HISTORY
MINING HISTORY
MINING HISTORY
ROYALTIES
Newfoundland did not become part of Canada until 1949. The two companies mining Bell Island iron ore were headquartered in Canada so, until 1949, the profits from this Newfoundland resource were going to a foreign country. Until 1910, the Newfoundland government had never entered into contracts with companies that carried out mining operations in Newfoundland. During the first decade of ownership of the Wabana mines by the two Canadian companies, the Newfoundland legislature had discussed the idea of levying a tax on the shipment of Bell Island iron ore out of Newfoundland, but it was not until 1910 that it was announced in the Speech from the Throne that agreement had been reached with the two companies to pay a royalty of seven and a half (7 ½) cents per ton on the total output of ore for the next 10 years (ie, until 1920). Based on annual production of one million tons at that time, the tax was expected to bring in $75,000. The “Bell Island Royalty Bill” received approval of the House of Assembly on March 24, 1910. At the end of 1910, the first royalties were paid and amounted to $94,668 between the two companies (Bown, vol. 1, 30-34). (At the same time, the government of Nova Scotia was receiving 12 cents per ton on coal mined in Cape Breton (Bown, vol. 1, 40).)
When that 10-year agreement ended in 1920, a new contract was agreed to by the two companies and the government, but debate on the contract in the House of Assembly dragged on for months. By the time the bill passed the third reading, BESCO had taken charge and the turmoil in the industry, which caused a downturn in operations at Wabana and subsequent layoffs, led to the government agreeing to a “temporary” suspension of royalty payments in return for the mines remaining operational (Bown, vol. 1, 64-66). The year 1923 brought more problems when politics between France and Germany caused the cancelation of all German orders, putting 1,500 men out of work at Wabana. BESCO agreed to reopen two mines in exchange for the suspension of royalties for another year (Bown, vol. 1, 69). With continued problems in the industry under BESCO, government contracts included vague clauses requiring the corporation to provide concessions, such as more worker housing and improvements to the plant, in return for the lack of royalty payments. These efforts, however, proved fruitless. (Bown, vol. 2, 11-12). It was not until BESCO was replaced by DOSCO that royalty payments were resumed. Achieving this, however, did require drastic measures. After 10 years of putting up with BESCO's threatening to close down the Wabana operation if forced to pay royalties, the Newfoundland government seized the first ore ship to arrive for the season from Nova Scotia in 1929 and held it hostage until DOSCO agreed to resume royalty payments, the details of which were worked out the following July at 10 cents per ton (Bown, vol. 2, 27).
Source: Addison Bown, "Newspaper History of Bell Island," V. 1, pp. 30-34, 40, 64-66, 69; V. 2, pp. 11-12, 27.
When that 10-year agreement ended in 1920, a new contract was agreed to by the two companies and the government, but debate on the contract in the House of Assembly dragged on for months. By the time the bill passed the third reading, BESCO had taken charge and the turmoil in the industry, which caused a downturn in operations at Wabana and subsequent layoffs, led to the government agreeing to a “temporary” suspension of royalty payments in return for the mines remaining operational (Bown, vol. 1, 64-66). The year 1923 brought more problems when politics between France and Germany caused the cancelation of all German orders, putting 1,500 men out of work at Wabana. BESCO agreed to reopen two mines in exchange for the suspension of royalties for another year (Bown, vol. 1, 69). With continued problems in the industry under BESCO, government contracts included vague clauses requiring the corporation to provide concessions, such as more worker housing and improvements to the plant, in return for the lack of royalty payments. These efforts, however, proved fruitless. (Bown, vol. 2, 11-12). It was not until BESCO was replaced by DOSCO that royalty payments were resumed. Achieving this, however, did require drastic measures. After 10 years of putting up with BESCO's threatening to close down the Wabana operation if forced to pay royalties, the Newfoundland government seized the first ore ship to arrive for the season from Nova Scotia in 1929 and held it hostage until DOSCO agreed to resume royalty payments, the details of which were worked out the following July at 10 cents per ton (Bown, vol. 2, 27).
Source: Addison Bown, "Newspaper History of Bell Island," V. 1, pp. 30-34, 40, 64-66, 69; V. 2, pp. 11-12, 27.