Military History

Devil Copper: War and the Canadian Nickel Industry, 1883–1970

by Scott Miller

Scott Miller is a civil servant and historian from Sudbury, Ontario. He completed his MA in History at Laurentian University. Scott’s work has been published by the Canadian Historical Review, and by the Forest History Society of Ontario.

Introduction

Located in the heart of northeastern Ontario, the city of Sudbury is often referred to as the ‘Nickel Capital’ for its historic relationship with this particular metal. Indeed, by the eve of the First World War, it had become the world’s leading producer of nickel, and by 1950, its share of the global supply peaked at 95 percent.¹ Also known as ‘devil copper,’ worldwide demand for nickel remained strong throughout much of the 20th Century, largely as a result of its far-reaching military applications. While the citizens of Sudbury are generally well aware of this mining legacy, others may not be as familiar with the significance of nickel in Canadian political and military history. This is hardly surprising. As renowned historian J.L. Granatstein once asserted, there is a lack of “…serious scholarship on Canada’s industrial [war effort],” including its mineral and mining sectors.² The following article attempts to address, albeit briefly, this gap in the historical literature. More specifically, it traces the evolution of the Canadian nickel industry from relative obscurity to an essential wartime enterprise, and highlights how it, in turn, influenced domestic and international affairs from the late-19th-to-mid-20th Centuries.

Birth of an Industry: Canadian Nickel and the United States Navy, 1883–1898

The discovery of Sudbury’s wealth of nickel initially aroused feelings of uncertainty, rather than excitement. The town itself began in 1883 as merely a camp for workers who were building the Canadian Pacific Railway, but within a few short years, it was realized that the area possessed valuable copper ore bodies. By January 1886, Sudbury’s first mining firm, the Canadian Copper Company (CCC), had been formed by Ohio businessman Samuel J. Ritchie. Within a matter of months, however, the nature of the situation had changed entirely. A substantial amount of nickel was found in the copper ores taken from Sudbury’s mines, a realization that was problematic for two main reasons. First, there was virtually no demand for nickel at the time. Second, the standard refining process could not effectively separate nickel from copper ore bodies. For the time being, the situation looked bleak for the CCC.³

Ritchie managed to find a solution to both of these problems by using his connections within the United States Navy (USN). The only known method for separating nickel-copper ores was held in secrecy by the Orford Copper Company in New Jersey, an organization headed by senior Navy officer Robert M. Thompson. Ritchie successfully orchestrated a deal with Thompson whereby the CCC would ship its product to New Jersey to be refined.⁴ With this technical issue solved, Ritchie turned his attention toward the market itself. Upon the discovery of Sudbury’s nickel deposits, he immediately recalled having personally witnessed an experiment conducted in Washington in 1876, which apparently demonstrated the incredible durability of nickel-steel alloys. Ritchie claimed that it “…occurred to me that nickel could be used with success in the manufacture of guns and for many other purposes as an alloy with iron and steel.”⁵

By 1889, Ritchie had communicated this revelation to General Benjamin F. Tracy, Secretary of the USN, who was immediately intrigued. That summer, Ritchie, accompanied by former Prime Minister Sir Charles Tupper, then the Canadian High Commissioner in London, and Lieutenant B.H. Buckingham of the USN, travelled to Europe to study the utility of nickel-steel as a strategic war metal. Following their return, the American government conducted test trials comparing nickel-steel versus plain steel armour. The results were ground-breaking; nickel-steel was deemed far superior to its traditional counterpart. As Ritchie himself recounted: “Tracy, by this Government test, sent all the common steel armour plate to the junk heap, and completely revolutionized the offensive and defensive efficiency of the navies of the world.” The United States government promptly committed a sum of $1,000,000 to purchase nickel from Sudbury to construct nickel-steel armour for its Navy.⁶ This marked the beginning of a massive modernization program for the USN, which had been rather stagnant since the Civil War. Over the next fifteen years, the United States embarked upon a shipbuilding spree which culminated in a fresh fleet of twenty battleships, twenty coastal defence vessels, and sixty cruisers.⁷ Years later, Ritchie proclaimed that this deal with the USN had “…advertised the Sudbury mines all over the commercial world … In short, the Government’s action through the Secretary of the Navy put a new enterprise upon its feet.”⁸

The United States’ nickel-plated warships were put to their first major test in the Spanish-American War of 1898. Mainly centered upon the issue of Cuban independence, the two nations went to war in April after years of political and diplomatic tension. Although the conflict did not directly involve Canada, and was taking place thousands of kilometers away in the Caribbean and the Pacific, the nation’s nickel industry was nonetheless interested in its outcome. In May 1898, The Globe stated: “…the good people of Sudbury … would like to see the nickel of Uncle Sam’s armour plate, the chief alloy of which comes from this place, make a good showing against Spanish shells.”⁹ This vision ultimately became a reality. The USN was a dominant force throughout the war, led by first-class ships such as the Indiana, Iowa, and Massachusetts.¹⁰ One of the Navy’s most notable accomplishments came on 3 July, when it soundly defeated Spanish forces at the Battle of Santiago de Cuba and essentially secured an American victory. By August the conflict was over, and the resulting 1898 Treaty of Paris transferred the territories of Puerto Rico, Guam, and the Philippine Islands to the United States. For the USN in particular, the Spanish-American War was “one of remarkable achievement.”¹¹ Indeed, the United States’ modernized battleships, forged with Canadian nickel, had certainly been a critical factor in its triumph over the Spanish Empire.

Era of Expansion: Sudbury Nickel on the World Stage, 1901–1939

The early-20^th Century was an eventful period for Sudbury’s nickel companies. The British-owned Mond Nickel Company emerged as the first serious challenger to the CCC’s stranglehold over the Sudbury area when it began operations in 1901. Then, in 1902, a new mining giant burst onto the scene. Formed through an amalgamation of the CCC, Orford, and other operating firms, International Nickel (INCO) was an American corporation headed by the legendary New York magnate J.P. Morgan. For much of the early-20^th Century, INCO practically held a monopoly in the nickel industry, in large part due to its ability to cartelize [combine to form a business cartel – Ed.] the market. In 1928, it firmly established itself as the absolute global power in the nickel business. That year, INCO absorbed Mond as a wholly-owned subsidiary, and then engaged in an “intricate but ingenious corporate gymnastic exercise” to circumvent anti-trust laws in the United States.¹² Another noteworthy Sudbury-based company, Falconbridge Nickel, was also founded in 1928, but INCO would still maintain its elite position for the next number of decades.¹³

The onslaught of the First World War generated an unprecedented demand for the precious minerals and ores found in Canada’s mines. Home to approximately 80 percent of the world’s nickel, the city of Sudbury proved to be an invaluable asset to the Allied war effort, providing much-needed material for the production of armour plate, guns, and other military equipment. From 1914 to 1918, annual nickel extraction in Ontario more than doubled, while its corresponding yearly value increased from $5.7 million to over $27 million.¹⁴ The conflict also solidified a profound shift in production from New Caledonia, a French territory which had previously supplied much of the world’s nickel, to Sudbury, and thereby further concentrated control of the market in the hands of INCO.¹⁵

The importance of this particular sector of the economy during wartime did not go unnoticed by contemporaries. In August 1916, for example, The Globe explained that INCO had the capacity “…to provide all the refined nickel required in the British Empire for the manufacture of munitions of war and for industrial purposes.”¹⁶ Likewise, with regard to a landmark 1917 trial dealing with the damaging effects of mining pollution in Sudbury, the local Sudbury Star noted that the possibility of an injunction being issued against either INCO or Mond was not even “…entertained by the trial judge on account of the pressing need for the unimpaired production of nickel as a war metal.”¹⁷ That same year, the Royal Ontario Nickel Commission also made numerous references to its military significance.¹⁸ In terms of employment, both the CCC and Mond expanded their work force to meet growing wartime demand, reaching a combined total of about 5,000 men by 1918. Within six months of the war’s end, however, the number of workers at both CCC and Mond decreased by more than half.¹⁹

Despite receiving widespread recognition for its indispensable role in helping fight the Great War, INCO found its reputation in jeopardy when a serious scandal arose during the summer of 1916. In July, an American newspaper reported that the Deutschland, a German cargo submarine, had transported Sudbury nickel from the United States to Germany, apparently without INCO’s knowledge.²⁰ The situation was especially suspicious, given that Germany had been INCO’s second-largest customer during the pre-war years.²¹ Over the course of two trips, the Deutschland allegedly delivered 500 tons of Canadian nickel to its motherland.²²

Unsurprisingly, INCO and both the Canadian and Ontario governments faced swift public and political backlash. On 15 August 1916, G. Howard Ferguson, Ontario’s Minister of Lands, Forests and Mines, downplayed the scenario in front of a congregation of concerned citizens in Toronto and affirmed that the “Dominion and Provincial governments today know just how much nickel there was on the Deutschland … and we know it never came from INCO.”²³ The people of Canada were not so easily convinced, however. Later that winter, The Globe challenged Prime Minister Robert Borden’s government to prove to “…the public that Germany is not using Canadian nickel to shoot down Canadian soldiers.”²⁴ INCO attempted to draw attention away from the controversy by announcing that it was going to start refining its ores in Ontario, something it had long resisted in the face of protectionist pressures at both the federal and provincial levels.²⁵ Nevertheless, even with the Allied victory in 1918, the Deutschland affair did not fade completely from public consciousness. In 1919, for instance, an organization representing Great War veterans lamented the idea that “…during the war Canadian nickel came ‘right out of Sudbury mines and through Germany right into us Canadians in Flanders.’” The group consequently insisted that the government conduct a public enquiry into the situation.²⁶

Nickel continued to have an impact upon Canada’s military and political landscape during the inter-war years. The years immediately following the First World War revealed that peacetime applications for nickel had yet to be fully developed, with demand for this mineral declining considerably in the early-1920s.²⁷ Nonetheless, technological advancements, ranging from motor vehicles to home appliances, allowed the international nickel market to remain relatively solid during this period, and remarkably so in the wake of the Great Depression.²⁸ Furthermore, the Canadian government found that nickel could still serve as a point of contention in political and diplomatic matters, even when the nation was not at war. In 1934, Parliament introduced legislation to ban the export of nickel for “war purposes,” but the bill never passed because there was concern it might offend the interests of the industry. When Italy invaded Ethiopia the following year, the government of Canada faced internal and international pressure to levy economic sanctions against Italy, Japan, and Hitler’s Germany. It ultimately refused to do so, citing already high unemployment rates as the main reason why it did not want to decrease the country’s nickel exports.²⁹ The Canadian government would seriously reconsider its position on nickel exports just five years later, when another record-setting war broke out in Europe.

Coming of Age: Canada’s Nickel Industry Reaches its Peak, 1939–1970

The military needs of the Second World War led to another boom in armament manufacturing and subsequent soaring demand for nickel. In August 1940, The Sudbury Star insightfully pronounced: “Modern war is a war of metals as much as of men, and with the outbreak of the present conflict last September, it was not surprising prospectors across the Dominion foresaw an immediate demand and renewed search for minerals of strategic importance in waging today’s kind of war.”³⁰ With vast stores of nickel that had a combined market share of nearly 90 percent, INCO and Falconbridge soon found themselves under great pressure to provide this military necessity.³¹

Canada’s politicians and its mining industrialists forged a tight-knit relationship throughout the war. Gleaning from the lessons of the Great War, the federal government made a concerted effort to oversee the economic allocation of the nation’s resources during the Second World War, which included nickel. The Government of Canada exercised strict control over this strategic war metal and the companies that cultivated it, largely in order to limit the supply available to the Axis powers. It also helped INCO address its labour shortage, leading to the creation of 5,000 new jobs at the company between December 1939 and April 1944.³² In return, INCO, as well as Falconbridge, undertook costly expansion programs to meet pressing wartime requirements, and fully cooperated with the Canadian and American authorities in all aspects of policy. In fact, it has been suggested that the companies practically acted as “agents of the government rather than private sector corporations” during the Second World War, especially INCO.³³ Indeed, INCO went so far as to investigate and report upon its own trading partners that were suspected of violating the Canadian government’s wartime nickel export regulations. On numerous occasions, this led to certain entities being barred from accessing further nickel supplies.³⁴ More generally, by 1943, INCO had raised its production by approximately 50 million pounds over its 1940 level, and was responsible for refining virtually all Allied nickel for the duration of the war.³⁵

A significant episode relating to nickel production during the Second World War was the controversy surrounding one of INCO’s mining operations in northern Finland. In 1934, the company acquired the rights to a valuable nickel concession from the Finnsh government in the Petsamo district. INCO established a Finnish subsidiary referred to as Petsamon Nikkeli O.Y. (PNO) to handle this overseas operation. Over the next number of years, INCO invested considerable money and manpower at Petsamo, culminating in the construction of sophisticated mining and smelting facilities in the area by the late-1930s.³⁶ The company was now in firm control of what was reported to be the largest nickel mine outside of Canada.³⁷

The outbreak of war in Europe altered the course of INCO’s Petsamo project. Specifically, the Russian invasion of Finland and the commencement of the Winter War in November 1939 brought the venture to a sudden halt. Fortunately, the Red Army did not cause irreparable damage to PNO’s property, and by the time the conflict had concluded in March 1940, the Soviets had restored Petsamo to Finland. Shortly thereafter, however, Germany began demanding access to Petsamo nickel. The initially-reluctant Finnish government eventually started pressuring INCO to concede to this request, or threatened it would take over the concession itself.³⁸

Predictably, INCO was hesitant to provide the Nazis with Petsamo nickel, but the Finns soon found an unexpected ally in the negotiations: Great Britain. Indeed, the United Kingdom asserted that it preferred if INCO delivered nickel to the Germans and maintained its control over Petsamo, as opposed to potentially losing its hold over the area altogether. Moreover, it reasoned that this would allow the company to restrict the flow of ore to Germany, rather than give it unfettered access. Interestingly, a similar situation had played out in 1939, when Falconbridge agreed to provide the Germans with a limited amount of nickel from its refinery in Norway. This arrangement had been fully supported by Canada and the United Kingdom.³⁹

Petsamo, on the other hand, was a different story. Perhaps due to the drastically-changed circumstances of the war, or possibly because it was INCO instead of Falconbridge involved, the Canadian government was not so convinced of the United Kingdom’s plan this time around. When Prime Minister William Lyon Mackenzie King caught wind of Britain’s stance in June 1940, he made it clear he was firmly opposed, undoubtedly with the Deutschland incident of 1916 still fresh in his mind. Soon thereafter, INCO’s senior management concluded it would not co-operate with the Germans. Cognisant of the fact that INCO was clearly following the Canadian Prime Minister’s lead, the British tried their best to sway King, but to no avail. He argued that the “political and psychological effects” of the arrangement would be far too damaging, and that in any event, the Germans would struggle to mine the ores efficiently without INCO’s expertise.⁴⁰

What followed was the exact opposite of what the British had hoped. On 23 July 1940, the government of Finland ordered PNO to prepare Petsamo ore for sale to Germany. Although PNO was not officially acquired by the Finnish government until August 1941, communications between PNO and INCO formally ceased during the summer of 1940. By the following February, Finland and Germany, drawn together by a mutual desire to defeat Russia, had signed a nickel agreement, leading to the German occupation of Petsamo.⁴¹

The Petsamo affair and its aftermath is noteworthy for a number of reasons. First, on 8 October 1944, the Soviet Union was granted title to INCO’s Petsamo properties in exchange for a modest sum of $20 million, a deal which was brokered by the Canadian and British governments.⁴² In the ensuing decades, INCO’s shares of the international nickel market plummeted, while Russia’s mines in Pechenga (formerly Petsamo) allowed it to blossom into a leading nickel producer.⁴³ More importantly, the diplomatic battle over Petsamo provided an early indication of Canada’s rising middle power status. The Government of Canada’s refusal to bend to the whims of foreign governments, particularly the British, was partly a result of its gradual maturation from a former colony into a truly independent nation. Finally, the case of Petsamo further illustrates just how vital nickel was as a militaristic metal to countries worldwide.

The two decades immediately following the Second World War witnessed the final phase of the Canadian nickel industry’s golden age. The policies of the United States government were once again a crucial factor in this prosperity. American defence officials believed nickel was “the world’s most critical material,” leading the country to spend $789 million between 1950 and 1957 to stockpile nickel and diversify its suppliers through special purchase agreements.

Moreover, both INCO and Falconbridge benefitted greatly from the outbreak of the Korean War, with the latter receiving a lucrative multimillion dollar contract from the United States as a result.⁴⁴ The full-scale participation of the United States in the Vietnam War after 1965 brought even more activity and massive profits to the Canadian nickel industry. However, during the 1960s, INCO expanded its operations abroad, namely in Indonesia, Australia, and New Caledonia, leading Canada in general and Sudbury in particular to lose a sizeable share of the world supply.⁴⁵ In fact, in 1970, INCO chairman Henry S. Wingate openly acknowledged: “Canada’s dominant position in the world nickel industry will be reduced during the next decade.” While the country still held about 65 percent of the global nickel supply, Wingate predicted that its “…contribution to non-Communist world nickel supplies will be down to about 50 per cent” in a matter of years.⁴⁶ As the global economy increasingly shifted toward plastics and Third World nickel sources, by the early-1980s INCO’s powerful monopoly had vanished. The city of Sudbury, meanwhile, “…had been failed by nickel, a glittering false idol,” and rapidly began looking toward more diverse economic pillars to sustain itself.⁴⁷

Conclusion

Evidently, the nickel industry profoundly shaped Canada’s military, political, and diplomatic development throughout the 20th Century. Along with strengthening the national economy, Sudbury’s rich nickel supply helped bring, however minimally, international recognition to Canada. It helped foster closer economic ties with the United States, and on many occasions, it influenced how the Canadian government handled aspects of international affairs. Most of all, Canada’s almost-exclusive access to one of the planet’s most essential strategic war metals made it the envy of governments worldwide for many decades. With the country’s grip over the international nickel market long since released, it is time for historians to take a more thorough look at how this industry shaped Canadian political and military history.

Notes

1. Gwenda Hallsworth and Peter Hallsworth, “The 1960s,” in Sudbury: Rail Town to Regional Capital, C.M. Wallace and Ashley Thomson (eds.),(Toronto: Dundurn Press Limited, 1993), p. 216.
2. J.L. Granatstein, “‘What is to be Done?’: The Future of Canadian Second World War History,” in Canadian Military Journal Vol. 11, No. 2 (Spring 2011), p. 56.
3. Peter V. Krats, “All That Glitters: Speculation and Development in the ‘Minor’ Minerals of the Sudbury Area,” in At the End of the Shift: Mines and Single-Industry Towns in Northern Ontario, Matt Bray and Ashley Thomson, (eds.), (Toronto: Dundurn Press Limited, 1992), p. 47.
4. H.V. Nelles, The Politics of Development: Forests, Mines, and Hydro-Electric Power in Ontario, 1849-1941 (McGill-Queen’s University Press, 2005), p. 88.
5. A.P. Coleman, The Sudbury Nickel Field (Toronto: King’s Printer, 1905), pp. 168-170.
6. Ibid., 170-172.
7. J. Andrew Byers, “The Sailors of 1898: Identity, Motivations, and Experiences of Naval Enlisted Personnel at the Dawn of an Age of American Empire,” in International Journal of Naval History 7, No. 2 (August 2008), p. 3.
8. Coleman, p. 172.
9. “Rich Places in Ontario,” in The Globe, 28 May 1898, p. 9.
10. David F. Trask, The War with Spain in 1898 (University of Nebraska Press, 1996), pp. 66-67.
11. Ibid., pp. 484-486.
12. Matt Bray, “INCO’s Petsamo Venture, 1933-1945: An Incident in Canadian, British, Finnish, and Soviet Relations,” in International Journal of Canadian Studies 9 (Spring 1994), pp. 174-175.
13. Oiva Saarinen, “Sudbury: A Historical Case Study of Multiple Urban-Economic Transformation,” in Ontario History LXXXII, No. 1 (March 1990), p. 57
14. Ian M. Drummond, Progress without Planning: The Economic History of Ontario from Confederation to the Second World War (Toronto: University of Toronto Press, 1987), p. 382.
15. O.W. Main, The Canadian Nickel Industry: A Study in Market Control and Public Policy (Toronto: University of Toronto, 1955), pp. 65-74.
16. “Canada’s Interest in Nickel,” in The Globe, 3 August 1916, p. 4.
17. “Injunction Is Sought to Stop Open Roasting: Contentious Question Is Again Launched in Local Court,” in The Sudbury Star, 19 March 1919, p. 2.
18. Report of the Royal Ontario Nickel Commission (Toronto: Printer to the King’s Most Excellent Majesty, 1917).
19. Matt Bray, “1910-1920,” in Sudbury: Rail Town to Regional Capital, C.M. Wallace and Ashley Thomson (eds.), (Toronto: Dundurn Press Limited, 1993), p. 93.
20. Ibid., p. 100.
21. Ibid., p. 92.
22. Main, p. 85.
23. “Minister Disproves Charge Krupps Own Nickel Stock,” in The Sudbury Star, 16 August 1916, p. 1.
24. “Hon. Arthur Meighen’s Defence [sic],” in The Globe, 25 November 1916, page 6.
25. Main, 85.
26. “An Inquiry as to Nickel,” The Globe, 2 August 1919, p. 6.
27. A.D. Gilbert, “The 1920s,” in Sudbury: Rail Town to Regional Capital, edited by C.M. Wallace and Ashley Thomson (Toronto: Dundurn Press Limited, 1993), 119.
28. C.M. Wallace, “The 1930s,” in Sudbury: Rail Town to Regional Capital, C.M. Wallace and Ashley Thomson (eds.), (Toronto: Dundurn Press Limited, 1993), p. 138.
29. Daryl White, “Coincident Interest: The Canadian Nickel Industry and Second World War,” (Honours Essay, Laurentian University, 2000), pp. 33-34.
30. “Modern War Is One of Metals,” in The Sudbury Star, 12 August 1940, p. 7.
31. White, pp. 1-7.
32. Graeme S. Mount, “The 1940s,” in Sudbury: Rail Town to Regional Capital, C.M. Wallace and Ashley Thomson (eds.), (Toronto: Dundurn Press Limited, 1993), p. 175.
33. White, p. 31.
34. Ibid., pp. 45-47.
35. Ibid., pp. 10-11.
36. Bray, “INCO’s Petsamo Venture,” pp. 175-179.
37. “Nickel’s Petsamo Property Held out Some High Hopes,” in The Globe and Mail, 25 October 1944, p. 20.
38. Bray, “INCO’s Petsamo Venture,” pp. 180-183.
39. Ibid., pp. 183-185.
40. Ibid., pp. 185-187.
41. Ibid., p. 188.
42. Government of Canada, Protocol between Canada, the United Kingdom and the Union of Soviet Socialist Republics providing for the Payment of a Compensation to Canada For Nickel Mines at Petsamo: Signed at Moscow, October 8, 1944 (Ottawa: King’s Printer, 1949), at: http://gac.canadiana.ca/view/ooe.b1631895/2?r=0&s=1.
43. Bray, “INCO’s Petsamo Venture,” p.190.
44. O.W. Saarinen, “The 1950s,” in Sudbury: Rail Town to Regional Capital, C.M. Wallace and Ashley Thomson (eds.), (Toronto: Dundurn Press Limited, 1993), pp. 190-192.
45. Hallsworth and Hallsworth, p. 216.
46. “Wingate expects ’72 end of nickel shortage, reduction of Canada’s dominant situation,” in The Globe and Mail, 23 April 1970, p. B1.
47. C.M. Wallace, “The 1980s,” in Sudbury: Rail Town to Regional Capital, C.M. Wallace and Ashley Thomson (eds.), (Toronto: Dundurn Press Limited, 1993), p. 276.