Cape Breton Development Corporation - Layoffs and Selling of Assets

Layoffs and Selling of Assets

Faced with rising subsidies for DEVCO, the federal government announced it was getting out of the coal industry in January 1999 by mining out the rest of Phalen by the end of the year and attempting to sell the Prince colliery.

In September 1999, Phalen colliery closed for good, with 400 employees laid off and the only on-line traffic source for the Devco Railway severed. The Prince colliery continued with production, however coal was trucked from the mine to the Victoria Junction preparation plant, from which it was then taken by rail to the Lingan Generating Station. Devco Railway also began to be used for importing some coal from locations in the United States and South America, with the international shipping piers beginning to be used in the reverse of their intended design.

On November 23, 2001, Prince colliery closed for good, after the federal government failed to entice any private sector investors to purchase the mine. DEVCO was out of the coal mining business, however for a period of approximately 1 month, it was in the coal importation business. The federal government moved swiftly to sell off assets, transferring the mine properties and mineral rights back to the provincial Department of Natural Resources. DEVCO subsequently decommissioned the Victoria Junction coal wash plant and began to immediately prepare remediation of the mine sites.

On December 18, 2001 DEVCO sold all surface assets, including the international shipping piers, railway track, railway rights-of-way, locomotives and rolling stock, and a coal storage facility and locomotive shops at Victoria Junction to 510845 New Brunswick Incorporated, a wholly owned subsidiary of Emera Inc., the holding company which owns Nova Scotia Power Incorporated (Nova Scotia Power Corporation having been privatized in 1992).

Emera subsequently contracted the operation of its newly acquired DEVCO surface assets to Logistec Corporation. Logistec sub-contracted operation of the railway to the Société des chemins de fer du Québec, a Quebec-based railway holding company and short-line operating company. The new railway was called Sydney Coal Railway, although ownership of the track and other assets remains with Emera's subsidiary, 510845 New Brunswick Inc. Logistec operates the international piers, which handles coal imports from the United States and South America, while Sydney Coal Railway hauls the coal to the storage facility at Victoria Junction before transporting it to NSP's Lingan Generating Station.