People packed the Donkin, N.S., fire hall to hear from Xstrata officials on Wednesday. (CBC)An underground coal mine in Donkin, N.S., will be opened by mining giant Xstrata more than 20 years after it was dug.

Jeff Gerard, the chief development officer of the company's coal division, made the announcement Wednesday night in a packed fire hall in the Cape Breton community.

"It'll be at a slightly smaller scale," he said. "What we're looking at doing is progressively building a continuous miner operation that will produce around about 2.75 million tonnes per annum."

The company had already spent more than $20 million pumping out the tunnels and analyzing the coal in Donkin, located 11 kilometres east of Glace Bay.

The Donkin tunnels had been dug in the 1980s by Devco, a former federal Crown corporation. The $100-million project was abandoned before the mine opened because of falling coal prices. The tunnels were then flooded.

In 2005, the province of Nova Scotia gave Xstrata permission to pump the tunnels and prepare them for coal production.

"It's a positive thing as far as I'm concerned," said Mike Gardner, who travelled to the fire hall to hear the announcement. "Jobs is something we need — the more the better."

Gerard said the mine would initially create about 200 jobs. He said he hoped the mine would eventually support up to 1,000 people.

"The resource base of this mine is sufficient to … support this mine for well over 25 years," he said. "This isn't about just setting up a mine, this is about setting up a lifestyle in this area, more akin to the lifestyle that used to be here."

The Donkin mine project was abandoned after the price of coal went down. (CBC)Over the next three years, Xstrata will spend up to $300 million to produce coking coal and ship it overseas.

Hugh Kennedy, chairman of the Xstrata Donkin community liaison committee, said world demand for coal is up and that bodes well for the mine.

“It’ll be an immediate impact on jobs and employment in the area — a lot of construction at the site and during the first year for the surface facilities and putting in the new highway and the access road to the mine,” he said.

At a public meeting held in Donkin on Dec. 17, Xstrata project manager Val Istomin said the company had to find a buyer for the coal to move ahead.

"Until such time that we can move the coal that comes out as a result of this exploration work, we really shouldn't start it because obviously … we don't want to stockpile a million tonnes of coal," Istomin said.

Istomin said it made sense to sell coal to Nova Scotia Power. However, the power company must meet new emission standards and Donkin coal would be raw and unwashed at this stage.