Canadian Pacific Railway Ltd plans to spend up to C$1.05 billion ($1.06 billion) on capital projects in 2011, about 25 percent more than it spent last year, as the Canadian and U.S. economies pick up steam.

CP, Canada’s second-biggest railway, said it will spend between C$950 million and C$1.05 billion this year, up from the C$750 million to C$800 million budgeted for 2010.

“This is a capital plan reflective of the growth opportunities that there are at CP,” said RBC Capital Markets analyst Walter Spracklin, who had expected the railroad to budget about C$900 million for capital projects in 2011.

CP, which has tracks across Canada and in the Upper Midwest and Northeastern United States, will spend C$680 million on renewing its track infrastructure and C$200 million on boosting rail volumes and productivity.

Another C$80 million will be used to upgrade computer systems.

CP’s biggest customer, miner Teck Resources Ltd , could present an immediate growth opportunity if it cranks up its coal output to help fill the gap left by Australia’s flood-hit exports, Spracklin said.

“There is significant demand for metallurgical export coal, Teck is the second-biggest player in the world and CP is the only way to get it to port,” he said.

The capital budget is equal to about a fifth of CP’s expected 2011 revenues of C$5.3 billion, according to estimates from Thomson Reuters I/B/E/S. The company is scheduled to release its fourth-quarter and full-year 2010 results on Jan. 26. (Reuters)