A History of the Canadian Shield – Canada’s Mineral Treasure Trove – David Kilgour (Part 1 of 2)

The Honourable David Kilgour P.C., is the Conservative Member of Parliament for Edmonton Southeast. http://www.david-kilgour.com/mp/house.htm

The Canadian Shield is, to most Canadians and foreigners alike, the quintessential Canada. I share this view having lived in the Gatineau Park spur of it for more than a decade and having often vacationed at Lake of the Woods for many more years. In countless ways, the Shield is idyllic. I think, for example, of the hundreds of motor boats which gather each July 1st in Kenora Bay at the north end of Lake of the Woods to watch Canada Day fireworks. Mingled with townspeople at these annual events under the stars are summer residents from all over the country. Many would move to the area to live year round if they could somehow earn a living; some do.

Approximately two million Québeckers and Ontarians combined live on the Canadian Shield. Since its borders are physical rather than political, residents on both sides of the provincial boundary lack effective structures through which they can pursue common regional concerns. The north of both provinces contains relatively thinly-populated frontier hinterlands; for many years, each of them has had only a limited influence on its respective provincial parliament and upon Ottawa policy makers.

The Shield in fact occupies more than forty per cent of our national territory across five provinces, but contains only eight per cent of our national population. In recent years, vigorous natural resource competition from developing countries, a declining resource-orientation of the world economy, and the weakened political position of the American economy have reduced mineral exploration and development across the region. Decades ago, it also contributed to the development of our national self-identity through the art of the Group of Seven and considerable writing about Northern self-reliance.

John Diefenbaker’s view that our national future lay in harnessing the distant North was popular in its day. Economic historians also accorded the Shield a large role, one competing even with the Laurentian school of thought. Some of them concluded that our national resource export patterns have entrenched metropolitan hegemony over various hinterlands such as the Shield.

The Shield is Canada’s largest and best-known physiographic feature:

4.6 million square kilometres of a lake-dotted plateau ranging from Labrador in the East to the Arctic in the Northwest. Distinguished by a mosaic of rock, deep lakes and forests, it offered the challenge of minerals of vast value hidden in a hostile wilderness. For most of the nineteenth century, its mineral potential was largely ignored and it was seen as a useless barrier blocking the northern and western expansion of farm settlement. In 1864, The Toronto Globe dismissed the Shield as “gaps of rough and.. . barren country which lie between us and the fertile prairies of North-Western British America.”

The regional variations of the Shield have determined a discontinuous and thinly scattered pattern of settlement. The first to arrive were farm communities established on land opened during the westward lumber boom of the nineteenth century, including the Ottawa Valley and Lac Saint Jean lowlands. Between 1880 and 1915, the second group of settlements sprang up along the CN-CP rail routes; some of these, notably Thunder Bay and Sudbury, achieved national significance during these years. Finally, more recent centres such as Lynn Lake in Ontario and Schefferville in Québec were created to mine resources. The Shield’s aboriginal residents today often live near single-industry mining or forest towns with narrow job opportunities, but continue travelling over large areas to seek fish and game.

As a result of these three types of settlement and the boom and bust cycles of natural resources, the urban structure of the Shield today consists of small and medium-sized communities with no large metropolis. Single-enterprise resource communities, vulnerable to the loss or depletion of their resources or a necessary international market, is a classic urban Shield feature.

The tendency of Southern cities to diversify their economies through import replacement seems not to apply to smaller communities on the Shield. Dozens of them in both Ontario and Québec depend on single employers and their service sectors. The isolation of most such centres, with limited employment opportunities and few social and cultural outlets, has encouraged considerable out-migration. Most communities on the Shield run from a few hundred to more than a thousand residents. According to the 1986 census, there are only three sub-regional cities even within our two largest provinces with populations of more than 100,000: Chicoutimi-Jonquiere (158,500), Sudbury (150,000) and Thunder Bay (122,200).

These three cities are connected much more closely to Montréal, Toronto and Winnipeg respectively than to each other. Their local industries are invariably controlled from one of the larger Canadian cities or from the United States. In addition, successive Ontario and Québec governments have for the most part shown an inadequate understanding of their own provincial north. A common regional identity has unfortunately failed to emerge that might have provided an effective voice in setting both public and private policies for a relatively large group of Canadians.

The construction of the CPR line across Canada solidified Montréal’s position as the dominant Shield metropolis during the late nineteenth century.

It connected such major centres as Sudbury, Sault Ste. Marie, Thunder Bay and Winnipeg to Montréal before later rail links to Toronto provided any real competition. Torontonians caught up and passed Montréalers in Shield dominance well into the twentieth century by becoming the financiers of most Shield mines. Through forest company mergers during the 1970s, the Ontario capital also reduced Montréal’s earlier dominance over Shield wood product industries. Together, however, the two cities, home to large natural resource companies such as Alcan, Noranda, Inco, Abitibi-Price and Hydro-Qudbec, effectively control the Shield’s economy today to an astonishing degree.

Consequently, Sudbury, Chicoutimi, Thunder Bay and other towns are in essence merely regional centres of services. The smaller communities are even less protected than these larger ones from the common boom-bust cycles of ore industry resource towns.

The Shield forest industry in both provinces is illustrative of a common sub-regional problem. From the early I 800s until World War I, a breathtakingly wasteful cutting of Shield trees lunged westward across both provinces. There was very little forest regeneration and it became necessary to move northward after 1918 for fresh pulp and paper stocks.
Earlier mills were founded in the St. Lawrence and Ottawa Valleys, but later ones extended from Chicoutimi to Kenora, providing pulpwood logs mainly to northern American newsprint markets. Various attempts by provincial Ontario governments to bar the export of raw pulpwood logs — “the manufacturing condition” — ultimately failed when governments in Québec City declined to enact similar legislation.

Only when American publishers, foreseeing a shortage in wood, succeeded in persuading legislators in Washington to allow the tariff-free admission of Canadian newsprint did large new investments create a number of new pulp and paper mills across the Shield. The resulting excess capacity, combined with the arrival of the Great Depression, brought severe drops in newsprint prices and major havoc for a host of newsprint-dependent communities. Québec and Ontario politicians and Canadian banks made various attempts to create an industry cartel that would end price competition and reduce production — a mechanism comparable to OPEC’s attempts to control oil. This failed for various reasons, but the banks’ and provincial governments’ motivation probably had little to do with keeping hinterland mill employees out of the ranks of the unemployed.

During the 1960s and early I 970s, another wave of pulp and paper mills was built, often financed with the help of Ottawa and provincial regional development grants. Unfortunately, long-term negligence by the two provincial governments acting as forest landlords has created severe problems, especially in northwestern Ontario where three out of four manufacturing jobs today still depend on trees. In recent years, both governments have improved their forestry practices a good deal.

Given that almost ninety per cent of the Shield’s pulp and paper and about sixty per cent of our newsprint goes to the United States, the current high exchange rate of the Canadian dollar — a ten year high — is causing real marketing problems. The Bank of Canada Governor appears to have kept Canadian interest rates at high levels mostly to keep the Canadian dollar at levels which will persuade Japanese and American institutions to buy Canadian government bonds. As a result, residents in the Shield believe they and the condition of the forest industries in which they earn their living have scant influence on the policies of the Bank of Canada.

Mining on the Shield began during the 1 890s in response to demands from various international markets. At Sudbury, where the CPR discovered ample nickel deposits during construction of its line westward to the Prairies, the mines enjoyed almost a world monopoly on the product for a long period.

It was not, however, until after 1945 that the mining age on the Shield flourished, following some very large investments in railway construction. Minerals from new sources, such as the Québec-Labrador iron fields, then came into production.

Since the 1982 economic recession across Canada, the Shield mining industry has faced an uncertain future. Severe competition from a number of developing countries and from Australia has hit the Canadian Shield. This, combined with uncertain ore prices, threatens the economic future of numerous Shield communities.

Shield minerals constitute an essential part of the Ontario and Québec economy; mines in Québec brought in $2.2 billion during 1986 and employed more than 20,000 people. They are a mixed blessing, though, since they are developed for outsiders and usually by firms from the south — thus perpetuating a hinterland status for the North.

The case of Elliot Lake illustrates the fortunes of communities affected by decisions taken thousands of miles away. Located 140 kilometres west of Sudbury, Elliot Lake, a community of 16,000 people, came into being in 1955, two years after the discovery of uranium in the area. The American military’s demand for uranium during the height of the Cold War was so great that a boom developed lasting from 1956 until 1963. By 1959, a dozen mining companies were in operation in the district.

Almost 25,000 people were living in the carefully-laid out community when Washington announced in 1959 that it would not renew its contracts. As a consequence of this devastating news, Elliot Lake’s population collapsed six years later to only 6,600. By 1970, only Denison Mines and Rio Algom were still in operation. A better period emerged in the I 970s with the advent of nuclear-generated power in Canada. The fortunes of the “Uranium Capital of the World” improved slowly until the early 1980s when sales to Ontario Hydro stimulated a second surge in growth.

The prospects of uranium are much less bright for the last decade of the century. In 1990, with the announced closures of the Rio Algom and Denison uranium mines as a result of plummeting uranium prices and rising production costs, 2,500 miners are expected to lose their jobs; an additional 2,000 service and support sector jobs will disappear as well. The impact on the local population and business community could be compared to job losses in Metro Toronto of one million. The expected exodus of the laid-off miners and their families again threatens to reduce Elliot Lake to the ghost town it resembled in the mid-1960s.

The community is bracing itself in anticipation of tough times. Its enterprising mayor has attempted to find salvation for his thirty-five-year-old mining town by persuading Canada’s seniors to move in. During the last two years, more than a thousand of them have been persuaded to move to Elliot Lake under the retirement program sponsored by the town and the mines. Doubts persist that even the 3,000 more seniors whose arrival is anticipated will be able to sustain the town once designed for ten times that number. Still, local citizens are determined not to let their community die. “Many of us have a lot of faith in the town and this community that it just can’t become a ghost town. We’ll adjust,” a miner’s wife said defiantly.

Since 1950, the major demand for the Shield’s cheap electricity has come from the urban-industrial heartlands within Canada and the American Northeast. The Churchill Falls project, started in 1953 in Labrador by a consortium of Europeans, set a standard for others to follow. Unfortunately for residents of Newfoundland and Labrador, in 1965 the Smallwood government entered into a sixty-five-year contract with Hydro Québec to provide ninety per cent of the power generated at a price which during the 1980s was approximately one-tenth of its value in American markets. In 1984, the Supreme Court of Canada, displaying an unusual respect for the sanctity of contracts, saw no legal reason to rescind the agreement.

The Québec government goes on selling Labrador’s power for huge profits in the U.S. and uses the product domestically to attract industry into Québec. Meanwhile, the two provincial governments continue to disagree hotly over where the Labrador-Québec boundary should be drawn.

Northern Ontario Disaffection

Life in the Shield has been far too little examined but one of its features is well known: the grossly unequal struggle between the heartland of southern Ontario and metropolitan Québec and the northern hinterlands. Manufacturing firms have no incentive to locate on the Shield because metals refined there are by direction of head offices rarely sold at prices set at the mine gate. Gasoline sold in Red Lake, Ontario, goes at the Sarnia price plus a two thousand and fifty kilometre freight charge to Red Lake even though Red Lake is only about five hundred kilometres from oil refineries in Winnipeg. Another case is Matagami in northern Québec, whose residents complained in 1976 that their community was relocated more than a half century ago to make room for a hydroelectric darn, while they themselves did not obtain electricity until 1971.

For generations, federal policies have been designed to suit southern Ontario’s needs. “New Ontario,” as northern Ontario was known a century ago, has today approximately three-fourths of the province’s land area but only ten percent of its population. In terms of Canada as a whole, however, northern Ontario lies not in northern Canada but close to its centre. Draw a straight line from Edmonton eastward and it runs into James Bay. Residents of North Bay, Sault Ste. Marie and Sudbury might occasionally call themselves “Northerners”, but they live south of some parts of the United States. A few northern Ontarians have sought provincial status for their sub-region at various intervals since Confederation as a solution to their isolation from Queen’s Park but with very little success or popular support.

In many ways, northern Ontario is a microcosm of Canada as a whole: eighty-five million hectares within the Shield’s rugged, lake-dotted geology; a scattered population; a colonial economic system; a sizeable French-speaking community in the northeast; a neglected native population who have finally begun to lobby for their rights at many isolated points everywhere. While it is true that Ontario, in the words of the late Ontario Premier John Robarts, is the “golden hinge” of Confederation, it is equally true that northern Ontario is “the rusty linchpin.”

As Don Scott notes, “If Canada is to work, then Northern Ontario, where all the alienations meet, must be made to work for it. It is here that Eastern Canada meets the alienated West. It is here that English Canada meets alienated French Canada. It is here that the Indian suffers a silent alienation within sight of a standard of living far above his own. It is here that a colonial industrial system functions with an alienated work force.”

When Ontario’s Ministry of Northern Affairs sponsored a history of the region during the province’s bicentennial in 1984, the author of one chapter concluded cheerfully: “No longer is Northern Ontario simply a place in which to work or survive; rather it is a place in which three-quarters of a million Ontarians choose to live satisfying and productive lives. Ontario’s north has finally come of age.” The realities of everyday life in northern Ontario scarcely warrant such optimism. Discontent is a sentiment which surfaces readily in discussions held north and west of any line drawn down the Mattawa River, Lake Nipissing and the French River.

It reflects the feeling common among many residents of the sub-region that they are being short-changed; that their natural resources, local residents and money are constantly removed from them in order to serve southerners; that southerners in return have little or no concern for balanced economic and cultural development, environmental protection or local government structures and services.

This sense of grievance and feeling of powerlessness tends to be reinforced by the perceived impotence of elected representatives at both the federal and provincial levels throughout northern Ontario.

Many northern Ontarians share with Outer Canadians generally the view that while they do much of the really hard work in often inhospitable places, rewards “go south.” Northern Ontarians also share the hinterland conviction that both federal and provincial government services are only grudgingly provided in their communities and that they are victimized by a host of transport and trade policies which leave them with undiversified resource economies vulnerable to every drop in world commodity prices.

“Northern Ontario is for the rest of the province what the Prairie West is for Canada,” notes Tom Miller, with the difference that “the Prairie West has provinces and a political voice; northern Ontario is apart, and electorally a very small part, of the province that exploits it. Political frustration gives northern resentment a very special bitterness.” During the summers I spent in the Kenora district of northwestern Ontario I was able to fully verify this feeling.

In Northern Ontario today, the sense of belonging to an exploited hinterland is both widespread and reinforced by geographic and other natural factors. Timmins has only ninety-two frost-free days, Sudbury and the Soo — 112, compared with Toronto’s 160. Thunder Bay is a two-long-days’ drive from Toronto, and residents west of the lakehead are for all practical purposes really Manitobans who happen to live in Ontario.

Lakehead residents often read Manitoba newspapers and watch Manitoba television. Many go to university in Winnipeg and find it closer for serious medical problems. The thought that things would have been better if everything west of Thunder Bay had been joined formally to Manitoba keeps few northerners awake at night today, but a persuasive case can still be made for it.

Kenora, one of the most idyllic settings anywhere in Canada, is northern Ontario in its most perfect state. On most summer weekends across northern Ontario there are about 300,000 vacationers among 800,000 local residents. Visitors generally drive better cars and own the better lakeside locations. When a high-powered motor boat full of carefree holidayers speeds down the lake, almost swamping a family of Indians in a canoe, many of us are horrified.

Tourism is the region’s third-largest industry, yet it is badly paid, seasonal, often harmed by pollution, and to a degree preempted by better incomes in the forest industries. Looking deeper, one discovers that freight practices and rates maximize the movement of raw materials out of the north; decent roads are usually built reluctantly by the Ontario government and late in the day; most communities lack dentists; and doctors are scarce. The tourists probably do not notice the brisk out-migration of young Northerners seeking better job opportunities to the South.

For part 2, click here: http://www.republicofmining.com/2010/07/23/a-history-of-the-canadian-shield-canadas-mineral-treasure-trove-david-kilgour-part-2-of-2/

The HON. DAVID KILGOUR, P.C., M.P., received a B.A. in economics from the University of Manitoba, an L.L.B. from the University of Toronto and pursued doctoral studies in constitutional law at the University of Paris. Admitted to the bars of Alberta, British Colombia and Manitoba, Mr. Kilgour has served as a member of the International Commission of Jurists, s assistant city prosecutor of Vancouver, as a senior advisor to the Department of Justice in Ottawa and as a constitutional advisor to the Government of Alberta. In addition, he has worked as an investment analyst, an economist, a journalist, a teacher, and a ranch hand before beginning a career in federal politics. Since his election as a Member of Parliament for Edmonton Strathcona in 1979, Mr. Kilgour has served as the parliamentary secretary to three Ministers, the Minister of External Relations, the Minister of Indian and Northern Development and the Minister of Transport.

Mr. Kilgour’s outspoken criticism of ethics within the Progressive Conservative Party and the treatment of Western Canada along with his vote against the Goods and Services Tax, resulted in his departure from the Progressive Conservative Party and his becoming a member of the Liberal Party in 1991. He recently served as Deputy Speaker of the House of Commons and Chairman of Committees of the Whole for the 35th Parliament. He is currently active as the M.P. from Edmonton Southeast and is the Secretary of State for Latin America and Africa.

Mr. Kilgour is the author of Uneasy Patriots: Western Canadians in Confederation (1989), Inside Outer Canada (1990), and Betrayal: The Spy Canada Abandoned (1994). He is also the recipient of the Masaryk Award from the Czechoslovak Association of Canada and the Human Rights Award of B’Nai Brith Canada, both are for his activities related to human rights.

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