Donkin coal mine will likely restart production when world prices rise, says U.S. analyst

Yahoo

31-01-2025

A U.S.-based analyst says he believes the undersea coal mine in Donkin, N.S., will reopen someday.
Joe Aldina, who writes for thecoaltrader.com, said the Cline Group, whose company Kameron Coal owns the Donkin mine, has made significant investments there that it will likely want to recover.
"They've invested a few hundred million dollars US in [capital expenditures] in that mine and that was the last project that Chris Cline, the founder of the company, really put himself into, so I don't see them walking away from that," he said.
"Donkin has some issues with roof control problems. It's a little higher-cost if you look at the global market, but I think the Cline Group's committed."
The mine shut down following a significant roof fall in July 2023 and was cleared by the Labour Department to restart production last March after more safety features were installed and its safety plans were reviewed by independent engineers.
But the mine still has not reopened.
It is surrounded by shale and has a history of roof falls. Production has been halted a number of times because of that, but no one has been injured.
David MacLeod worked underground at the Donkin coal mine and says he'd go back to work if production restarted. He says that would be good for local workers and the provincial economy. (Kyle Moore/CBC)
David MacLeod cut coal in the mine and said he can't wait until it's back in operation.
He blames provincial regulations and politicians for the lengthy shutdown.
"I really believe Tim Houston should call the Cline Group and say, 'We've got to have a meeting,' because they're pushing to have natural resources in Nova Scotia to be self-sufficient. Here's one here, all ready to go."
MacLeod said many of his fellow employees are now working in other mines out west.
"It's a win-win situation for the province to have that mine running. All the tax money, everybody can sleep at home in their own bed and not go to Alberta and miss their family growing up."
Joe Aldina, who writes for thecoaltrader.com, says the world price for coal is lower than it has been and that's likely why the owners are keeping the Donkin mine in an idled state. (Zoom/CBC)
Aldina said even though governments are slowly turning away from burning coal for power, there is still a market for the commodity.
He said metallurgical coal for making steel is not in strong demand, but artificial intelligence and electric vehicles are driving increases in power generation and that means thermal coal is still needed.
Donkin has soft metallurgical coal and some thermal coal, but because it's dug from tunnels under the ocean, it's more costly, Aldina said.
He also said the world price is lower than it has been and that's likely what's keeping the Donkin mine from reopening right now.
"This mine was really doing well when the price of coal was high in Europe and it has a short shipping distance to Europe, so that was beneficial, but now with the price down around $110 per metric tonne in Europe, it's probably difficult for this mine to get the margins they want to get, or really any healthy margin at all," Aldina said.
"I think it's probably more price right now than it is geology or operating conditions."
Likely no buyers: analyst
Aldina also said the U.S. has large stockpiles of coal, which is one factor that's helping keep the price low.
It's not likely the mine is being kept ready for a potential buyer, he said.
"There are very few buyers out there right now," Aldina said.
"Maybe there's some consolidation and someone picks up this mine, but it's hard to think of exactly who the buyer would be right now."
Kameron Coal has been hauling and selling product from its above-ground stockpile, which could be seen from the Donkin coastline in the summer of 2024. (Tom Ayers/CBC)
Kameron Coal has occasionally been hauling coal from its own above-ground stockpile at the mine.
Morien Resources, a publicly traded company that gets a two per cent royalty on Donkin coal sales, reported receiving $82,000 in royalties in the first nine months of 2024, which means the mine owner sold roughly $4 million worth of coal in that period.
Kameron Coal did not respond to requests for comment.
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