Nova Scotia

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

The Donkin coal mine in Nova Scotia, Canada, has been the subject of much speculation and anticipation in recent years. With the mine shutting down in 2023 due to a significant roof fall, many have wondered about its future. However, U.S.-based analyst Joe Aldina believes that the mine will reopen someday.

Aldina, who writes for thecoaltrader.com, points to the significant investments made by the Cline Group, the company that owns Kameron Coal and the Donkin mine. He estimates that the company has invested hundreds of millions of dollars in capital expenditures at the mine, indicating a strong commitment to the project.

Despite the challenges faced by the mine, including roof control problems and higher operating costs compared to global standards, Aldina is optimistic about its future. He believes that the Cline Group is dedicated to seeing the mine succeed, especially given its proximity to Europe and the demand for coal in the region.

One of the key issues affecting the reopening of the Donkin mine is the current low world price for coal. Aldina notes that the price of coal has decreased to around $110 per metric tonne in Europe, making it challenging for the mine to achieve healthy margins. However, he emphasizes that the decision to keep the mine idle is likely more influenced by price than by geology or operational factors.

In addition to market conditions, Aldina highlights the surplus of coal stockpiles in the U.S. as a factor contributing to the low coal prices. He believes that there are currently few potential buyers for the Donkin mine, making it unlikely that the mine is being held in anticipation of a sale.

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Despite the challenges and uncertainties surrounding the Donkin mine, there are signs of activity at the site. Kameron Coal has been hauling coal from its above-ground stockpile, with Morien Resources reporting royalties of $82,000 in the first nine months of 2024 from Donkin coal sales.

Overall, while the future of the Donkin mine remains uncertain, there is hope that it will reopen eventually. The mine’s strategic location, investments made by the Cline Group, and ongoing demand for coal in certain sectors all point towards a potential revival of operations in the future. As the industry continues to evolve, the Donkin mine may yet play a significant role in the coal market.

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