THE COMPANIES
The news that Ottawa plans to privatize
the Cape Breton Development Corporation shocked the local community, but it
shouldn't have. The history of coal on Cape Breton has been a history of
failures and government bailouts. The mines were supposed to have closed by
1981. Looking back over the years, an outsider could say it was just a
matter of time before the government would call it quits. That time has
come.
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UPDATES:
Nov. 20, 2001: News
reports say Cape Breton coal miners will likely work their last shift
this week.
May 16, 2001: The federal government announced that the last
working industrial coal mine in Cape Breton will be closed.
Read the story
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In the past 30
years, Ottawa has poured more than $1.5 billion into Devco. Coal may be
abundant on the island, the Sydney coalfield may be one of the largest in
the country, but mining the resource has been less than profitable over the
centuries.
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 the past 30 years the federal government has 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 hasn't been the case. There have been numerous
government bailouts with the company promising to stay on budget and within
business plans. Those promises never seemed to work out, something has
always come 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. In January of this
year the federal government announced it had had enough. It will close one
of the Devco mines and sell the other. The proposal is being fought by
people in Cape Breton and the thousands who work for the company, but there
are many, particularly in mainland Nova Scotia who applaud the move.
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. That 100
figure is slightly fewer than the number of mines in the Cumberland Basin
field on mainland Nova Scotia, but the amount of coal taken from the Sydney
field is more than all the other coalfields of Nova Scotia combined.