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The wagons of petrol, fertiliser and sulphur products first caught fire and later exploded as firefighters and villagers crowded near by.
Bodies were strewn around the wreckage and cars, crumpled by the sheer force of the explosion, dotted the scorched landscape. Officials said the death toll had reached 295, and that 182 firefighters and rescue workers were among the dead.
Last night dozens of people were thought still to be buried under the rubble of their homes. Fires raged around the charred ruins as rescue workers scrambled desperately for survivors amid clouds of thick, black smoke billowing out of the overturned carriages. Revolutionary Guards cleared a security cordon of more than 1,00 yards around the scene.
More than 260 survivors suffering horrific burns were taken to hospitals in the nearby town of Neyshabur. Doctors called for urgent blood supplies.
The explosion happened after 51 wagons became detached from their engine, rolled down the line and hit another train, derailing and catching fire.
As officials from Neyshabur arrived to inspect the damage from the initial impact, the wreck blew up in a massive explosion, killing the first firefighters to arrive at the scene, the Governor-General, the head of the city’s electricity board and the fire chief, as well as many villagers.
The magnitude of the blast was immense. The explosion was heard 50 miles away in the city of Mashad. The villages of Dehnow, Hashemabad and Abdolabad were among those reported most severely damaged. Iran’s state news agency, said that windows were shattered up to six miles away.
Saeed Kaviani, a journalist in Neyshabur, said: “The whole city is shocked by this accident. Official vehicles mounted with loudspeakers are roaming the city calling for volunteers to donate blood.”
Television showed overturned carriages jumbled beside the tracks, with homes just metres away. Mangled pick-up lorries littered the area and, in one village, dazed onlookers stood around on a dusty plain, snow-capped mountains in the distance.
Aerial shots of the surrounding area showed the devastation. Local officials fear that scores of survivors are trapped under the masses of mud brick ruins in scenes eerily reminiscent of the shattered landscape of Bam, where an earthquake killed almost 50,000 people less than two months ago.
Initial reports said that the wagons were derailed by a powerful earth tremor, which was registered by seismologists in Tehran, although officials now suspect that the tremor could have been caused by the blast itself. Seismologists recorded a tremor registering 3.6 on the Richter scale at the exact time of the explosion.
Questions are being asked about how such a dangerous cocktail of chemicals could be allowed to travel through Khorasan, Iran’s largest province, an arid, mountainous land bordering Turkmenistan and Afghanistan.
Last night investigators were attempting to establish how the accident happened. According to Muhammad Maqdouri, head of the local emergency operations headquarters, the 51 wagons were waiting at the Abu Muslim train station near Neyshabur when they were set in motion.
They rolled out of the station at 4am. They picked up speed and, moving without an engine or anyone in control, overturned when they reached Khayyam, the next stop. Mr Maqdouri said on Tehran television that the cars exploded at 9.37 am when 90 per cent of the initial fire had been put out. It was not known how the wagons had broken free.
Mehran Vakili, Neyshabur’s medical examiner, said 180 bodies had been recovered.
Neyshabur has a population of about 170,000 and is at the centre of a region that farms cotton, fruit and grain. Other industries include carpets, pottery, leather goods and turquoise.
It became one of Persia’s foremost cities in the year 400, a centre of culture with several important colleges. Omar Khayyam, the Persian poet, was born there.
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