12th June 2013

Excerpt: From Meteorite Impact to Constellation City: A Historical Geography of Greater Sudbury – by Oiva W. Saarinen

posted in Books and Music About Mining and Northern Topics, Glencore-Xstrata PLC, Nickel, Nickel and War, Sudbury History, Vale |

To order a copy of “From Meteorite Impact to Constellation City”, please click here: http://www.wlupress.wlu.ca/Catalog/saarinen-meteorite.shtml

From International Nickel Company to Inco, and Merger with Mond (1902–1928)

Between 1902 and 1928, International Nickel prospered from the pre-war European demands for nickel in armour plate, the military needs of the First World War, increased peacetime uses for nickel in the United States, and the impact of the roaring twenties. By 1903, nickel production from Sudbury exceeded that of its main rival, New Caledonia. This dominance became continuous after 1905. The control of Sudbury’s wealth was paralleled by the dominance of International Nickel within the nickel industry. Through the use of long-term contracts with its consumers, the company was able to thwart competitors from entering the market, especially in the United States.

Its ability to meet the growing global demand for nickel was facilitated by the opening of Creighton mine in 1901 and the growth of this operation by the First World War into the world’s largest operating mine.10 Its output far surpassed that of the company’s other major source, Crean Hill.

Also significant was the opening of a new smelter by the CCC in Copper Cliff in 1904 which heralded the appearance of the first of three great smokestacks which dominated the Sudbury skyline for years to come. These smokestacks served to disperse the sulphur fumes released during the smelting process into the atmosphere. Around the same time, the former East and West smelters were taken out of production. Officials reorganized to increase the capital structure of the company in 1912, at which time its name was formally changed to The International Nickel Company. The opening of the Frood ore body in 1913 further solidified the company’s economic position.

International Nickel’s growth into a powerful monopoly soon gave rise to serious concerns in towns near their operations in Canada and the United States. In Canada, the issues were the absence of export duties on nickel and matte, and the company’s lack of a refinery in the country. Politically, this became known as the “Nickel Question.” Although local politicians made several appeals to the Ontario and Dominion governments, their concerns fell on deaf ears. The Ontario Metal Bounty Act (1907–17) was a timid response to the calls for Canadian refineries that had no effect whatsoever on securing nickel refining in Canada.

As well, the federal investigation of mining practices undertaken by the Committee on Mines and Minerals in 1910 led to naught. While these feeble political attempts affirmed the ability of International Nickel to manipulate the two higher levels of government, they nonetheless laid the foundation for the renewal of attacks against the company in 1914. Additional criticism resulted when International Nickel opened a new refinery at Bayonne, New Jersey in 1913. In the United States, the issue was related to the threat of antitrust action.

Following the outbreak of the First World War, International Nickel closed down its mines and smelters, whereas Mond continued its operations after a brief shutdown. This led to a public outcry that International Nickel was more interested in serving Germany, the largest importer by far of nickel products from the United States, than meeting the needs of the Allied governments.11 Reassurances that this was not the case provided by the Dominion government and the company late in 1914 did little to satisfy the press or political opposition. The call for a refinery in Canada continued, and even the Canadian Mining Journal, normally a staunch apologist on behalf of International Nickel, was in favour of Canadian refining.

The ensuing political uproar was such that the Ontario government announced the formation of an official commission in 1915 to deal with the matter. In the same year, the Dominion government took action by establishing two Munitions Resource Commissions to study the question of base metal refining in Canada. When the second commission came out firmly in favour of government aid to British America Nickel to assist the company in erecting a refinery in Canada, International Nickel saw for the first time the potential for genuine competition to replace its token and largely prearranged rivalry with Mond.

The criticism that International Nickel was a “foreign monopoly under the control of German interests” came to a head when it was reported that the German submarine Deutschland had made two trips to the United States in 1916 and taken tons of nickel, presumably of Canadian origin, back to Germany. When knowledge of these sensational events became public, International Nickel knew that the die was cast, and the company immediately decided to build a new refinery at Port Colborne in Ontario. It likewise announced the formation of The International Nickel Company of Canada as a subsidiary of International Nickel to carry out this task. Thus, when Ontario’s voluminous Royal Nickel Commission report came out later in 1917, the commission saw no need to make any recommendation regarding the need for the company to establish a Canadian refinery.

Significantly, the report condemned the idea of nationalizing International Nickel or giving government aid to British America Nickel. The conservative position taken by the commission destroyed any prospect of International Nickel facing competition from either a private or public corporation. Indeed, it only took another seven years before its only real competitor, British America Nickel, disappeared from the scene.

The refinery at Port Colborne was completed in 1918, at which time all of International Nickel’s assets in Canada were transferred to The International Nickel Company of Canada. As a result of this reorganization, the CCC lost its corporate identity, thereby ending its thirty-two year association with the Sudbury area that extended back to 1886. A shift in the company’s new public relations strategy then became evident in 1919, when its first advertising campaign appeared in the Saturday Evening Post; another landmark that year was the registration of its trademark name, Inco.

After the First World War, the demand for nickel fell and the cartel temporarily collapsed. This decline was exacerbated by the limitations placed on naval and other armaments by the Washington Arms Conference in 1921–22. The new circumstances forced both Inco and Mond to change from pure mining companies to ones where research and the creation of new markets were critically important. These developments allowed the economic situation in Sudbury to improve during the 1920s.

During this period of reorientation, Robert Stanley led the charge for Inco. The Bayonne refinery in the United States was closed in 1921, and a new rolling mill for converting Monel (a nickel-copper alloy) into ingots for rods and sheets was erected at Huntington, West Virginia in 1922. By the middle of the 1920s, the growing demand for nickel plating by the automobile industry, and the adoption of new chromenickel-iron alloys for use in kitchens, cables, and telephone and radio communication devices, all combined to encourage production from the mines in Sudbury. To meet the power demands for its present and future needs, Inco constructed a new hydroelectric plant at Big Eddy on the Spanish River in 1927.

Indispensable in war, nickel had now become even more indispensable in peace. In the Sudbury area, the growing demand for nickel focused attention on the problem of Frood mine. Since different parts of the Frood ore body were jointly owned by Inco and Mond, the latter company’s officials suggested that “what was needed, if the mine were to be properly developed and all the ore recovered, was single ownership and not a duplication of effort.”14 Joint ownership, Lord Melchett argued, would have many advantages: it would conserve ore, reduce costs by approximately 19 per cent, and save huge sums on capital expenditures and equipment.

From Inco’s point of view, the strategic importance of the Frood deposit was not only related to the fact that it was a “deposit of dimensions” whose ores had a high content of precious metals, including platinum but also because the future outlook of its own Creighton mine was uncertain. Robert Stanley readily accepted Melchett’s offer. It was simply too good for Inco to refuse at the price agreed upon. All the usual benefits of corporate concentration, near-market monopoly, economies of scale, and large profits were inherent in the merger, without any obvious disadvantages. Given the buoyancy of the market, moreover, the timing was ideal.

Company officials reached an agreement to merge the two operations effective January 1, 1929. The merger involved a series of stock exchanges whereby Inco became the parent organization and Mond was relegated to a subsidiary position to control operations in Great Britain. A new company known as International Nickel Company was formed to take control of all operations in the United States. With this action, Inco acquired the following properties: the Frood Extension; the Garson and Levack mines; the smelter at Coniston; a nickel refinery in Clydach, Wales; a precious metals refinery at Acton, London; and Henry Wiggins & Company, which operated rolling mills, fabricating, and chemical plants in Birmingham.

Prior to the merger, Inco took the step of making the parent company a Canadian corporation. One reason for this move was to avoid antitrust action in the United States because of the elimination of Mond as a “competitor” in that country. While Inco became nominally Canadian, executive control remained firmly in the hands of its American directors. The merger gave the new company worldwide control over 90 per cent of the nickel market, thereby solidifying Inco as a global monopoly and Stanley’s position as head of Inco.

The US control of Inco was paralleled by the country’s concern about controlling nickel as a strategic wartime mineral. For example, during the 1920s and early 1930s, paranoia existed in certain US circles concerning the possibility of a theoretical war between the United States and the British Empire that would use Canada as a theatre of warfare. Added to this paranoia was the belief held by many Americans in the expansionist ideology of “Manifest Destiny:” that the United States had the inherent and inevitable right to controlall of North America. To prepare for this unlikely scenario, the United States government even prepared a Joint Army and Navy Basic War Plan in 1924 that included the option of invading Canada and preparing the provinces and territories for statehood. This plan was approved in 1930, and updated in 1934 and 1935. One of the critical aspects of this plan was its repeated emphasis on the need to control Sudbury’s vital nickel deposits via an invasion route through Sault Ste. Marie.

As noted in the report, “Unless nickel can be obtained from the Sudbury mines, serious shortage in that important warmaking material will develop … within a few months after the war begins.” The document is instructive, as it reveals the enormous strategic global importance of the Sudbury nickel deposits at the time.16 Another part of the strategy involving northern Ontario was a proposal to generate hydroelectric power at James Bay. While nothing official came out of this plan, it is pertinent to note that the idea of hydroelectric generation at James Bay has since been revisited on several occasions, notably in the form of the Grand Canal Project proposed in 1959 involving the diversion of water to dry areas in the United States.

Another outcome of the 1929 merger was the consolidation of the hydroelectric plants previously owned by the two companies. While they were among the biggest customers for power generated by Ontario’s Hydro-Electric Power Commission, they also relied on local sources of hydroelectric power. As early as 1902, International Nickel established a subsidiary known as the Huronian Power Company for the purpose of developing power sources along the Spanish River. A plant, known as High Falls, was built on one side of an island in 1905; it was the first to supply the mining industry with power in Northern Ontario. In order to regulate the flow of the Spanish River, the company acquired the rights to eleven crib dams reaching as far north as the river’s source at Biscotasing Lake.

A second High Falls plant was built on the other side of the island in 1917. The two plants supported a small community of eighteen homes and a one-room elementary school in a setting that looked “more like a slumbering New England village than a nerve-centre of Northern Ontario.” Completed in 1920, with a length of 358 metres and a maximum height of 45 metres, the Big Eddy dam was the largest in Canada at that time. It also transformed the physical setting by creating a new lake (Agnew), some forty kilometres in length. After the merger in 1929, Mond’s subsidiary, the Lorne Power Company, which had built power plants at Wabageshik on the Vermilion River in 1909 and Nairn Falls on the Spanish River in 1915, was absorbed into the new entity. END

The Book

From Meteorite Impact to Constellation City is a historical geography of the City of Greater Sudbury. The story that began billions of years ago encompasses dramatic physical and human events. Among them are volcanic eruptions, two meteorite impacts, the ebb and flow of continental glaciers, Aboriginal occupancy, exploration and mapping by Europeans, exploitation by fur traders and Canadian lumbermen and American entrepreneurs, the rise of global mining giants, unionism, pollution and re-greening, and the creation of a unique constellation city of 160,000.

The title posits the book’s two main themes, one physical in nature and the other human: the great meteorite impact of some 1.85 billion years ago and the development of Sudbury from its inception in 1883. Unlike other large centres in Canada that exhibit a metropolitan form of development with a core and surrounding suburbs, Sudbury developed in a pattern resembling a cluster of stars of differing sizes.

Many of Sudbury’s most characteristic attributes are undergoing transformation. Its rocky terrain and the negative impact from mining companies are giving way to attractive neighbourhoods and the planting of millions of trees. Greater Sudbury’s blue-collar image as a union powerhouse in a one-industry town is also changing; recent advances in the fields of health, education, retailing, and the local and international mining supply and services sector have greatly diversified its employment base. This book shows how Sudbury evolved from a village to become the regional centre for northeastern Ontario and a global model for economic diversification and environmental rehabilitation.

The Author

Oiva Saarinen received an Honors B.A. (1960) and an M.A. (1969) from the University of Western Ontario and a Ph.D. in Geography from the University of London in 1979. He retired from Laurentian University in 2003. He is the author of Between a Rock and a Hard Place: A Historical Geography of the Finns in the Sudbury Area (WLU Press, 1999).

To order a copy of “From Meteorite Impact to Constellation City”, please click here: http://www.wlupress.wlu.ca/Catalog/saarinen-meteorite.shtml

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