The History of Mining

The events, technology and people involved in the industry that forged the modern world

Michael Coulson

• Publisher: Harriman House
• Year: 2012
• ISBN:
  9780857192660
• Edition: 1
• Topic: Business
• Subtopic: Commodities
• Index: Business

THE INDUSTRY THAT FORGED THE MODERN WORLDThroughout history metals and raw materials have underpinned human activity. So it is that the industry responsible for extracting these materials from the ground - mining - has been ever present throughout the history of civilisation, from the ancient world of the Egyptians and Romans, to the industrial revolution and the British Empire, and through to the present day, with mining firms well represented on the world's most important stock indexes including the FTSE100.This book traces the history of mining from those early moments when man first started using tools to the present day where metals continue to underpin economic activity in the post industrial age. In doing so, the history of mining methods, important events, technological developments, the important firms and the sparkling personalities that built the industry are examined in detail. At every stage, as the history of mining is traced from 40, 000BC to the present day, the level of detail increases in accordance with the greater social and industrial developments that have played out as time has progressed. This means that a particular focus is given to the period since the industrial revolution and especially the 20th century. A look is also taken into the future in an effort to chart the direction this great industry might take in years to come. Many books have been written about mining; the majority have focused on a particular metal, geographical area, mining event or mining personality, but 'The History of Mining' has a broader scope and covers all of these essential and fascinating areas in one definitive volume.

The Modern Age (from 1900)

1. Broken Hill and other Australian giants

The development of Australia’s gold mining industry was a story of romance and drama, and like all the gold rushes of the 19th century, attracted prospectors and speculators from around the world. However, it was arguably less important to the emergence of Australia as a significant economy than the discovery and development of the Broken Hill mines in the far west of New South Wales (NSW) was, in the 1880s.

Broken Hill

Silver is discovered

The story of Broken Hill began on the NSW state border with South Australia when silver was found at Thackaringa in 1876. Prospectors, excited by the news, pushed west from the copper discoveries at Cobar. The Thackaringa silver deposits, however, did not have a long life and soon petered out. In due course prospectors found gold in modest amounts at Mount Browne, 200 miles north of Thackaringa, and this started a mini-rush to the new goldfield. Conditions were appalling with temperatures holding steady for weeks at an end at over 100 degrees Fahrenheit. Disease was rife and the cost of supplying food and water so high that Mount Browne never really had a chance of measuring up to other gold fields in Australia and around the world. Interest soon switched back south towards Thackaringa, where prospectors had begun to search for silver again.

The first of these new discoveries was the Umberumberka silver and lead mine and this spawned the town of Silverton, which today – though pretty much a ghost town – is a magnet for tourists and film makers. At the time it was the centre for some highly profitable silver mines and a busy stock exchange. The grades found at three of the mines were astonishing, even for those times – rock from the Chanticleer mine ran 10,000 ozs to the ton, the Marine ran 10,724 ozs and the Hen and Chickens mine assayed a less juicy but still mouth watering 3,400 ozs to the ton.

Intermittently, droughts created problems for miners and prospectors, and the mid-1880s witnessed a particularly serious one, but Silverton survived and the town’s population based on silver mining was in the thousands by 1885. The Silverton stock exchange that year also saw it start trading the shares of Broken Hill Proprietary, then merely an exploration company with leases a few miles to the east of the town. But as the silver began to run out again, interest in Broken Hill, despite problems of geological interpretation, was on the rise.

Broken Hill is born

Broken Hill had attracted prospectors for many years, but surface samples taken had yielded only small shows of lead and silver mineralisation. What fascinated those people who had stopped, looked and wondered about Broken Hill, named after its jagged top, was the size of the area stained by the oxidisation of the surface iron and manganese. Those oxides were much larger than others in the area, but those samples that had been chipped from the surface were unexciting, giving no hint of what actually lay beneath this stained cap.

In September 1883 sheep boundary rider, Charles Rasp, a German who had become interested in prospecting in the wake of the Silverton silver rush, was working close to the Broken Hill and decided to take a few samples of his own. Two contractors, David James and Jim Poole, excavating a dam nearby, were shown the samples by Rasp and were intrigued by their weight. With Rasp they put a little money up to secure a mining lease over part of the Hill. They then took further samples and sent these off to Adelaide for assaying; the results showed lead and some silver present.

Whilst the paucity of the silver was a disappointment, the three decided to persist and hired a miner to drill a single hole to see what might be found at depth. The three partners also took on four more pastoralists, including the station manager, George McCulloch, and with the expanded syndicate having contributed £500 the partners were able to secure almost 300 acres of ground. Additional drilling was done on behalf of the syndicate and it further confirmed the presence of lead and silver in the Broken Hill mineralised lode near the surface. The silver assayed around ten ozs per ton, a respectable 300 plus grammes in today’s silver mining world but disappointing then, particularly when compared to the riches of nearby Silverton.

Perhaps if the syndicate had been made up of geologists the drilling programme would have been abandoned there and then, for high grade silver not lead and silver ores was what the group was hoping to find. The syndicate pressed on believing that higher-grade silver might well lie deeper. Further drilling confirmed the presence of substantial quantities of lead, but high-grade silver still eluded the drillers. This was a difficult time for the project with money very tight and so the syndicate had to pass over the opportunity to buy the freehold of the Broken Hill leases.

When the lode finally showed its potential this decision proved to be an expensive if unfortunately inevitable one as Broken Hill had to pay millions in royalties to maintain the lease when it came up for renewal in the early 1900s. Shares in the syndicate also occasionally changed hands, often at prices that would eventually be seen as bargain basement. Also for the first time in 1884 a mining man, W.R. Wilson, bought a stake. Some of the new members of the syndicate were only in for the short-term ride but others stayed the course and reaped huge rewards in the form of capital growth and dividends.

Development starts

In the same year – 1884 – the project finally began to come together. A small-scale shaft was sunk and larger quantities of ore were mined for analysis. Some of the samples, which were now being drawn from deeper parts of the lode and thought to be chloride of silver, were sent to nearby Silverton for assaying and they came back showing up to 700 ozs per ton. The project was beginning to reward the faith its largely pastoral owners had shown in funding such a speculative venture.

The syndicate was now headed by W.R. Wilson and George McCulloch and two newer members, William Jamieson, a government surveyor, and Bowes Kelly, pastoralist and investor. They decided that the time was ripe for Broken Hill to be incorporated and floated on the stock exchange, with a view to raising sufficient funds to develop a mine. In today’s heavily regulated market it is interesting to note that the prospectus issued for the Broken Hill Proprietary Company (BHP) offered very little information on the mine and its prospects; perhaps the owners thought any detail superfluous, instinctively knowing that Broken Hill would become one of Australia’s largest mines paying out many millions of pounds in dividends over the years. Also that it would, in the end, become one of the largest mining companies in the world, with a global reach both in terms of shareholders and investments.

The issue price was £9 a share and when the first offer was made to investors in nearby Silverton in 1885 they wolfed down the lot. The next offering was in Adelaide where the prospectus had to be re-written but after that the shares sold quickly. Further sales were made to Sydney and Melbourne investors where the offering was less well received. The more sophisticated eastern investors thought the shares extremely over-priced, but in contrast the owners, who had retained control of the company, holding 14,000 of the issued capital of 16,000 shares, thought the listing price had been too low. The new capital enabled a more thorough exploration of the Broken Hill lode and soon the first ore, just under 50 tons, was dispatched to Melbourne for smelting; this high-grade batch yielded around 800 ozs of silver to the ton. BHP decided to build its own smelters at Broken Hill; they had a capacity of 100 tonnes a day and opened in early 1886.

Overseas capital begins to flow

Although BHP and other mines along the Broken Hill lode were beginning to do very well, these were economically difficult times for the region; labour was cheap and readily available, which swelled mining profits. The mines’ product was generally sold overseas and to help this process a railway linking Broken Hill with the South Australian coast was completed in 1888.

The growth of the mines at Broken Hill began to attract overseas capital, particularly from Britain, and the price of Broken Hill shares led by BHP began to soar. Originally offered at £9 to Silverton investors in 1885, BHP shares rose to £409 on the Melbourne exchange in early 1888. Speculation spilled over into other Broken Hill shares including two stocks well known to more recent Australian mining investors, Broken Hill South and North Broken Hill (now part of the Rio Tinto group). Price rises amongst other stocks were often meteoric and huge short-term profits were made by investors in producers and explorers alike.

The level and intensity of activity in Broken Hill stocks was very similar to that which was to rage 120 years later over the nickel discoveries in Western Australia. Some of the claims made by stock promoters about unproven ground in the wider Broken Hill area would have even embarrassed Aussie Boom brokers and entrepreneurs in the 1960s, and would have caused life-threatening palpitations amongst today’s securities compliance officers. Such was the appetite amongst investors for Broken Hill shares that BHP split off some of its unutilised ground into three new companies to feed the frenzy, making even more money for itself and its own investors.

Behind this speculation there was, however, real growth amongst the producers and BHP was able to start paying dividends from an early stage. The town of Broken Hill also grew exponentially, reaching a population of 20,000 by 1891, although like most mining rush towns the growth in services to support this rate of expansion was wholly inadequate. Broken Hill was filthy and disease ridden but its development provided dynamism and economic prosperity at a time when Australia’s economy was depressed.

The product from Broken Hill was primarily silver and lead, although there was zinc in the ore which became more important in later decades. In the 19th century silver was still considered a monetary metal and lead was beginning to benefit from the development of automatic weapons firing large quantities of ammunition, as well as scaled up wars like the Boer War in South Africa and the looming First World War.

Developments in medicine and public health initiatives were helping to increase longevity and the Industrial Revolution had already had a huge impact on moving people from the land to the cities where mass housing was built. Lead was an increasingly important component of the construction equation, both in terms of housing and commercial building, where the metal was extensively used in piping and roofing. The coming of electricity and motor vehicles also boosted demand for lead as battery technology was developed, and its use as an additive in petroleum products further increased demand. Huge discoveries like Broken Hill and Mount Isa (which we will come to later), were a critical part of the coming of the modern economic age and provided the size of resource that could support the establishment of the wider consumer economy that developed as the 20th century progressed.

Building BHP

But before all that could happen, the full potential of Broken Hill needed to be realised and that meant the establishment of a professional mining structure. BHP was essentially the creation of pastoralists and they managed the company from Melbourne. This was all right when the company was in its infancy but inadequate as it became a listed company with ambitions to increase output and add value at the smelting and refining stage. So it was that the BHP board in 1886, following flotation, realised that a new approach was required if the company was to expand its Broken Hill project to exploit rising demand for lead and silver.

A search was therefore instigated for a mining engineer experienced in running large operations and a top metallurgist. The search took the company to the US. There BHP hired William Patton from the giant Comstock mine in Nevada and Herman Schlapp, a metallurgist from Colorado. The hirings were well timed because the Broken Hill lode, though exceptionally rich, was not easy to mine, and as operations on the huge lode were expanded, difficulties concerning ground and orebody stability arose. Mining was dangerous and though techniques were developed to try and improve safety and productivity they were not always successful; fatalities, shifting in-situ ore and fires all dogged mines along the lode. The movement of the ore beneath the surface meant that many of the buildings on the surface were subject to movement also, which was particularly unfortunate for the operating precision of many of the treatment plants.

BHP turns to steel and the Collins House Group turns to Broken Hill

Huge change was in the air in Broken Hill towards the end of the 1890s. The monetary role of silver was on the wane and the very success of Broken Hill threatening oversupply had led to a weakening lead price as the century came to a close. The complexion of Broken Hill also began to change as companies, including BHP, decided to relocate their smelters to the South Australian coast around Port Pirie and Port Adelaide. Although Broken Hill would rise again, the excitement generated in the early years had faded away as the new century dawned. For BHP itself, the issue arose as to its long-term future, for though it owned the richest part of the Broken Hill lode, it also owned the shallowest and it had mined it extensively.

Close to its relocated smelters at Port Pirie BHP also owned the iron ore deposit of Iron Knob, whose product was used in the lead smelting process, not for the making of steel. In due course we will come to the great modern industry of iron ore exports and Australia’s role in it, but it was at Iron Knob that BHP decided in 1911 to explore the feasibility of establishing a steel-making plant at Port Pirie. However, when the decision was taken to enter the iron and steel-making industry BHP located the works in New South Wales at Newcastle near the coalfields of the Hunter Valley, shipping the ore from Iron Knob to the Newcastle works.

Whilst BHP’s days at Broken Hill were numbered the great lode itself, dominated by producers like Broken Hill South, North Broken Hill and the Zinc Corporation, continued to pour out its wealth throughout the 20th century. During its 120 years of operation over 200 million tonnes of ore have been mined from Broken Hill and mining continues to this day. After BHP’s heyday on the central structure of the lode, the targets became the deep but rich ores of the lode at its south and north ends. Mining at Broken Hill was broadly profitable but there were periods when the going became very difficult. One such period was in 1904 when William Baillieu, a Melbourne financier, and brothers William and Lionel Robinson, Australians with very strong London connections who had made a fortune in gold mining in Western Australia, moved in on Broken Hill. They formed an alliance that was the foundation for the Collins House Group which, from its headquarters in Melbourne, dominated Australian mining for much of the 20th century.

William Baillieu (1859-1963)

William Baillieu spans the Industrial Revolution and the Modern Age but his impact on Australia’s mining sector only really began in the 20th century with the founding of the Collins House Group in Melbourne in 1904. He was born in Queenscliff, Victoria, in 1859 as one of fourteen children (ten boys). His father was James Baillieu from Wales who married Em...