Sydney Steel Corporation

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Sydney Steel Corporation (SYSCO) is a Crown corporation in the Canadian province of Nova Scotia.

[edit] History

An integrated steel mill was established on the southeast side of Sydney Harbour in the Whitney Pier neighbourhood of Sydney, Nova Scotia in 1901 by American investors. This entity was named Dominion Iron and Steel Company Limited (DISCO) and was a subsidiary to the Dominion Coal Company Limited (DOMCO). DOMCO coal was used to create coke to fuel the blast furnaces for smelting iron ore which arrived from Bell Island in Newfoundland.

In 1920, DISCO merged with the Nova Scotia Steel and Coal Company (SCOTIA) to form British Empire Steel Corporation (BESCO). In 1930, BESCO reorganized as Dominion Steel and Coal Corporation (DOSCO). In 1957, DOSCO was purchased by A.V. Roe Canada, which was later purchased and made a subsidiary of Hawker Siddeley Canada in 1962.

Hawker Siddeley sought to eliminate money losing operations and in 1965, DOSCO announced that its mines had only 15 years of production left and concluded that the cost of opening new underground mines in the Sydney Coal Field would be too expensive. The company made its intentions clear that it would be exiting the coal mining business within months.

In response to a vast public outcry in industrial Cape Breton County, the Minority government of Prime Minister Lester Pearson announced J.R. Donald would head a Royal Commission of Inquiry into the Cape Breton coal industry, with hearings held in 1965 and 1966. The Donald Commission recommended that a federal Crown corporation be established to acquire and manage DOSCO's coal operations, with the aim being to slowly wean the Sydney area economy off the coal industry.

"Future planning should be based on the assumption that the Sydney mines will not operate beyond 1981."

On July 7, 1967 the Cape Breton Development Corporation, or DEVCO, was established to operate the mines in the interim, while phasing them out throughout the 1970s and, at the same time, develop new economic opportunities for the surrounding communities.

On December 1, 1967, the provincial government established Sydney Steel Corporation (SYSCO) under an act of the provincial legislature to operate DOSCO's steel mill for a period of 12 months until the steel mill could be resold to another private operator. On March 30, 1968 DEVCO expropriated DOSCO's coal mines and the S&L, settling for a payment of $12 million.

Just as the federal government's plans to gradually shut down coal operations were derailed by rising world energy prices and changes in political priorities, the provincial government's 1 year temporary commitment turned into a 33 year commitment, adding over $1 billion to the cash-strapped province's debt.

SYSCO became a political football and no provincial government dared to shut it down, opting instead to use heavily-subsidized federally produced DEVCO coal for coking fuel. Over time, the provincial government gave limited capital investments to SYSCO throughout the 1970s and early 1980s. During the mid-1980s the provincial government of John Buchanan decided to modernize the steel mill for sale to the private sector by changing the process from a fully integrated oxygen blast plant to an electric arc mini mill. The blast process fuelled by coke would be mothballed in favour of using electricity to smelt recycled metal brought in by rail.

With no purchasers from the private sector and tumultuous steel markets during the 1990s, the provincial government began to seek ways to rid itself of SYSCO. Numerous proposals for sale to foreign and domestic companies came and went, raising and lowering the hopes of Sydney and its surrounding area each time announcements were made and then promises broken. Finally, the Progressive Conservative government of John Hamm opted to sever provincial funding for the company entirely upon being elected in 1999. In July 2001, it was announced that SYSCO's mini mill was being sold to an Indian company named Zoom Developers who planned to dismantle it and ship it overseas.

Despite worker protests, SYSCO's steel production was shut down that year and the workers have been helping to dismantle the entire facility for site remediation.

[edit] Environmental legacy

SYSCO until the mid-1980s, along with its predecessors, Hawker-Siddley, DOSCO, BESCO, and DOMCO/DISCO, was a user of coke as a fuel for the mill's blast furnaces. Coke is produced by slowly baking coal, evaporating or leaching out various liquids in the process.

The coke ovens used in Sydney were located across Victoria Road from the steel mill and since 1967 were operated by DEVCO, which produced the coal for them. The associated run-off from these coke ovens over a period of 85 years ended up in the Muggah Creek tidal estuary downhill from the coke ovens and adjacent to the steel mill, creating the Sydney Tar Ponds.

The Tar Ponds are one of the largest environmental hazards in Canada and are currently planned for remediation under a controversial joint federal-provincial project.