Xstrata pulls out of Donkin Mine project in Eastern Canada

Cecilia Jamasmie | April 27, 2012 | 1:26 pm Energy Australia Canada Europe Coal

Australian miner Xstrata Coal is pulling out of the Donkin Mine project, which promised to employ as many as 300 people in Cape Breton, Eastern Canada, by 2014.

Xstrata, which owns a 75% stake in Donkin, yesterday announced its intention to find another operator for the project in a joint press release with its partner in the project, Erdene Resource Development Corp.

“Over the past decade, Xstrata Coal has evolved, as has our business strategy, and core to that is a focus on larger volume mining complexes,” said Peter Freyberg, Chief Executive, Xstrata Coal in a statement. “We believe the Donkin Coal project is a valuable asset to a qualified partner and remain positive about its viability. We will continue to work closely with Erdene and the Province of Nova Scotia to secure an operating partner to advance the project to production.”

“We recognized for quite some time now that Xstrata has been growing into a different company than when they first arrived in Nova Scotia,” added Peter Akerley, Erdene President and CEO.

The Donkin Mine is located in one of North America’s oldest coal mining belts and has the potential of producing another 30 years at a rate of 2.75Mtpa, with both metallurgical coal for export and thermal coal for domestic use, according to Erdene Resource Development Corp.

The sale process will be concluded during 2012, with the selection of an entity with the mining experience, technical expertise and financial capability to operate the underground mine safely and efficiently. Erdene has a 60-day right of first refusal on the sale by Xstrata Coal for its interest in the Donkin project.

The Cape Breton economy was driven by coal throughout the 19th and 20th centuries and up to World War Two it was the largest private employer in Canada. The island has two major coal fields, the Sydney Coal Field in the south eastern part of the island and the smaller Inverness Coal Field in the west part.

(Photo of Dominion Coal Company’s Reserve Mines Colliery, Cape Breton County, Nova Scotia ca 1900, is found on Wikimedia Commons.)