Only coal mine in Nova Scotia closes doors

Kameron Colleries’s Donkin mine, the first underground coal operation in the province of Nova Scotia’s Cape Breton in 15 years, has closed its doors, putting about 150 people out of work.

The operation, which began production in 2017, had been dealing with unfavourable geological conditions that had triggered several roof falls in the past year, in which no one was ever injured.

“Sometimes news like this is preceded by buying or selling depending on what is coming down the pipe. That was clearly not the case here,” Resource Opportunities’ publisher James Kwantes, wrote in a note to subscribers.

Morien Resources (TSX-V: MOX), which had a 2/4% royalty on coal production from the mine, was buying back shares the entire month of March — about $190,000 worth at average prices just above 42 cents, according to Tuesday night SEDI filings, Kwantes notes.

The Nova Scotia government, in turn, had recently installed traffic lights on the dedicated coal road that Kameron had built to the port.

Paul McEachern, a spokesperson for Kameron Collieries, said the decision to cease operations was only due to the adverse geologic conditions in the mine. It also noted that Donkin will not be sealed, but maintained by the small staff to ventilate and keep the facility dewatered.

With a resource of 481 million tonnes — 227 million tonnes in the indicated category and another 254 million tonnes in the inferred — the deposit had enough low ash, high-energy coking and thermal coal to last for 25 years or more.

Donkin was expected to produce 2.75 million tonnes of coal a year over the next three to four years.

Coal mining in Cape Breton dates back to the early 1700s, when the French needed the fuel for their nearby fortress. The industry has long been considered a way of life on the East Coast island.

The news comes as several US coal producers have idled operations to help contain the spread of the novel coronavirus. Coal miners are especially at risk, given their close working conditions in underground mines and locker rooms.

It also follows a decline in coal consumption worldwide as nations try cutting their carbon emissions and the use of alternative sources of energy, including natural gas and renewables, climbs.