"Unfortunately, despite our best efforts, some mandatory redundancies will be unavoidable.
"At this stage we don't know the final number as every effort will be made to retain the skills and talents of our staff by finding other opportunities for them at KiwiRail.''
Rail and Maritime Transport Union secretary Wayne Butson said a reduction in the number of redundancies was welcome but still went too deep.
"We fought hard to save as many jobs we could. With rotting Peruvian sleepers and hundreds of wooden bridges beyond their centenary of service, the last thing KiwiRail should be doing is laying off skilled workers.''
Mr van Barneveld said the restructure of its infrastructure and engineering arm was part of a wider programme "to rebalance KiwiRail's priorities in response to continuing economic uncertainty''.
"Delivering this kind of news to our people is never easy. But it's a necessary step for us to achieve the savings we need to make the improvements to the rail network that customers want.''
KiwiRail intended to spend $750 million on its network over the next three years, about four times more than what was spent in 2004-05, Mr van Barneveld said.
"KiwiRail has a future as a business that can earn enough money to pay its own way - but it has to be different to what has failed before.''.
Labour's transport spokesman Phil Twyford said the job cuts were the direct result of unrealistic financial targets imposed on rail by the Government.
"KiwiRail is desperately trying to save $200 million by deferring network maintenance over the next three years,'' he said.
It was a stupid decision that was setting KiwiRail up to fail, he said.
"Cutting back on network maintenance will mean the track isn't repaired, trains will take longer to get from A to B, and KiwiRail will struggle to compete with long-haul trucking.''
