A freight train derailed north of Wagga at Bomen early on Thursday morning, blocking both tracks and ripping up rails.
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Fire and Rescue NSW Regional South 3 Zone Commander Stewart Alexander said emergency services were called to the scene at about 2.50am near the Austrak yard and the former Dampier Street railway crossing.
"Both drivers or operators are OK. They were obviously shaken up but otherwise quite well," he said.
"I imagine there will be a significant investigation conducted as well as a major salvage operation to firstly remove the train and then fix the rail line.
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"We are just on scene making sure there are no significant oil or diesel spillages and also assessing the cargo that the train was carrying."
One locomotive and five carriages were involved in the incident, which has blocked off both rail lines and caused damage to at least one of the lines.
Mr Alexander said one of the rail lines was "well and truly buckled" as a result of the derailment.
The derailment has also forced the suspension of passenger train services.
Transport for NSW said the 7.40am Sydney to Melbourne XPT service has been replaced by coach service for the entire journey.
The 8.40am Melbourne to Sydney XPT service has been replaced by coach service between Melbourne and Junee. Passengers will transfer to the XPT at Junee for the remainder of the journey.
Fire and Rescue NSW stated on social media that the train's cargo "is not hazardous and the train will be righted this morning".
Ambulance NSW and police also attended the incident.
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