444. Reference to this question was made in the negotiations which took place during the Imperial Economic Conference, Ottawa, 1932, for a trade agreement between the United Kingdom and Newfoundland. In the agreement that was concluded* no mention was made of Wabana ore but scheduled to the Agreement was an exchange of letters between the Prime Minister and the Leader of the United Kingdom Delegation, of which the terms were as follows:--

"Dear PRIME MINISTER,
  "My colleagues and I recognise that an arrangement between the interests concerned for the importation into the United Kingdom of a substantial quantity of Wabana iron-ore is of paramount importance to the economic life of Newfoundland.
  "We therefore give you our assurance, on behalf of our Government, that we shall regard the last paragraph of Article 9 of the Agreement which is being concluded between His Majesty's Government in the United Kingdom and His Majesty's Government in Newfoundland as entitling the Government of Newfoundland to give us notice that they are unable to implement the Agreement, other than Articles 4, 7 and 8 and Schedule E, on the ground that a satisfactory arrangement between the interests concerned as regards the importation of such ore into the United Kingdom has not been concluded.
  "In that event it is understood between us that the Agreement, other than Articles 4, 7 and 8 and Schedule E, will be regarded as at an end.
  "I shall be glad to learn from you at your early convenience whether you concur that this correctly represents our understanding.

"Dear LORD PRESIDENT,
  "I have received your letter of to-day's date regarding the Agreement between our respective Governments, and I agree with you that your letter represents the understanding between us.

  445. It is understood that Your Majesty's Government in the United Kingdom have since taken up the question with the steel masters in the United Kingdom and, now that the Agreement concluded at Ottawa is in force, it is hoped that arrangements may be made whereby the importation of Wabana ore into the United Kingdom may be encouraged. In the meantime, some small shipments of ore have been consigned, on a barter basis, to Cardiff, South Wales, in return for Welsh coal. Pending the conclusion of a permanent arrangement, the extension of this practice could not fail, we suggest, to prove of mutual benefit to the two countries.

  446. In 1907-08 the Anglo-Newfoundland Development Company, in prospecting for sulphur for newsprint production on land leased from the Newfoundland Government, discovered an outcropping of lead-zinc ore at a point on Buchans River, some five miles north of Red Indian Lake (see Map No. 1). A shaft was driven and the ore was found to be a fine-grained intimate mixture of the sulphides of zinc, lead and copper, with traces also of silver and gold. But it transpired after exhaustive enquiry that there was then no known method by which the ore could be satisfactory treated, and the workings had perforce to be temporarily abandoned. Fortunately, however, experimental work, undertaken during and after the War in the laboratories of the well-known American Smelting and Refining Company, finally resulted, in 1925, in the elaboration of a process by means of which the lead and zinc sulphides could be extracted and crushed into marketable products. An agreement was then entered into between the American Smelting and Refining Company and the Anglo-Newfoundland Development Company providing for the operation and development of the deposits by the former Company, the net profits being divided equally between the two Companies. (The interests of the Anglo-Newfoundland Development Company owns over 98 per cent. of the issued share capital.)

  447. As a result of electrical prospecting and diamond drilling, a further body of ore was located in the immediate vicinity, the estimated yield of the two bodies together being placed at 8,000,000 tons. Analyses of the ore gave the following average results:--

  448. The Buchans Mining Company was formed and construction operations were begun in 1927. A railway was built connecting the mine with the Anglo-Newfoundland Development Company's line at Millertown Junction. A site was cleared for settlement, and a town called Buchans laid out. The mine itself was equipped with the most modern machinery, including a crushing plant of 2,000 tons capacity per 24 hours, a concentrating mill with a daily capacity of 600 tons, and a hydro-electric installation of 2,500 horse-power. Storage sheds were erected at Buchans and the port of Botwood, and the wharf at the latter place was extended and specially equipped with suitable cranes.

  449. Production was started in 1928, but within three years those responsible for the operation of the mine were faced with a crisis, the world-wide slump in prices having reached such a low level as to make operation no longer profitable. In these circumstances, the mine had either to be closed or its production doubled. The latter course was chosen and in 1931 new plant was installed at the cost of $1,500,000, giving the concentrating mill a daily capacity of 1,200 tons of ore. The total capital cost of the enterprise was thus brought to approximately $7,000,000.

  450. In spite, therefore, of the low prices at present obtainable in the world markets, the mine at Buchans has continued to work full time. We made a detailed inspection of the operations there and were highly impressed at the efficient manner in which they were conducted. The life of the mine on the present scale of output is estimated at 14 years, but it is thought improbable that the two deposits so far found are isolated ones, and further prospecting is being undertaken by the American Smelting and Refining Company as opportunity offers.

  451. During the four years 1929-32 the tonnages mined and milled and concentrates produced by the Buchans Mining Company, Limited, and the production costs per ton of ore, were respectively as follows:--

  At 31st December, 1932, the estimated ore reserves at Buchans were 6,967,500 tons.

  452. The town of Buchans is remarkable as being one of the few settlements in the interior of Newfoundland. So far removed from the sea and from other towns, the people are thrown to a large extent upon their own resources. The Company has provided them with facilities for education, recreation and amusement, and we were struck by the progressive spirit which prevailed. The town has been attractively laid out and is equipped with an excellent water supply, modern drainage and electric light. The Company maintains a school, and there is also a night-school for workers in the mine. A cinema theatre serves also as a town hall. There is a flourishing athletic club. A hospital, with a resident medical officer and two nurses, is maintained by the Company.

  453. The population of Buchans is about 1,000, of whom about 300 are employed in the mine. Wages are good and relations between the employees and the management are excellent. Prices in the stores are high, owing to the distance of the town from the coast and to discriminatory railway freight-rates.

  454. As at Grand Falls, the high birth-rate at Buchans gives rise to some anxiety. Indeed, the future of the town itself may be said to hang in the balance, since, if no further bodies of ore can be discovered, the mine will be exhausted in 1947. The problem of providing for the coming generation of Newfoundlanders is one to which we have referred elsewhere; the solution of the special problem of Buchans will, it hoped, be found in the discovery of other workable deposits.
  Reference is made in paragraphs 459-464 to the Company's shipping arrangements at Botwood.

  * See Chapter IV, paragraph 160. The full text of the Agreement is reproduced in Appendix K.