Economic and Rural Development Minister Percy Paris said a fair assessment of the railway's future must be done, and a working group of government and company officials has been struck to do that.

"It's a matter of us having the right data, the right information in front of us, so that we can move forward with Cape Breton Rail," said Paris.

The amount of traffic on the line is far below what is needed for the company to be profitable.

A provincial news release said the estimate is the line needs 10,000 railcar transports every year for the company to break even, but there were only about 1,500 in 2009.

One of its customers was quoted in the release as saying that the rail line is essential in controlling transportation costs.

"The loss of the line would have an immediate negative financial impact of C$250,000 per year," said Sean Burke, vice-president and general manager of Polysteel Atlantic, just outside Sydney. "Without this service, it would be difficult for our business to remain at our current location and continue to offer our customers a high-quality, competitively priced product."

The subsidy, for working capital and maintenance costs on the Cape Breton section of the line, includes up to C$3 million for the extension period. There is another C$500,000 available for a "transition period" or if more study is needed.

Paris said the subsidy for an unprofitable rail line shouldn't be compared to the government's decision late last year to pull a subsidy from the unprofitable Cat ferry service in Yarmouth. "Replacing a ferry is certainly not the same as replacing a railway spur. Once you pick up a (rail) spur, it's gone. It's gone forever, the cost to re-lay a line is just so expensive, and when you're talking about a ferry service, I think it's a whole different ball game."

The province also struck a deal on crossing fees for people who need to cross the rail line to get to their properties. The fee is set at C$300 annually, with increases to be determined by the provincial Utility and Review Board. People who lease the land from the rail company will have the option to buy their land at fair market value.