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Nova Scotia’s Coal Industry Is in Decline. The Province Needs a Green Energy Transition.

In March 2020, after a series of rockfall accidents, and with international coal prices plunging, Kameron Collieries announced that it was permanently closing its mine at Donkin on Cape Breton Island, Nova Scotia. One hundred and forty workers received layoff notices just as pandemic-induced closures swept through the rest of the Canadian economy.

Cape Breton is a coal-mining region that has been hammered by decades of deindustrialization, with devastating social consequences. The mine opened in 2017, spurring hopes for economic recovery in the region, only to be shuttered three years later.

The Donkin mine closure, and the wider history of coal extraction in Nova Scotia, can help us understand how energy transitions ought to be managed in the future. Canada has historically dealt with decline in the energy sector by propping up loss-making, polluting industries that later abandon their workers. The Canadian government’s intervention in Nova Scotia’s fossil-fuel industry was a failed thirty-year experiment, and a sad lesson in the unrealized possibilities of publicly managed energy transitions.

Coal has been mined in Nova Scotia since 1720, primarily on Cape Breton Island. From the 1830s onwards, extraction became increasingly industrialized. After 1870, mine owners further accelerated their output to feed industrial demand in the United States and the rest of Canada.

Coal production increased more than five-fold between 1880 and 1913, reaching 7.2 million tons annually, with 80 percent of this increase coming from Cape Breton. Canadian dependence on export markets, and the concentration of mine ownership under a single foreign monopoly for most of the nineteenth and twentieth centuries, created an industry that was highly exposed to dips in global coal demand. Since coal was so important for local communities — typically based around company towns — the volatility of foreign markets could wreak havoc on the lives of workers and their families.

After the First World War, the British Empire Steel Corporation (BESCO) owned almost all the mines in Nova Scotia, but slumping coal prices threatened the company’s profitability. BESCO attempted to solve this problem in the classic fashion, with rounds of aggressive wage cuts. In 1921, the company imposed a 33 percent wage cut, which instantly provoked a strike.

During the early decades of the last century, the renowned Scottish-born communist activist James Bryson McLachlan led the United Mine Workers of America District 26, which represented the Nova Scotia miners. Under his leadership, there were a total of fifty-eight strikes from 1920 to 1925 alone, many of which were resolved by the authorities through force and government-imposed labor contracts. This labor unrest culminated in the 1925 general strike which was ultimately put down by the Canadian army. During this episode, police killed William Davis, a local coal miner. His death on June 11 remains a holiday in many former Nova Scotia coal towns.

The frequency and militancy of strikes convinced the provincial government to force concessions from the company instead of simply siding with its owners. The flexing of labor muscle also bankrupted BESCO, which was reorganized as the Dominion Steel and Coal Corporation (DOSCO) in 1928. By 1930, the coal industry had begun to receive provincial and federal support.

After the Second World War, the industry was so uncompetitive that it was cheaper for Nova Scotia to import oil for electricity generation than to burn domestic coal. Despite this, the ailing DOSCO was Canada’s largest private employer at the time. This gave the company plenty of leverage over coal towns. Their enormous influence over the local economy meant that DOSCO could always threaten to pull out instead of accepting union demands that would encroach on its profits.

In Springhill, an explosion on November 1, 1956, killed thirty-nine men and closed the No. 4 mine, leaving only No. 2 open. Although this mine had been in operation since 1873, DOSCO opted to dig deeper and deeper instead of using its profits to open a new one.

The depth and age of the mine made it susceptible to cave-ins known as “bumps,” which led the miners working in No. 2 to fear for their safety. The threat of closure squashed an abortive strike over the issue in September 1958. Less than a month later, in October 23, the long-expected bump occurred.

The two-week rescue effort that followed was one of the first mining disasters broadcast live on TV. At the time of the disaster, No. 2 was the world’s deepest mine, burrowing more than fourteen thousand feet below the Earth’s surface.

Seventy-five men died, but an inquiry held the following year largely absolved the company of blame for the disaster. Six days after the rescue effort was suspended, DOSCO announced that it was closing the mine. By 1961, Springhill’s population had already contracted by one-fifth. By 2016, the town had half as many inhabitants as were living there at its 1956 peak.

In the end, government subsidies were not enough to keep DOSCO profitable. In 1967, the company announced that it was exiting the coal business. The federal government feared that the economic disaster that had befallen Spring Hill would now be repeated on a larger scale in industrial Cape Breton. It opted to nationalize the mines under the auspices of the Cape Breton Development Corporation (DEVCO).

Meanwhile, the government of Nova Scotia stepped in to take over the steel plant, the mine’s main customer, creating the Sydney Steel Corporation (SYSCO). Worker militancy and union strength probably contributed to the government’s decision, first to subsidize the industry and then to nationalize it, rather than simply letting it close.

It is important to remember that these were rescue nationalizations. The provincial and federal governments were reacting to the collapse of a private company rather than trying to implement a worked-out transition plan. Insofar as they had a long-term vision, it was to phase coal out gradually while new industries developed in the meantime.

Government officials never intended public ownership to be more than a temporary expedient. But having had their hand forced by a combination of capital flight and labor militancy, they did not go on to develop any long-term plans.

The way that the federal government managed DEVCO was largely driven by events on the world stage. The 1973 oil crisis, which nearly tripled the price of oil on the world market, led federal politicians to think again about winding down coal production. They now decided that coal was a strategic national energy source, ramping up production and opening new mines.

Nova Scotia Power, a public utility, opened several coal-generating stations to make use of this increased production. This locked the province into a cycle of dependency on carbon-intensive electricity that has continued to this day. DEVCO even drew up plans to dig a mine at Donkin, but ended up mothballing the project in the late 1980s before it was finished.

DEVCO and SYSCO were rarely profitable firms: they operated under the constant threat of closure. It was against this background of economic decline that the Westray mine disaster occurred, leaving a protracted battle for justice in its wake.

In 1991, Curragh Resources Incorporated opened the Westray mine in the economically depressed town of Stellarton, promising it would have a fifteen-year operational lifespan. A unionization drive that had been triggered by safety concerns ended in defeat when the company threatened closure. During the course of this campaign, Curragh even fired one miner for filing safety complaints.

On May 6, 1992, an explosion rocked the Westray mine, killing twenty-six men. The mine shut down, but company management never had to face any criminal consequences for the disaster. As with Springhill, Westray had seen private profit assigned greater importance than the lives of workers and the well-being of their communities.

By the end of the millennium, it was increasingly obvious that government officials were going to shut down DEVCO and SYSCO. In an era of neoliberal austerity, Canadian governments at the provincial and federal levels were seeking to divest themselves of publicly owned enterprises and reduce public outlay on economic development schemes.

While governments were still mindful of the employment that these industries provided, they couldn’t find a private buyer willing to take on such unprofitable enterprises. Paltry regional schemes for economic diversification weren’t enough to compensate for the loss of coal. When DEVCO and SYSCO closed in 2001, the effects on communities in Nova Scotia were devastating.

Unemployment on Cape Breton has averaged 14 percent for the past twenty years, while the island’s population has declined in every year but one. Much of those who migrated out have gone to Alberta to seek work in another fossil-fuel industry, built around the extraction of bitumen from the Athabasca oil sands.

The history of coal mining in Nova Scotia shows that regional economic decline is not a natural outcome of an energy transition: it is a predictable consequence of letting the market determine development. It also underscores the folly of piecemeal exercises in public investment in the absence of wider economic diversification efforts.

Canada is still deeply invested in climate-endangering fossil-fuel extraction. The ongoing shift away from oil is already having a severe impact on workers in Alberta. Canadian governments aren’t intervening as much as they did in the case of DEVCO, but they’re still repeating the old pattern, with short-term initiatives to rescue parts of the oil industry and no long-range plan for a future beyond oil, coal, or other fossil fuels.

An effective green transition will require a very different approach: legislated targets for renewable energy, training opportunities, new standards and regulations, and feed-in tariffs and public procurement systems to create new markets. We know these things are possible. After all, the fossil-fuel industry already benefits from similar kinds of public support.

It’s not a question of whether the state and the public sector should intervene in the energy field: the question is how it should intervene, and in whose interests. We should learn from the experience of Nova Scotia. Instead of scatter-gun efforts to prop up declining industries that subsidize corporate profits but leave workers ultimately bereft, we need a serious plan for a transition that will protect both workers and the environment.

Read More: Nova Scotia’s Coal Industry Is in Decline. The Province Needs a Green Energy Transition.

2021-04-04 12:08:35

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