INDEPTH:
CAPE BRETON
Cape Breton Coal
CBC News Online | December 14, 2005
The first mention of coal in Cape Breton came in 1672. French explorer,
colonizer and Governor of Acadia Nicholas Denys declared "there is a
mountain of very good coal four leagues up the river" at Sydney Harbour.
He was granted the right to levy a duty of 20 sous per ton on coal
extracted from Cape Breton.
In the late 1600s records show the French military mined coal from "crop
openings". They literally pried coal from outcroppings on the cliffs along
the shoreline using crowbars. It wasn't until the late 1700s that
something was actually done to systematically exploit the resource.
Cape Breton coal made Canadian history when the first commercial coal
mine in the country opened at Cow Bay or Port Morien in 1720. The first
recorded export of minerals from Canada was in 1724 when coal was shipped
from Cape Breton to Boston.
The first lieutenant-governor of Cape Breton, J.F.W. DesBarres, considered
the mines an "inexhaustible source of revenue" for the colony. It was not
to be. In 1784 he leased the mineral rights to a Thomas Moxley. For the
next 50 years those rights were transferred back and forth between the
Crown and various operators.
It was not a particularly profitable business. Surveys showed the mines
were in bad shape because of poor mining practices dating back to the days
at the fortress in Louisbourg. British law prohibited the export of coal
to the United States and Cape Breton coal was twice as expensive as
British coal.
The rights were finally passed on to the General Mining Association in
1826. It was a London firm that got the leases through the bad debts of a
well-known member of the Royal Family.
Frederick, Duke of York, was the favourite son of King George III. He had
been handed the rights by his father in 1788, but never exercised the
claim. However, the Duke liked the good life and had accumulated quite a
few debts. So in 1825 he went after the leases and promptly handed them
over to one of his major debtors, a London jewellery firm, which set up
the GMA to operate the mines.
The GMA brought better mining practices to the island, but was really only
interested in the Sydney coalfield. So it surrendered much of its lease in
1857, opening coal mining to other companies. During the next four decades
more than 30 mines were opened, but few were successful. The GMA held on
to the Sydney coalfield until the turn of the century.
By 1875, most of the Nova Scotia colliery owners were complaining it was
impossible to make money because of transportation costs and competition
from lower priced American and British coal. The federal government
stepped in with what was called the National Policy in 1879. It sheltered
Canadian companies from foreign products and stimulated new manufacturing
industries. The policy saved the mines. Through the years, federal and
provincial governments continued to step in to save the Cape Breton coal
industry with protective tariffs and subsidies.
The owners also decided the only way to stay in operation was to join
forces and formed the Dominion Coal Company at the turn of the century. It
was taken over by the British Empire Steel Corporation in 1920.
Besco lasted only eight years. It was in constant financial trouble mainly
because it needed a profit of eight million dollars a year to stay in
operation. In 1928 a new holding and operating company was formed called
Dominion Steel and Coal Corporation. Dosco was able to bring some
stability to the industry for the next 30 years.
By 1965, Dosco estimated the Sydney mines had just another 15 years of
life. It concluded that opening any new mines on the existing deposits
would cost too much and wouldn't be profitable. So it went to Ottawa and
said it wanted out of Cape Breton coal. In 1965 and 1966 a Royal
Commission headed by J.R. Donald took a look at the Cape Breton coal
industry. It recommended setting up a Crown corporation to acquire and
manage Dosco's coal operations.
The Donald Commission report stated "Future planning should be based on
the assumption that the Sydney mines will not operate beyond 1981." On
July 7, 1967, the Cape Breton Development Corporation was established to
phase out the coal mines and find new employment opportunities.
On March 30, 1968, Ottawa expropriated the Dosco coal mines and later
settled with the former operator for almost $12 million. In 30 years the
federal government spent hundreds of millions of dollars more keeping the
mines in operation.
From the beginning Devco was supposed to pay its own way, but that wasn't
the case. There were numerous government bailouts with the company
promising to stay on budget and within business plans. Those promises
never seemed to work out, something got in the way.
There were roof falls that shut down a mine, extra money needed to
replace old equipment or just the lack of production. It seemed things
were looking up with the energy crisis of the early 1970s. Nova Scotia
Power cut its dependency on foreign oil by converting to Cape Breton coal.
Here was a huge local customer, but by the 1990s Devco was having trouble
meeting the demands of the contract.
During some periods Nova Scotia Power had to import coal to maintain its
electrical generation.
The peak production of Cape Breton coal came during the 1940s, but
production steadily dropped after the end of the war. By the 1960s only
half the original mines were still producing. In all, roughly 100 mines
have operated in the Sydney coalfield through the past two-and-a-half
centuries, an astounding span in mining terms.
In the 1980s, Devco spent $100 million developing the Donkin coal mine
near Glace Bay. It abandoned the project before any actual mining began
when coal prices fell. But by the new millennium, prices had rebounded. In
December 2005, a Swiss company won the right to develop the Donkin mine –
a project that could result in hundreds of new mining jobs.
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