Interest In Sudbury's Nickel Copper Ores example essay topic

Main - "The inability of nationalist sentiments to find effective instruments of control for export industries... strengthened the development of industries in the industrial nation at the expense of the fringe areas". INTRODUCTION The history of Sudbury, Ontario is inevitably intertwined with that of its mineral extraction. In the days before INCO came to dominate the region's principal resource, many unsuccessful attempts were made at establishing productive mining companies. Between the discoveries of the abundant ore deposits in 1883, to the merger creating International Nickel in 1902, the Canadian Copper Company acquired the largest mines of the Sudbury basin. How did it succeed? What made the rise above the competition to dominate the area?

The following shall account for the success of the Canadian Copper Company, from its inception in 1885, to the International Nickel merger in 1902. Said account shall be provided for by detailing the discovery of the basin's deposit by CPR railroad worker Thomas Flannagan. Subsequently, it shall detail the history of the American entrepreneurship and capital invested in Sudbury, as well as its means of production and shifting market focus. Finally, the paper will analyze the public policy and issues surrounding the mineral extraction, treatment and manufacturing. I. ORIGINS OF CANADIAN COPPER COMPANY: DISCOVERY OF THE SUDBURY BASIN MINERAL DEPOSITS In 1883, as the Canadian Pacific Railway was working its way through the Canadian Shield westward. During its construction, countless company towns like Sudbury were created and abandoned across Canada. Although, as was to become the case, the future of the Sudbury area was drastically altered by the discovery of copper ore deposits in what was then known as the McKim Township.

After more focused studies and development, it would later become known that the nickel and copper ore ranges near Sudbury Basin encloses an oval central depression that is approximately thirty-seven miles long and seventeen miles wide, on whose lip the key producing mines are positioned. A series of major ore discoveries along the south rim of the Basin, later to become well-known mines, such as Murray, Creighton, Copper Cliff, and Stobie, soon followed. Ore bodies on the north rim were not pursued until later in the decade. The original survey of the ores in the region of Sudbury had been published in the 1856 Geological Survey of Canada Reports, however, went unnoticed by "all but the most intrepid readers".

Nonetheless, the detection of these deposits a little more than a quarter century later incited a dissimilar reaction. Although distorted in a out-and-out mythology, it is generally believed that blacksmith Thomas Flannagan, in August 1883, discovered a goss ano while working the CPR construction line with a pick. Neither Flannagan, nor his fellow employees or employers laid a claim to the deposits. News of copper-sulphide's, then a useful product of manufacturing, spread quickly and the discoveries, along with a convenient accessibility via the CPR led to a prospector's rush in 1884 and 1885.

The ore-bearing lands were quickly purchased by promoters and speculators, since the property was available for the statutory provincial rate of 1$ per acre, without any requirement of discovery or development before the transfer of title. The ore deposits were soon acquired by a few groups of speculators, many of whom were based in northern communities such as Pembroke, Ottawa and Sudbury itself. The first patent was issued in October 1884 to two brothers from Pembroke, Thomas and William Murray who acquired 310 acres. Other early promoters included with Harry Abbott, the CPR construction boss, and John Loughlin, a businessman who later represented Sudbury in the provincial legislature. The regulations concerning land acquisition in the General Ming Act of 1869, in addition to the valued rate of 1$ per acre, included a minimum purchase of 80 acres, therefore excluding a large proportion of prospectors and small businessmen. What's more, apart from the Crown's reservation of pine timber on lands, there existed no provision to either limit the amount of land one individual or company might claim or endow a royalty on minerals extracted.

Furthermore, it has been argued that mining in the Sudbury basin in the late 19th century required not only large amounts of capital for land patents and development, but also access to advanced technology. Moreover, the development of steel had spurred the evolution of rail transport and sophisticated manufacturing machinery. In turn, the technology produced business on a scale that required the joint-stock company, more often than not funded through banks and major financial institutions, to replace the small privately owned business to mobilize the required capital. Lastly, railways also encouraged a transformation in the secondary manufacturing sector by weakening local and regional markets... In an effort to encourage capital investment towards previously disappointing efforts at development, the government policy has not only made it difficult for individual prospectors to manage a claim financially, but had provided "an institutional setting favouring the growth of a monopoly, from which it could not retreat". ii. FINANCIERS, ENTREPRENEURSHIP & AMERICAN INFLUENCE American born Samuel Ritchie, who had been largely responsible for the construction of the Central Ontario Railroad from Trenton to Coe Hill, also followed suit with the early prospectors, purchasing 10 000 acres in the heart of the Sudbury basin.

In 1885 Samuel J Ritchie formed the Canadian Copper Companyo to mine the area's outcroppings of copper. The was incorporated as a joint stock company on January 6, 1886 under the laws of the state of Ohio, having headquartered its operation in Cleveland, with an initial capital of two million, later increased to two and a half million, dollars to operate expanded holdings of Copper Cliff, Stobie and Evans mines totaling 97 000 acres. Shareholders of the included major businessmen and politicians from Ohio. It was not uncommon to see American investors involved in such operations, considering the liberal government policies and abundant resources. In fact, at the time, over half of the funds invested in the mining industry of Ontario were American based, and the Ontario Commission favoured further increasing this ratio because of both the large market to the south and American technical achievement. The government's preference of American investment to quickly and efficiently create and sustain development in northern Ontario was not without substance.

Virtually overnight, the American based would emerge to dominate the industry in Sudbury.. PRODUCTION In the late 19th century, the popularity of nickel began to increase in the world market. Various reasons account for said increase, such as the adoption of token money coinage after 1860. The American market only absorbed about 1000 tons of nickel annually, but interest expanded after a series of scientific findings. More specifically, the discovery and commercial production of nickel-steel by Mar beau in France in 1885 transformed nickel from "a nuisance into a valued mineral". The copper-nickel alloy was of interest due to its economy, durability, hardness and resistance to tarnish.

Not long after, an elaborate paper entitled "Alloys of Nickel and Steel", read by Riley in 1889 before the Iron and Steel institute of England revealed that test results had discovered that nickel-steel showed an unprecedented resistance to armour piercing projectiles and would provide an immeasurable advantage in military use. Although Great Britain's military authorities were initially unconvinced by Riley's paper, General B.F. Tracy, Secretary of the United States Navy, initiated a series of tests of nickel-steel armour plates in 1889, and many European nations followed suit. Subsequently, interest in Sudbury's nickel copper ores increased dramatically. Ritchie, who had engaged in some nickel-iron experiments in 1876, was particularly aware of the possible effect that a revolution in armour-plate making would have on his company.

Moreover, with a potential capacity for nickel matte equivalent to the world consumption in 1889, exerted every pressure to increase the demand for nickel. By 1890, the first serious nickel boom hit Sudbury. Meanwhile, by the fall of 1886, the was allegedly producing a copper ore running at 7 percent metal from the Copper Cliff, Stobie, McAllister and Creighton mines. In the post extraction phase the next year, the shipped 1200 tons of copper ore to the Orford Copper Company at Bayonne, New Jersey, among others, for treatment. Much to Ritchie's dismay, the copper ores were contaminated by a high percentage of nickel and could not be refined by the Orford Copper Company. As it were, instead of an ore containing 7 percent copper, it was 4 1/2 percent copper and 2 1/2 nickel.

Regrettably, nickel at this point was not yet considered a valuable mineral, since there was no known process of cost effective treatment that was widely available. Furthermore, the still narrow world market of nickel was dominated by a French mining operation in New Caledonia, Le Nickel, not far of the coast of Australia. A Boston metallurgist, Dr. E.D. Peters, was affianced to travel to Copper Cliff and direct the building of a smelting works project. Here, he introduced heap roasting of the ore, that enabled the production of a satisfactory matte, which refers to the product of the smelting process, whose product contains high quantities of metal along with sulphur and other impurities, requiring refining before pure metals are obtained. The complicated process of heap roasted involved running ores through grinding "jaw-breakers" and, once transported to the roast yard, dumped upon heaps in areas of birch and spruce trees. Said heaps were 40 by 80 feet, up to 6 feet high situated on a bed of pine wood, with appropriated air channels in the center of the piles.

After the main body of the heap is formed of the coarse ore the fines are added on and around the pile to ensure smothering of the fire, since "the entire success of the roast depends upon the building of the heap". From thereon, the heaps would burn anywhere from thirty days to seven weeks. In 1892, a process had been developed by Robert Thompson of the Orford Copper Company for extracting nickel from the heap roast in a cost-effective and efficient procedure. Post-roast product was then taken to the smelter furnace, to be combined with American coke, delivered via the CPR.

Once the melee of burnt ore and metal was removed from the furnace, the molted mass was separated into two layers in what became known as the "tops and bottoms" process, an innovation provided by the Orford Copper Company. The bottom, heavier layer was then sent to New Jersey to be refined while the top half remained as slag. Therefore, in a mutually beneficial agreement, the Canadian Copper Company engaged in an exclusive contractual relationship with the Orford Copper Company, in which it was agreed to be its sole supplier, to refine its matte. Earlier, in 1877, the Orford Copper Company had begun to smelt copper and sulphur in the Eastern Townships of Quebec, but encountered opposition when sulphur fumes from its plant destroyed the neighbouring farms.

As a result, the company had moved its operations to New Jersey, where it was producing sulphuric acid for sale to the Standard Oil Company. The technical success of Orford's refining process, new company location and the erection of required facilities, gave it an impending monopolistic position within the American nickel market and this power, and, "working backward" through the exclusive of its agreement, ensured the overwhelming supremacy of the at Sudbury. In an effort to reduce shipping costs to New Jersey, the subsequently adopted a policy requiring a low grade ore concentration into nickel-copper matte to allow transport. Also, the company endeavored to eliminate as much waste product as possible at on site to reduce the weight of transport goods, hence reducing cost. With its means of production developed, the and Orford combination made for a powerful partnership. Thereafter, through these logical means, the two companies established a firm toehold on the North American nickel industry, and the foundations of an empire. iv.

MARKETS It is a well known fact that the introduction of nickel-steel into armaments was the most important single factor in the development of the nickel industry. The U. S Navy, encouraged by the promotional efforts of Ritchie, became interested in the possibilities of this alloy and placed orders that provided the new Canadian Industry with its initial market. After some experimentation, the Orford process for extracting nickel was finalized and had effectively achieved a scale of operations and had developed a process which enabled it to supply nickel suitable for alloy purposes at a lower price than any other nickel producer. In the meantime, two smelters were erected at Sudbury in 1888 and 1889. In 1890, the Orford Company entered into a contract to refine the matte which the Navy purchased from the Canadian Copper Company. From 1890-5, the maintained an unshakable monopoly over the district through its connections with the Orford Company.

Orford's capture of the American market was based on its exclusive contract with the United States government and when the armament manufacturers became direct purchasers of nickel after 1892. Almost inevitably, the -Orford relationship came to monopolize the market as they became the sole supplier to the armament market and, as it improved its refining process, moved into the refined nickel market. While the United States market, completed dominated by the Orford- monopoly, was protected by a duty of 10 cents a pound under the McKinley tariff (partially refined matte was considered duty-free, as was that supplied by the ), Orford's low cost of its raw materials and cheap production enabled it to gain access to the European market, though a limited access nonetheless, due to the depression of 1893-5. Further, an agreement between Orford and Le Nickel in 1895 "enabled Orford- to increase shipments to the important and growing European market". Thus, Orford's US exports more than quadrupled between 1895 and 1901. Conclusively, the nickel market of the Orford- partnership expanded not only into the European market, but monopolized the North American market simultaneously, paving the way into world market domination. vs. RIVAL FIRMS A major prospecting rush to Sudbury, between 1889 and 1891, was said to have been fuelled by what were considered 'unlimited deposits' on the authority of the 1890 Report of the Royal Commission on the Mineral Resources of Ontario.

Further inspired by the success of the, there were numerous abortive attempts to establish rival firms. Among them were previously established and successful businesses, such as HH Vivian and Co., a prestigious smelting and metal company whose attempted admission in the region attracted international attention to Sudbury. HH Vivian mined the Murray deposit, built a local smelter in 1890, and shipped to its refinery in Wales. Unfortunately for its shareholders, the company ended operations in 1894, after sustaining large financial losses. Access to refining techniques was strictly guarded, and those in control of the markets proved to be strict gatekeepers.

The Dominion Minerals Companyo, an enterprise organized with Canadian capital and based out of Montreal, was incorporated by an act of Parliament in 1889, and held properties in Worthington, Blezard and Cameron. DMC built a smelter at Blezard Mine and operations were continued until 1895. The failure of the DMC and HH Vivian companies were in accordance to several factors elaborated by O.W. Main: the market connection between and Orford, and therefore Canada and the US, and what's more, their connections in the European market allowed the -Orford combination to cut their prices too low for Vivian. Additionally, the DMC's Blezard deposit was quickly exhausted.

Lastly, the rising costs of the above stated depression and a decline in the price of nickel and copper allowed that any company not firmly established in the world market would crash and burn regardless of their capital. Further, in 1900, Robert Thompson of the Orford Company established the Ontario Smelting Works at Copper Cliff to re-treat matte and vastly increase its copper content, thereby almost doubling its value. Other early rivals also failed, for both financial and technical reasons. The Drury-Nickel Company, Ltd, incorporated in Ontario in 1892, and worked the Chicago and Tracers mines until 1893. Two other companies from Hamilton, Hoepfner Refining Co ltd 1899 and Nickel Copper Company, attempted to invade the Sudbury area deposits and markets, but were short lived. Often, assets and liabilities of failed ventures were taken over by, such as those of the Vermillion mining Company.

Another difficult obstacle that newcomers faced in the nickel industry was the acquisition of the cost-effective refining processes, and the market for nickel was thing and tightly-controlled. The aforementioned French Company, Le Nickel, using New Caledonia ores, had a strong hold on the European market, while the grip of and Orford on the American market was strengthened in 1902 when the two firms merged to for International Nickel Co (New Jersey), later renamed INCO. It was not until the turn of the century that a successful rival firm, Mond Nickel, was established in Sudbury. Mond's refineries were situated in Wales, a market which was of no interest to the.

Smaller than the, Mond produced for the European market and was tolerated, until the two firms merged in 1928. Though, perhaps, after much research, this author has discovered that, to describe Mond as a 'successful rival' may be an overstatement or tentative conclusion. vi. MARKET CONTROL Mond's establishment at Sudbury took place in 1904, just two years after the and Orford to form the International Nickel Company in 1902. Although discussing events past this merger may be including history beyond the stated thesis, this author feels the importance of this analysis will make a sound contribution to the argument of this essay. From the get go, the formation of the International Nickel Company drew allegations of practicing a monopoly in the nickel market.

Further, it has been argued that public policy (discussed below) never attempted to end the domination of the on the grounds of monopoly" Finally, agreements reached between International Nickel and Le Nickel, the two largest producers in the world, led a period of sustained world market control perpetuated by the two nickel giants When it arrived in 1904, Mond Company received a 'quick admission to the 'cartel' due to its "transparent economic and political" associations. As mentioned, Mond's refineries were situated in Wales and therefore the company did not pose a threat to International Nickel. According to Swift, Mond, a privately owned firm with a secondary interest in nickel and a willingness to cooperate with International Nickel for mutual benefits, was the "perfect 'proof' needed to refute the not infrequent rhetorical attacks in Canada on the 'foreign monopolist', International Nickel". Furthermore he contends that the 'parent-child' relationship between U.S. Steel and International Nickel allowed it sole access to the U. S market through an exercised cartel, citing, as an example, J. P Morgan, owner of U. S Steel, using influence on the stock market to prevent necessary credit from being allocated to rival operations, such as the Lake Superior Corporation.

Moreover, O. W Main alleges that Mond was granted a market share immediately on the agreement that they would enter into a price-control affiliation with International Nickel by selling at the same price as the existing producers and using the same sales gent. Additionally, Mond was given a share in the Steel Manufacturers Syndicate. In return, the company also protested recently legislated export royalties alongside the former, and weighed heavily in the balance. Considering the above evidence, it is obvious that International Nickel would go to any extent to pursue its own interest, even if it meant cultivating relationships with allies or imposing monopolies. The Canadian Mining institute even referred to the corporations dealings as a "plan that has been arranged which will regulate production, prices, and a division of market". vii. GOVERNMENT POLICY Soon after the inception of the, Ritchie had successfully negotiated with both provincial and federal governments in 1889, to amend a 30% duty on mining and smelting machinery and a 75% per ton duty on smelting coke to encourage development therefore allowing a required fluidity in the shipment of ores to New Jersey's refinery.

The success of the at Sudbury notwithstanding, in the later nineteenth there was a great deal of frustration with the lack of exploration and production in northern Ontario. A fundamental dilemma confronted the provincial government: how could it draw up regulations that would simultaneously encourage prospecting and mining development and protect the broader society's claim to share in the profits: "The emphasis on regulation in the mining act of 1864 and in the Gold and Silver Mining Act of 1868 gave way to an encouraging framework in the General Mining Act of 1869. From that year until 1890 the province placed minimal constraints on the location and development of mining properties". Over the next 30 years, under the liberty of the General Mining Act, the Ontario mining business collected roughly 33$ million in gold, silver, copper and nickel from the mines of the Canadian Shield without paying a penny in royalties.

Prior to 1890 the rules for exploration and development on crown lands were liberal - or lax - in the extreme. Earlier attempts to restrict access or to impose provincial royalties and taxes were rescinded in the General Mining act of 1869. Under this measure any licensed prospector could explore for mineral-bearing ores and, after staking, register his claim with Department of crown lands in Toronto. Mining locations of 80,160, or 320 acres could be bought for 1$ per acre, for which the buyer obtained title to all mineral rights. There were no requirements of prior discovery neither of valuable minerals nor of development into a working mine, before the issuance of an ownership-patent.

Nor were royalties payable. In fact, the province surrendered all subsequent rights to the resource base, alienating it absolutely - in an environment where neither personal nor corporation incomes were taxed at all. By the late 1880's, following the developments at Sudbury, reform was clearly needed. Hence the Ontario government appointed a Royal commission on Mineral Resources in 1888.

Reporting in 1890, the commission brought the potential for industry-government conflict to a head. The commissioners insisted that the government should aid and support the industry, and they advocated only minimal changes in the existing act, although they did suggest that there might be a decrease in the minimum size of claim, proof of the presence of valuable minerals as a condition of staking, and development work before a patent was issued. Such rules would curb the worst speculative excesses. The subsequent mining legislation departed significantly from the recommendations.

In 1891 a new mining act proposed to extract royalties from mines producing silver, nickel-copper, iron, and other minerals - but only on lands patented after 1891. Thus Queen's Park received no revenues from nickel, and it had originally transferred the lands for a mere 1$ per acre. The situation was irritating, although not to or INCO. Another major issue was that of refining. It was obvious that because Orford refined in New Jersey, jobs, and incomes were created in the United States, not in Sudbury or elsewhere in Ontario. Also, the Ontario administration tried constantly to persuade them and even to intimidate Orford, and then INCO.

The First World War ended the quarrel at last, and INCO opened a new refinery at Port Colborne in 1918. In the post-war years there were new uses for nickel, as steel alloys found widespread application in the burgeoning production of consumer durables and semi-durables, not only in Canada but throughout the western world. INCO proposed to capitalize on the situation by developing the large Food ore body, a property that it shared with Mond. The economic advantages of joint exploration, and perhaps the desire to control world markets, precipitated the merger of INCO and Mond in 1928.

Indeed, in the act of 1900 the government gave up all presence of collection royalties and rescinded all remaining reservations of minerals on lands that had passed into private ownership. On the other hand, the government did act to reduce the minimum size of claim, replace the 1$ price by a graded price, introduce a system of renewable leases, and require development work before patents would be issued. Not only did Orford have the only efficient process for further refining the matte, but the US levied a 10% tariff on refined nickel and copper. When the was incorporated in 1886, Samuel J Ritchie promised to locate its refining operations in Canada. Finding that the was still uncooperative and the US government more protectionist than ever, Ontario pressed for a dominion export tax on nickel and copper mattes, analogous to the tax that had been imposed on logs and pulpwood in 1897.

Parliament passed the measure but as it was never proclaimed, the new law was without effect. So the government's next move: opting in the 1900 amendment to the Mines Act for a rebate: there was a license fee of 60$ per ton of nickel matt and 50$ per ton of copper matte, but these fees would be rebated if the ores were refined in Ontario, btu the measure was never proclaimed. In the end, both provincial and federal governments backed down, virtually powerless in the face of determined opposition from the mining industry, especially the former, which threatened to withdraw from Sudbury and to move its mining operations to New Caledonia. 6 vs. CONCLUSION As the above analysis would indicate, obviously many factors contributed to the success of the. Primarily, it can be said that a combination of technology and politics were at the forefront of the company's triumph. One must not ignore the secondary factors, such as indispensable timing of the's incorporation: allowing Ritchie's brainchild royalty-free mines for a steal, or the fortunate combination of opportune purchases and financial strength.

Also, there was the company's exclusive relationship with the Orford Company that would evolve into INCO through means of backroom bargains and illegitimate market control. Nonetheless, one cannot deny that the's success is still alive and well today with INCO in Sudbury. Sudbury was to be a minor depot like dozens of others every hundred miles or so across Canada and the strategic lands made it seem to the that its governing position could not be challenged. In fact, the CPR syndicate had established its regional headquarters in North Bay and prior to Ritchie's arrival, and there was only a minute and transient population of a few hundred residents, half of whom were employed by the CPR. Present day now knows the ascension of Sudbury from rail town to regional capital, with much owing to the extraction of its nickel deposits.