CANADA'S POSITION IN RELATION TO THE EMPIRE'S MINERAL SITUATION
AN ADDRESS BY DR. CHARLES CAMSELL, C.M.G., B.A., LL.D., F.R.G.S., F.R.S.C., F.G.S.A.
Chairman: The President, Dr. F. A. Gaby.
Thursday, April 4, 1940
THE PRESIDENT: Distinguished Guests and Gentlemen: It is a distinct honour to welcome as our guest-speaker such a distinguished Canadian as Dr. Camsell, and though he is here at some slight inconvenience to himself, owing to an injury he received a few days ago, we are very pleased to have him with us. Dr. Camsell has played a very important part in the development of Canada's natural resources and he has been prominent in its exploration as a geologist, a scientist and as Administrator of the Department of the Federal Government dealing with resources that are of primary importance to our industrial economy and world trade.
Dr. Camsell has reached such prominence in engineering and science and has received so many degrees and honours from universities and societies, both engineering and scientific, that I can only mention a few of the more outstanding honours and degrees that have been conferred upon him. He graduated from the Manitoba University with the degree of B.A. in 1894. He received the degree of LL.D. from Queen's University in 1922, and LL.D. from Alberta University in 1929. In recognition of his outstanding contributions to his chosen sciences he has received many high honours from many societies, and more particularly, the Murchison Grant, awarded him in 1922 by the Royal Geographical Society for exploratory work in Northern Canada. He has been President of the Royal Society of Canada in the years 1930-31, and was President of the Engineering Institute of Canada in 1932. He was Vice-President of the International Geological Congress in 1913, and many more honours have been conferred upon him by these and other societies. He was awarded the Gold Medal of the Canadian Institute of Mining and Metallurgy in 1931, for his untiring zeal and great ability in promoting the development of the natural resources of the Dominion and furthering the general interests of the mineral industry.
Dr. Camsell has on many occasions been a special representative from Canada on important foreign commissions, particularly the World Economic Power Congress in 1924, in London; and again in 1930, in Berlin, and in 1936 in Washington. He was the Canadian representative at the Mining Conference in South Africa in 1930. In Berlin, its Chairman, in announcing the address of Dr. Camsell, referred to him as representing the whole of North America, notwithstanding the fact that there were United States guests present at that time.
Dr. Camsell joined the Department of which he is now head in 1900 and became the administrative head of the Department of Mines in 1920, and when the department was amalgamated with the Departments of Interior, Immigration and Indian Affairs in 1936, he was again the administrative head of that Department and also Deputy Minister. All of this work he has carried on with distinction.
I take very much pleasure in introducing to you Dr. Camsell, Deputy Minister of Mines and Resources for the Dominion whose subject today is, "Canada's Position in Relation to the Empire's Mineral Situation". Dr. Camsell. (Applause)
DR. CHARLES CAMSELL, C.M.G., B.A., LL.D., F.R.G.S., F.R.S.C., F.G.S.A.: Mr. Chairman and Gentlemen: To speak to the Empire Club of Canada is a distinct honour, indeed, although making public addresses today is not what it used to be because of the necessity of submitting what you have to say to the censor. Having submitted my manuscript to the censor and having had it approved, I feel that it is necessary for me to stick pretty closely to the text in order that I may play the game with him--whoever he is. You will pardon me, therefore, if I have to refer to my notes quite frequently.
Thoughtful people everywhere are, I am sure, agreed that the present struggle, in which the British Empire and its Allies are engaged, is one that will call forth the mobilization of all our resources if we are to bring it to a successful conclusion, and if those things that freedom-loving people regard as essential to "life, liberty, and the pursuit of happiness" are to prevail.
In the final analysis, success must rest with the contestant who can bring to bear the most weight of organized resources both of man-power and materials. Nevertheless, the best organization of man-power in the world is not a suitable substitute for raw materials. The cry of the ancient Israelite to his Egyptian taskmaster, "We cannot make bricks without straw" is as applicable today as when first uttered. There can be no "ersatz" for metals and minerals in either modern civilization or modern warfare.
It has been said that "modern industrial civilization rests upon a raw material base," and minerals are among the most important of raw materials used in present day civilization. I do not think that any of you will disagree with that. We have only to glance about us and see the impossibility of naming a half dozen articles essential to our present day needs, wherein some mineral product does not enter, either directly or indirectly.
Looking about among the nations we find that those countries that we regard as the most advanced and most progressive, are those that have been by nature endowed with a mineral heritage or have made the greatest developments of those resources. Modern civilization has made itself dependent upon a diversity of mineral materials and uses them to an extent never approached at any other time in the world's history. The irony of it is that these very mineral products that contribute so much to our peacetime comfort and progress, become in war equally important as agents of destruction.
Throughout the milleniums of the Stone Age, stone was the single essential war mineral, later to be superseded by copper and tin in the Bronze Age; and these in turn by wrought iron. The invention of gunpowder began a new epoch in warfare and added sulphur, saltpeter, and lead, to the list of essential war minerals. With the invention of the steam engine came the substitution of steam power for sail, and of iron for wood in warships; with the introduction of longer ranged rifled guns and improvements in metallurgical practice, came all the new developments in the use of metals and minerals that have since been applied to military needs.
Each advance in the destructive powers of offensive weapons was countered by effective means of defence, and these were met in turn by more destructive agents of warfare and by more effective transport and communication facilities.
As contrasted with warfare of the last century, warfare today demands the mobilization of the entire economic resources of the nations engaged. A modern war is a total war.
The Great War established a record for its diversity of munitions and supplies. Developments in the science of war since 1918 have resulted in the almost complete mechanization of land forces and the transition of the air forces from an auxiliary arm to one of major importance. As a result the demands are for more and more metals and minerals for building, operating, and fighting the new war machines.
No nation possesses sufficient raw materials from which to draw its whole requirements in peace time and all are even less self-sufficient in times of war. This is particularly true of mineral materials, all of which play some part in warfare as waged today. You find, in order to meet the deficiencies of these materials that are needed in times of emergency, policies being adopted by certain peoples. In the United States they are storing up stocks of materials of which they have no domestic supplies, to meet emergencies that might arise in the future, and I have no doubt that our enemy, Germany, has been storing up stocks of things which she cannot produce in her own country. There isn't any question about it, she has been storing up supplies of petroleum, and I shall refer to that later on.
Deficiencies in domestic supplies must be met by purchases from other nations. Large economic resources or credits are of vital importance in war in order to finance such purchases. The significance of economic reserves has been ably demonstrated by the fact that at the outbreak of the present war all the allied nations, including Canada, set up Exchange Control Boards with wide powers to strengthen the national foreign credit position. This emphasizes the importance of gold-still the universally accepted medium of exchange--as an essential war material though usually not classed as such.
Realizing then the importance of minerals and metals in modern warfare, let us examine briefly the contributions that can be made by a nation's mining industry to its military needs in time of war. These are of two kinds
First: The production of those minerals that are essential for the manufacture of armaments, munitions, and other war supplies, and what is equally important, for normal civil needs.
Second: The creation of essential foreign credits by the production of gold, silver, and other minerals surplus to national needs.
Therefore, in times of stress such as the civilized world .is now enduring-and when the British Empire is involved not only in a struggle for existence but when we are fighting for every principle we believe right-it is highly important that we appraise the resources at our command. In particular, we as Canadians-proud as we are to be a member of the British Commonwealth-are concerned with knowing what we are capable of contributing towards the final success of the struggle between Liberty and Force.
The United States and the British Empire control, either by direct development in their own territory or by capital and enterprise in foreign territory, three-fourths of the world's mineral production. The most recent Empire survey figures are those published for 1937. They show the Empire's percentage share of the world's volume of output, as follows: Of the twenty-one chief minerals of the world, in only three, namely, sulphur, petroleum, and potash, did the Empire's share fall below 10 percent. Some of the more important were coal, 21 percent, gold 46, nickel 90, lead 36, copper 25, zinc 29, tin 48, and asbestos 74 percent.
The strength of the Empire's mineral industry lies not only in its large share of the world output, but on the rest of the world's dependence upon it, to a great extent for asbestos, nickel, tin, platinum, diamonds, and china clay. Its weakness lies in its dependence on other sources for antimony, mercury, potash, molybdenum, petroleum, and sulphur.
Now, let us see how Canada contributes to Empire strength. In 1936, Canada accounted for 18 per cent of the total Empire mineral output, being exceeded by the United Kingdom with 40.73 percent and the Union of South Africa with 18.41 percent, and far outdistancing Australia and India with 4.74 and 3.11 percent respectively.
The United Kingdom leads the Empire in iron ore, pig iron, coal, china clay, salt, gypsum, feldspar, and fluorspar; South Africa leads in gold and diamonds;
Australia in lead and zinc ores; India in manganese, mica, magnesite, potassium nitrate, titanium ore, and talc; Southern Rhodesia in chrome ore.
Where Canada excels is in the extent and variety of essential metals she produces.
In 1939 the value of Canada's mineral output was approximately 470 million dollars; this was the highest on record, yielding first place only to agriculture among the primary industries. The Dominion now occupies a leading position among the world's mineral producers, ranking first in nickel, asbestos, and platinum; either first or second in radium (I don't know exactly what our first competitor in that metal produces); second in zinc, third in gold, silver and copper, and fourth in lead. Because these metals are produced in amounts far in excess of national needs, large quantities are available for export to allied and neutral countries. In addition the Dominion produces large quantities of coal, gypsum, salt, petroleum, and other minerals. In fact the list of minerals produced in commercial quantities, as issued by the Dominion Bureau of Statistics, shows some 23 metals and 20 non-metallic, exclusive o£ structural materials, clay, lime and cement, as well as the fuels, coal, petroleum and natural gas.
The attainment of such prominence in world mineral production is evidence not only of the abundance and diversity of the Dominion's mineral resources, but indicates the highly organized condition of the industry and its ability to develop these resources at costs sufficiently low to enter the highly competitive export markets of the past decade. In consequence, the mineral industry is in a position to make a contribution to the present war effort on a scale hardly dreamed of, even at the close of the last war in 1918. In fact our production of raw materials, minerals included, may be the determining factor in the present situation.
During the forty-seven years between Confederation and the Great War, Canada's attention was devoted almost entirely to the solution of the many problems relating to the political and economic development of the new Dominion; agricultural settlement of the new provinces; lumbering; immigration; and building of railways, towns, cities, and other associated activities. Its mineral resources were explored only as an incident to such activities. In 1913 the mining industry recorded the peak of its pre-war annual output value of 146 million dollars, of which metallic minerals represented 46 per cent, the fuels 28 per cent, and the industrial minerals and structural products 26 per cent. All but a small portion of the metals were exported. Silver was the leader in output value, followed by gold, nickel, copper, lead, iron, cobalt and zinc. Of the four non-ferrous metals, copper, lead, zinc, and nickel, only lead was produced as refined metal; Canadian requirements of the others in refined form being imported. The development of Canada's mineral resources up to the commencement of the Great War had, therefore, no relation to war requirements except in the production of nickel matte for export. Our problems were solely those relating to peace.
Even the Great War scarcely made us mineral conscious although it led to the establishment of a copper and zinc refinery at Trail in 1916, and of a nickel refinery at Port Colborne in 1918. Apart from these our mineral products continued to be shipped abroad for refining. The great strength of the Dominion's mining industry to support the present war effort has been largely a development of the last twenty years and this in spite of the fact that the country experienced some years of the greatest industrial depression ever known. Canada's mineral output in 1939 was, as I have said before, valued at 470 million dollars; almost 3 1/4 times that of 1913, and nearly 2 1/4 times that of 1918, under the maximum pressure of the then war demands.
Of the most essential of the metals required for war purposes, Canada is a leading producer of copper, lead, zinc, and nickel, in the refined form suitable for the uses of industry. The domestic consumption of each is relatively small and large surpluses are available for export. In the first few months of the war Canadian producers of copper, lead, and zinc, entered into contracts with the British Government to supply annually large quantities--210,000 short tons of refined copper and our exportable surplus of lead and zinc--at prices approximating those prevailing just at the outbreak of the war. Contrast this with conditions in 1914, when Canada, apart from lead, was producing scarcely a pound of these metals and Britain was forced to go into world markets and to pay as high as 26 cents per pound for copper, 8%2 cents for lead, and 8.1 cents per pound for zinc. Prices that are double at least those at which these metals are now being supplied to the United Kingdom.
Last year Canadian mines produced over 303,000 tons of copper, 80 per cent being produced in the refined form. Its lead refineries have a rated annual capacity of over 200,000 tons, while its zinc refineries are capable of producing over 180,000 tons of zinc metal. From the point of view of the present emergency, this is the most significant change in our mining industry in the last twenty years.
Although used in smaller quantities than copper, lead and zinc, nickel is important both because of its strictly military uses and for its use in industrial steels applied to military needs. Canada is at present the source of 85 per cent of the world's supply and production of nickel has been greatly increased by the industrial uses of the metal; the peak peace time production of over 113,000 tons in 1939 being 2%2 times that of 1918, when the requirements of the Great War were at their height. The outstanding development since 1918 has been the increased production of the refined product. In 1918 the refinery at Port Colborne produced 1,200 tons, the present capacity of the plant is in excess of 75,000 tons. Canadian nickel producers are, therefore, in a position to supply ample quantities of nickel both in refined and unrefined form at prices substantially lower than prevailed in the Great War. For example, the average price of nickel, largely as refined metal, in 1939 was 22%2 cents a pound as compared with the corresponding average value of 36 2/3 cents a pound for the entire output, almost wholly in unrefined form, for the four years from 1915 to 1918 inclusive.
Iron is, of course, the chief war metal, being the basic constituent of nearly all armaments and munitions as well as of the supporting industrial and transport machine. While Canada's production of iron ore has been almost negligible, compared to the great iron producing countries of the world, nevertheless, investigations of the last few years, indicate several deposits of iron ore suitable both in size and quality for commercial development. Operations have already commenced on two of these properties, one is actively producing on a scale of almost 300,000 tons of ore annually; the other, a deposit of high-grade hematite, is being actively explored. Indications are that this is likely to prove one of Canada's most important mineral discoveries. In addition, blast furnaces for the production of pig iron and steel, and having a total capacity of 1,600,000 tons, are located at Sydney, Nova Scotia, Hamilton, Port Colborne, and Sault Ste. Marie, Ontario.
Although Canada has no commercial deposits of aluminium ore, nevertheless, the Dominion ranks third among the world producers of aluminium metals and this industry in Canada is largely a growth since the last war. Thus the exports of approximately 65,000 tons in 1938 were almost 5 times higher than in 1918. The productive capacity of the Canadian aluminium producing plants is being substantially increased and it has been announced that the entire output, surplus to domestic requirements, is now under contract to the British Government.
I have suggested that while gold and silver were not essential war metals they were important from the standpoint of establishing foreign credits. Canada's output of gold in 1939 was valued in excess of 181 million dollars in Canadian funds. This sum represents immediately available foreign credits in the United States of 176 million dollars, or more than ten times the average annual foreign credits made available by Canadian gold mines for the four years from 1915 to 1918. Not only is the contribution of our gold output greater than in the Great War, but under the present United States policy of cash and carry, it is necessary, in order to take full advantage of the huge industrial organization of that country for the production of war equipment. Canadian gold producers, therefore, are making a very important contribution to our war effort.
In addition to these, there are a number of other important minerals and metals necessary in the conduct of the war. We might mention, for example, the platinum group metals, cobalt, tellurium, selenium, and cadmium. Of these platinum is the most important. Our production of over 160,000 ounces in 1939 assures the Allies of a large proportion of the available world output, compared with our average production of 800 ounces during the last four years of the Great War. Many will remember the condition we had to face when the supply of platinum was very meagre and search was made all over the Dominion of Canada for platinum deposits, without very much success.
In the field of the non-metallics, Canada still remains the chief producer of asbestos and her production in 1939 was almost double what it was in 1918. Her production of gypsum in the amount of tonnage is almost eight times that of 1918; salt, more than three times; our coal production remains constant at about 15 million tons.
Now, we come to petroleum which is perhaps most important of the lot in many respects. Our production of petroleum has increased from 305,000 barrels in 1918 to nearly 8 million barrels in 1939, and the prospects are that that production will continue to grow, particularly if it is possible to provide a wider market for what the western fields are able to produce. These western fields, as many of you know, are hampered to some extent by reason of the fact that the market is limited to the western prairies. If sufficient reserves are developed in Western Canada, which is not the case at the moment, I have no doubt that the time will come when you will see western oil transported eastward to refineries in Ontario, because if there is one thing I believe in, it is that the oil resources of Western Canada are very great indeed. One cannot travel across the eastern slopes of the Rocky Mountains, from the International Boundary line towards the Arctic Ocean, without being impressed with the possibilities of oil development all along that eastern slope, because where one does cross those mountains, one finds evidences of petroleum here and there.
That again brings us to the question of what is the situation with regard to peroleum in Germany. Little is known of it, but it is probable that oil is one of the things which has been stored up during past years, because Germany's capacity to produce petroleum is very limited. They have a few small fields, but their main effort has been directed for many years toward the development of processes for the conversion of coal into oil. It is said that by these processes Germany is able to supply perhaps 40 per cent of her peace time requirements. On the other hand, the oil that is produced from that source is not entirely suitable for all aviation purposes and for such, Germany has to look to the outside world. Possibly one of the reasons for the invasion of Poland was to secure the control of the oil fields of that country. Poland's production, however, has never been very great-it is something like a four million barrels a year. While I am not quite certain of this, I am inclined to thing that Russia got the major share of the oil fields in the partition of Poland.
The next source available to them, of course, is Rumania. Rumania's annual production is about 50 million barrels a year, but she has to supply her own requirements as well as the requirements of the Balkan States to the south. In addition to that, about 60 per cent of the production is under the control of financial interests in Holland, in France and in England, and undoubtedly the efforts of the British and French controllers of these sources are directed towards seeing that as little as possible of Rumanian oil gets across to Germany.
The next source is in the Caspian and Baku. Now, Russia's production from Baku normally is about 200 million barrels a year, and in past years she has had only a small proportion of that available for export-something like one per cent, perhaps, of the total. So, unless Russia develops additional supplies of petroleum in her own country, she will not have a great deal to export, even to Germany. But there is another factor which makes it difficult to get Russian petroleum into Germany, and that is the distance between the two countries. It has to be taken across the Caucasus by means of a pipe-line 400 miles in length, then 600 miles across the Black Sea and, finally, up the Danube 1200 or 1500 miles before the oil reaches Germany. In all, some 2,500 miles of transport has to be covered in order to get the oil to its destination. I have no doubt these points are very well known to those who are defining the strategy and the tactics of this war and to cut that supply will be one of the important objects of the Allies.
Now, I have said that the present position of Canada's mining industry has been built up almost wholly on the basis of peace time effort. Modern warfare, which is essentially a test of economic and material resources, only increases the tempo of peace time activity. From the brief account of the industry's position that I have given you, it is evident that Canada is capable of making a very much greater contribution to the Empire's war effort than she did in the last war. Particularly is this true in the case of the base metals so vitally important in the prosecution of modern mechanized warfare, and in gold, no less essential in financing the war effort. At the beginning of the Great War, Canada produced important quantities of nickel but not in refined form. It produced comparatively little copper, lead and zinc, and only lead in refined form. Its role as a world gold producer was a small one-770,000 ounces, valued at less than 16 million dollars. Since that time its annual production of nickel has more than quadrupled. The Dominion is regarded as one of the great producers and exporters of copper, lead, zinc, gold, and platinum, and a large exporter of aluminium. It is fully equipped with large metallurgical refining plants, one each for lead, nickel, and aluminium, two each for copper and zinc, and the capacity of all these can be increased with relatively small capital outlay. What is of almost equal importance is that there has been developed in Canada a corps of skilled miners, metallurgists, and chemists, capable not only of carrying on the work demanded of them but endowed with an ingenuity and initiative that will enable them to solve any new problem that might face them. Moreover, these men are available for service in other parts of the Empire and already men who received their training in Canada are to be found in the mining and metallurgical plants of Australia, Africa and India.
During the Great War the world shortage of productive capacities of the essential war metals and the urgent demand for larger supplies forced prices to abnormally high levels. Because of the conditions under which Canadian base metal ores occur, coupled with cheap power and skill in operation, unit costs of production are low. The producers have passed on the advantages of their low cost of production to the British Government for war purposes by furnishing the larger part of their output at prices prevailing prior to the war. It is estimated that the British Government will pay from $75,000,000 to $90,000,000 less than for similar purchases in 1918. That is the contribution of the base metal mines of this country toward our war effort.
Today Canada's mining industry is organized as never before to meet any demands that may be made upon it. It played an enviable part during the depression; it can be expected to play its full part in the present war effort, both in providing necessary war minerals for military purposes, and in supporting the economic arm. Thank you. (Applause)
THE PRESIDENT: Dr. Camsell and Distinguished Guests: We are indeed indebted to you for the fine address, and the excellent manner and comprehensive way in which you have dealt with your subject today, which demonstrates the necessity of mineral resources for our economic development, and the place of the mining industry in our defence. It is time that the importance of our mineral resources should be stressed and the advantageous position that Canada is in to meet its own and world demands through present and future development.
I take much pleasure on your behalf in extending the thanks and appreciation of the Empire Club to Dr. Camsell for his excellent address. (Applause)
We are indeed pleased today to have with us many distinguished guests who have been associated with Dr. Camsell in the mining industry and other societies in which he has been interested for such a long period of time and for which he has done so much as the Administrator of the Department of Mines and Resources in Ottawa. We thank them for being present with us today. (Applause)