Donkin mine partners not planning to send coal by rail
SYDNEY — Despite the hopes of local port developers, Donkin mine partners say they have no plans to send coal by rail to Sydney harbour.
Project manager Val Istomin of Xstrata mining corporation said the decision is cost-based and coincides with the scaled-back plan for the underground mine. Donkin officials have already spent $20 million of their own money on the coal project, with another $350 million to be spent over the next few years.
Xstrata and Erdene Resource Development of Dartmouth, N.S., which holds a 25 stake in the project, say the inability to find a buyer for raw thermal coal that was to be extracted during a test phase of the project led them to shift their focus altogether.
Instead of mining thermal coal, workers will mine for metallurgical coal at a production rate of 2.75 million tonnes per year.
“If we had been able to develop Donkin as a long-wall mine as initially planned, we would have transported about four million tonnes each year to our customers and this volume justified the cost of a railway system,” Istomin stated in an email. “The capital and operating cost of a railway system to transport this lower volume would make the project uneconomic.”
Istomin added that project partners also don’t want to see trucks running through Cape Breton communities for the expected 25-year lifespan of the mine, leaving them with the option of barging off the Donkin peninsula.
Xstrata has said the barge will be able to carry between 12,000 and 15,000 tonnes of coal to deep water where it will be loaded onto large vessels by crane.
Xstrata has environmental approvals to mine coal, but is now seeking provincial and federal approval for new infrastructure. The area where partners plan to barge the coal is within the vicinity of a commercial fishery, which has raised some concern among local fishermen.
Sydney Marine Group chair Jim Wooder said he remains optimistic the Port of Sydney will be an asset to the two private companies.
“To have that harbour available there with an ability to potentially use capesize ships (the largest drybulk carriers in the world), we believe is important,” said Wooder. “ We fully expect that Sydney harbour will end up playing a role and will be the most efficient and effective way to deliver product to market.”
The marine group is also continuing to push for the $35-million proposed dredging of Sydney har- bour and the construction of a $200-million container terminal. Wooder said dredge bids are currently being evaluated and an announcement will be made in a couple of weeks.
While in Sydney earlier this month, Defence Minister Peter MacKay said a revitalized port could convince Xstrata to ship its coal out of Sydney.
“If the port itself became more viable with a dredge I suspect that Xstrata would re-examine their initial decision as to where they would export the coal from,” said MacKay.
According to the Port of Sydney business model, once the harbour is dredged, the largest of container vessels will transit to Sydney via the Suez Canal with cargo then loaded for inland destinations either by rail or reloaded onto small vessels.