November 19, 2019 - Today's strike by Canadian National (CN) railroad workers will quickly lead to closures and layoffs at coal and oil sands mining operations, companies are warning.

About 3,200 members of the Teamsters Canada Rail Conference (TCRC) at CN went on strike early today after failing to agree on a new contract with management.

The strike "will result in a severe reduction or elimination of railway capacity and will trigger the closure of mines with concurrent lay-offs of thousands of employees beginning in a matter of days," Mining Association of Canada president Pierre Gratton said today. Members of the association include companies mining oil sands, coking coal, metals and industrial minerals.

The group said the mining industry is the "most significant customer" at CN and competitor Canadian Pacific, accounting for just more than half of rail freight revenues.

Mining companies are heavily dependent on rail to either deliver supplies or transport products and by-products from operations.

CN said it was disappointed that TCRC initiated strike action.

"We apologize to our customers, but we do appreciate their understanding that safety is always our first priority," CN vice president of financial planning Janet Drysdale said today at the Scotiabank Transportation & Industrials Conference in Toronto. "Negotiations are expected to continue later today under the watchful eye of federal mediators."

The strike essentially shut down most of the railroad's Canadian operations, stopping the loading and delivery of trains of key commodities, including crude, coal, fertilizer, propane, metals and grain. Trains continue to operate on CN's US arm, but the railroad will not be able to ship into Canada nor will it receive any goods.

TCRC said the contract dispute was not focused on wages but rather disagreements over train operating rules, work schedules, staffing levels and perscription drug coverage policies.

The strike affects the 85pc of rail traffic on CN's network that originates in Canada. About 17pc of that traffic is delivered domestically, 34pc heads overseas and 34pc heads to the US.

A CN strike would have a deeper impact than the Canadian Pacific strike last year because CN moves about double the traffic, according to railroad data. CN this year through 9 November has moved 5.1mn units, including 303,592 railcars of petroleum products and 237,962 coal cars. CP has moved 2.4mn units, including 188,985 railcars of petroleum products and 263,494 coal cars.

In contrast, western US railroad BNSF, which is North America's largest carrier, has handled 9.3mn units, including 339,630 petroleum product cars and 1.6mn coal cars.

CN said that for the remainder of 2019 it expects growth in refined products, crude, natural gas liquids and Canadian origin grain and coal.