Donkin coal mine reopening scrapped, employees laid off
Work to reopen the Cape Breton mine has been underway for years
The Donkin coal mine site in Cape Breton will be shut down until a buyer for the project is found, meaning the crew of about a dozen people maintaining the site will be laid off.
Glencore Xstrata Plc, the multinational mining giant which owns 75 per cent of the venture, made the announcement at a meeting in Donkin on Wednesday night.
Val Istomin, a business development manager for Glencore Xstrata Plc, told an audience of about 40 community members that the company has been unsuccessful in finding a buyer.
He said it costs the company about $3 million a year to maintain the mine site. Istomin said he's been instructed by Glencore Xstrata Plc to reduce that expense while it continues to search for a prospective buyer.
"We're going to shut shut the site down, withdraw all the equipment and put temporary seals across the tunnels, ready for a new operator to come in," he said.
The reopening of the Donkin mine has been in the works for eight years, since the Nova Scoita government granted permission to get the site ready for coal production.
The tunnels in Donkin were dug in the 1980s by Devco, a former federal Crown corporation, but the project was abandoned before the mine opened because of a drop in coal prices.
Morien Resources Corp. owns 25 per cent of the current project and has been in talks with Glencore Xstrata Plc to become the sites new operator.
John Budreski, the president and CEO of Morien Resources Corp., said he isn't happy with the shut down.
"That's something we'd prefer not to have happen, but it's an inconvenience to us and no more than that," he said Wednesday.
If Morien Resources Corp. buys out Glencore Xstrata Plc, it will have to pump out the mine since the tunnels will start to fill with ground water as soon as the shutdown goes ahead.
Budreski said his company is determined to find partners to come up with the tens of millions of dollars to take over the project.
"I think this is a great project. We have a mine that's ready to go. We have tunnels down to the coal face; we have permitting for both the short term and the long term," he said.
"We have a place that's ready for wealth generation in the community; there's a labour pool we can access. I think it's a perfect project to go."
Budreski said his company also has an agreement to sell Donkin coal if and when Morien Resources Corp. is able to complete a deal with Glencore Xstrata Plc.