Ontario government might consider selling the railway.

“Given Ontario Northland’s difficulties, it is possible that the rail could be on the block,” said David Newman, National Bank Financial analyst, in a note to clients. “Canadian National Railway Co. previously had an interest in Ontario Northland and would have the financial means to acquire the railway and weather the current storm. That said, [Canadian Pacific Railway Ltd.] could benefit as well with a more fluid Ontario north.”

The Ministry of Northern Development and Mines said Wednesday there are currently no plans to sell the railway, and a CP spokesman said the country’s No. 2 railway had no interest in buying it at this time.

Mark Hallman, CN spokesman, said he had “no comment” on whether the country’s largest railway would be interested in taking another swing at it.