Nova Scotia

Xstrata pulls out of Donkin mine project

The international mining company wants out, but a spokesman says the project will continue with a new owner.

Partner Erdene Resources still expects coal mine to open

The international mining company that has a major share in Cape Breton's Donkin project wants out, but a spokesman says the project will continue with a new owner.

Xstrata is trying to sell its 75 per cent stake. The company announced its plans last night at a public meeting in Donkin.

Project manager Val Istomin said the company wants to own only groups of mines, and Donkin doesn't have enough coal to meet that criteria.

Istomin said he's confident another company will buy Xtrata's stake in the operation.

"It's business as usual for this project. The studies continue, the care and maintenance of the site continues," he told CBC News on Friday morning.

"The only change will be instead of the personnel walking around with a Donkin T-shirt with Xstrata on it, it will have a Donkin T-shirt with the XYZ mining company on it."

Earlier this week, fishermen in the area rejected the company's plan to ship coal through fishing grounds to large ships waiting offshore.

Istomin said that has nothing to do with the company's decision to sell.

Erdene not worried

Peter Akerley, president of Erdene Resources, the local partner, said he's not worried. He still expects the mine to start producing coal by 2014.

"I don't think it puts the project in jeopardy at all. In fact, I do think it allows us to get more focused on the project development," Akerley told reporters.

He said Xstrata has become too big for Donkin.

"When you look at what we have here in Cape Breton, with 500 million tonnes of coal sitting near a dredged port with a local workforce, everything to me is a positive for the Donkin coal project.

"The negative was really having a manager that had grown beyond the size of Donkin and therefore that was the obstacle."

Akerley said there are dozens of prospective buyers. He expects a sale would take six or seven months.

The Donkin tunnels were 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 Nova Scotia government granted Xstrata permission to get the site ready for production.