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A major upgrade of the rail line between Auckland and Northland would cost $1.3 billion and there is no demand for the freight capacity it would bring, a Ministry of Transport business case says.
However, the study also noted the poor state of the line meant without significant investment it could become unsafe and close in about five years.
It also noted it could generate more freight if Northport, at Northland's Marsden Point, expanded significantly.
A major upgrade of the rail line to Northland is considered 'marginal' (file photo).
The work would plug into a separate study on the future roles of the three major ports in the upper North Island and the viability of shifting Auckland's port business elsewhere.
The preferred upgrade would covered the North Auckland line as far as Otiria, north of Whangarei, with a branch line called the Marsden Point Link out to Northport.
The $1.3 billion cost retained a single rail line and required larger tunnels and new bridges to bring it up to modern freight standards.
It found the project would deliver $1.19 of benefits for every $1 spent on it.
The study found while the economic benefit was low, an upgraded rail line would have strategic value in boosting activity in Northland.
"A high-quality rail connection from Marsden Point to Auckland is a critical pre-condition of Northport becoming an inter-regional container port," it said.
"This will enable this strategic option value, in the same way as road and rail investments in the Waikato and Bay of Plenty have enabled greater economic integration with Auckland."
An initial look at expanding Northport's freight role, the so-called Upper North Island Supply Chain Study, found it could only happen with an upgraded rail link.
The case for the link argued there was little demand for it without an expansion of Northport.
The findings have been welcomed by the Associate Minister of Transport and Northland-based New Zealand First MP Shane Jones.
"The Northland Rail business case, together with the recently released interim report from the Upper North Island Supply Chain Strategy, present a bold vision for investment in how freight moves around the upper North Island," he said in a statement.
"This business case will play a major role in government decision-making about major investments in Northland rail after the final report from the Upper North Island Supply Chain Study is completed in September."
While the study found the economic argument "marginal", it also underlined the impact on Northland of the existing poor-standard rail line.
"The light axle loads, small tunnels and slow operating speeds of the current NAL both limit its usefulness for freight customers and results in poor operational productivity for Kiwirail," it said.
This article first appeared on www.stuff.co.nz
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