Warren Buffett’s Berkshire Hathaway boosts capital plan for railroad to $4.1 bn

21 Jan 2013

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US billionaire Warren Buffett, one of the world's most successful investors, plans to increase the capital spending in US rail freight operator BNSF Railway Company to approximately $4.1 billion in 2013 through his investment arm Berkshire Hathaway Inc.

BNSF RailThe capital commitment programme for the current year is about a $450 million more than the company's 2012 spending of $3.6 billion, BNSF Railway said in a statement.

The expansion plans are aimed at increasing the capacity of the rail network in North Dakota, the region with growing oil production from the prolific Bakken shale formation, expansion of inter-modal terminals including the BNSF's Kansas City intermodal facility and other terminal improvements.

The railway operator plans to spend a large chunk of $2.3 billion on its core network. An additional $1 billion will be spent on acquisition of locomotives, freight cars and other equipment.

The program also includes about $250 million for continued installation of federally mandated positive train control and $550 million for terminal, line and intermodal expansion and efficiency projects.

BNSF Railway's chairman and chief executive officer Mathew Rose said, ''This record capital plan continues our long-term focus on ensuring our network is prepared for the growing US demand for freight rail.''

''We are focused on investing to meet our customers' expectations and to expand capacity where growth is occurring, he further stated.

Fort Worth, Texas-based BNSF Railway is the second-largest rail freight company in North America and operates around 32,500 route miles of track in 28 states and two Canadian provinces. It is one of the top transporters of consumer goods, grain and agricultural products, low-sulfur coal, and industrial goods such as petroleum, chemicals, housing materials, food and beverages.

Earlier this month, Rose had said that BNSF will increase its capital spending to move more petroleum to refineries from the Bakken formation and hopes a 40-per cent surge in crude oil shipments.

Berkshire Hathaway, headquartered in Omaha, Nebraska, is a US multinational holding company that manages a number of subsidiaries.

The company is controlled by Warren Buffett, an investment genius and one of the world's wealthiest people, owns a diverse range of businesses including insurance, confectionary, retail, railroad, home furnishings, jewelry sales, and newspaper publishing among others.

Berkshire Hathaway achieved an annual average growth in book value of 20.3 per cent for its shareholders for the last 44 years, while employing large amounts of capital, and minimal debt.

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