McIntyre Porcupine Mines Limited had coal leases in the area and wished to develop that resource.4 Canadian National Railways was approached by the coal company as to the feasibility of building a railway to the projected mines, but CNR was not prepared to undertake such a venture without the guarantee of 1.5 million tons of coal per annum, for a period of 15 years.5 Before McIntyre Porcupine had obtained a contract with the Japanese, the Government of Alberta (Ernest C. Manning, Premier) announced that it would finance a railway from near Hinton on the CNR main line to Grande Prairie.6 The railway would precede development in the hope that such action would assist the coal company and other resource developers to obtain long-term contracts.7 As Mr. Manning (now a Senator) stated at the Crump inquiry into the town of Grande Cache in 1973: 8
So we had a combination of ... factors, a large area that had no outlet to market that had considerable potential in mineral development and timber development plus the concern of the northern area of the province which did not have direct outlet to the Pacific Seaboard as we felt it should have.
Now it was a combination of all these things that led to the Government’s decision to build the railway. The fact that the railway plan envisaged a railway built from the Canadian National to Grande Prairie ... indicates our concern went considerably beyond an outlet to market for McIntyre Porcupine coal from Grande Cache. Had that been the only consideration ... the Grande Prairie aspect would not have been in the picture and I don't think we would have been involved in the railway, but the combination of these things in the Government’s opinion justified us taking some action.
... [The] possibility of an early opening of the mine at Grande Cache had a definite bearing on the time factor when the railway was built. Had the coal development not materialized, or at least had the plans to develop it not been in the picture, it is very doubtful if we would have moved on the railway at that particular time, but this combination of the factors I mentioned plus the possibility of getting the coal developed which brought a new time element into the considerations, that was a big factor in the decision to more at that particular time.
As to the economic viability of the line Mr. Manning stated:9
... even if we didn't recover the capital, or only recovered a part of the capital, we still felt a responsibility in providing a means of transportation for that resource region and for the Peace River area.
In fact the cost of the line was grossly underestimated and amounted to over $100 million by the time it was completed.10 By 1973 the capital costs of the railway had reached $127 million and with it a large debt,11 which in 1981 amounted to over $80 million, and an operating loss in access of $11 million.12 An agreement was reached with CNR in October, 1965 whereby the railway company agreed to construct and operate the line as the Grande Cache subdivision of CNR on a lease basis with an option to purchase.13 The amount of the rental fee was not as high as expected, due to the government having to accept a lower amount for that part of the fee associated with the transportation of coal from the McIntyre Porcupine mines.14 The coal company finally signed an agreement with the Japanese in January 1969, for a total of 29.5 million tons of coal over a 15-year period,15 which was cancelled by the coal company in 1973 in order to negotiate a more limited contract,16 thus endangering the stability of the town of Grande Cache which had been built by the government for the benefit of the workers recruited for the mining operation.
Construction of the railway started early in 1966, and was authorized to carry traffic by the Railway Transport Committee on May 28, 1969.17 Building techniques and machines perfected in the building of the Great Slave Lake Railway were used on the ARR. Helicopter-borne electronic survey instruments enabled the engineers to establish essential ground control thus speeding up construction. Techniques in soil mechanics were developed, and computers were used in the design of bridges. A ruling grade of one percent compensated was established for southbound trains, and 1.5 percent for those going north. The maximum curvature was six degrees.18
In June of 1972 a 37-mile stretch of line was severely damaged by the flood waters of the Smoky River requiring some relocation and considerable stabilization. The cost of repair amounted to $8 million, borne mostly by CNR.19 The full length of the railway was back in operation in 1974.
In 1981 CNR acquired absolute control of Northern Alberta Railways and soon after abandoned that portion of the line over the Smoky River at Watino. Traffic west of there was therefore diverted over the ARR.20 The freight traffic consists mainly of coal from the mines at Grande Cache, and woodpulp from the Procter and Gamble mill at Shaver, plus lumber and grain.21
In 1994 CNR exercised its option to buy all the assets of the Corporation for $33.1 million.22