The Australian Transport Network will ask employees of the Emu Bay Railway to apply for individual contracts in the wake of its $7.8 million purchase of the network yesterday.
ATN, the owner of Tasrail, bought the 145km Rosebery to Burnie section and has pledged to spend a further $9 million over five years.
However, the Emu Bay engineering business, which employs close to 50 people, is to be retained until it can be sold by Pasminco.
Executive manager David Crispin said there would be five to six redundancies from the present workforce of 29 at EBR.
"The conditions will be better than the employees presently earn," he said.
In August last year 177 Tasrail employees transferred to individual contracts despite union opposition.
The EBR employees' union is to seek a collective bargaining agreement.
"The offer will include cash performance incentives, a flexible work environment and opportunities for multi-skilling," Mr Crispin said.
The 100-year-old Emu Bay Railway carries 630,000 tonnes of zinc and copper concentrates from the Pasminco Rosebery mine to the Port of Burnie.
"ATN intends to grow the EBR's rail business by servicing the mineral-rich mines of the West Coast of Tasmania and moving into the untapped rail freight opportunities such as the forestry industry.
"He said all forestry products were presently moved by road.
"In broad terms we would hope to increase existing traffic by 50 per cent over the next two years," he said.
Pasminco executive director of mining Bryan Davis said the company and ATN had signed a 15-year contract for railing and loading of concentrates from the Rosebery mine.
The Australian Transport Network, which consists of a consortium including US operator Wisconsin Central and New Zealand's Tranz Rail and two investment firms, bought Tasrail for $22 million in October last year.
It operates 581km of track and hauls about 2.2 million tonnes of freight.
Mr Crispin said ATN would be relying on its new employees to develop and grow EBR's rail business and improve current services.
"We see real synergies between EBR rail operations and Tasrail and by integrating the two businesses we know we can make significant operational efficiencies and strengthen the business," he said.
Mr Crispin said Tasrail's business was growing, particularly in container movement to Devonport and Burnie.
After taking over the loss-making business in November, ATN is hoping to make a profit by June.