Firm with ties to Donkin mine says future of the facility is uncertain
The mining development company cautioned its shareholders that the mine could close for good
A company with ties to the coal mine in Donkin, N.S., says the facility is in danger of closing for good.
It opened in 2017 and was idled two years ago amid falling coal prices and falling rock in the underground slopes. But many people in Cape Breton have been hoping that the mine would restart one day, bringing back the economic benefits that go with it.
Morien Resources, a publicly traded mining development company connected to the mine's owner Kameron Coal, says in a Q2 2022 report on its website that there is still plenty of coal in the mine, demand is on the rise and the equipment is in place and ready to go.
However, it also has a warning for shareholders.
"The future of Donkin is unknown and is contingent on Kameron's decision to recommence operations," the report says. "There is significant risk that operations may not recommence under Kameron's ownership or otherwise."
No insight into owner's intentions
The report does not say why that warning is being issued now.
Morien Resources CEO Dawson Brisco would not agree to an interview, but in an email, he said the company has no insight into the mine owner's intentions.
"Morien, as a public company, has a legal obligation to its shareholders to disclose certain risks, which would include the Donkin mine potentially not reopening," he said.
Kameron Coal owns 12 per cent of Morien Resources' shares, but Brisco said Kameron "is under no contractual obligation" to share its intentions with Morien.
Kameron Coal did not respond to a request for comment.
In its most recent annual report, Morien says it has earned $1.12 million in royalties from Kameron Coal due to sales from the Donkin mine over seven quarters from 2019 to 2021.
Price fluctuations and stop-work orders
The company says it stands to earn even more if the mine reopens and production ramps up to its potential for three million tonnes a year.
The mine had been increasing production in 2019, when coal was valued at more than $100 a tonne.
But a series of roof falls led to constant stop-work orders from the provincial Department of Labour, even though no injuries were reported.
In March 2020, the company cited difficult geological conditions in its decision to mothball the mine, and later that year the price of coal fell below $100 a tonne during the COVID-19 pandemic.
Mine looking attractive again
Morien Resources says coal is now trading at three to five times what it was worth when the mine closed.
Adrian White, a former senior executive with the Cape Breton Development Corporation, known as Devco — the company that used to run Cape Breton coal mines before they closed in 2001 — said there is still a need for coal in steelmaking and the war in Ukraine is making the Donkin mine look very attractive again.
Kameron Coal is owned by the Cline family, but White said no one knows if the heirs have the same zeal for digging coal that the company founder, Chris Cline, had before he died in an accident.
"I would assume the family is looking at what the cost would be to restart the mine, because coal prices are really back, and back with a vengeance, so it would be very profitable," White said.
"But they would need to find financing ... and that is probably not that easy for them to come by overnight."
Coal financing hard to find
White said governments around the world are pushing for change towards a green economy and international financing is becoming harder to find because investors are skittish about fossil fuels.
The world needs to make that change, he said, but the transition is taking longer than most people thought.
"We're not quite there yet," White said. "We need some additional time to make this transition."
Canada still has vast resources in coal, oil and gas and he said people have put the cart before the horse by shutting down fossil fuel production too quickly.
"The tax dollars that the government would take in from that production would help speed up Canada's transition to the green economy."
Uncertainty, concern in the community
Steel is also an important component of wind turbines and other renewable energy sources and so far, no one has found a replacement for coking coal in steelmaking, White said.
James Edwards, a Cape Breton regional councillor representing the Donkin area and a member of the mine's liaison committee, said local officials with Kameron Coal have not said if or when the mine will reopen.
"They say that it isn't up to them," Edwards said. "They listen to their superiors and there has been no decision made on it.
"As of right now ... there's no indication that the mine is closing and well, there's no indication that the mine is reopening, either."
Some area residents have complained about the noise from the mine's ventilation fans and the mine's owner has recently paid for the manufacture and installation of a muffler on one fan to try to reduce the sound.
If it can make the technology work, the company plans to install another muffler on the other fan, said Edwards.
It has also kept on a handful of workers to keep the mine free of methane gas and flooding.
Both Edwards and White say that is not the sign of a company preparing to walk away.
"They've been keeping the home fires burning over there for the last couple of years, so it would make sense to me that they're looking at reopening, especially with the price of coal going up," Edwards said.
While some people might want to see the mine close for good, Edwards said there are plenty who want to see the mine reopen and bring back the more than 100 good-paying jobs it had while in production.