King Coal: The man that never was: 2nd edition

It has been bought to my attention by the Edit Police that my previous post on this matter slipped out without edit. For this I apologise and will try again.

The strangest mining story I ever came across involved Metallurgical Coal.

I am able to relate this tale because for a short while I ran a coal mining company, situated in the Crows Nest Pass in South Western Alberta at the behest of a large Canadian energy company that had made  a hasty and disastrous foray into the business.

The Crows Nest Pass was famous for its coal mines and at one point in history was home to a very large population of relatively well paid coal miners who were willing to take on the horrifying risks of toiling in dangerous underground mines. But by the end of the Second World War the boom was over as the boilers of the  railway steam  locomotives were converted from coal to oil and most mines were shut down.

At about this time a clever entrepreneur by the name of Frank Harquail began to acquire the shares of  coal mining companies that nobody else wanted. These companies owned vast quantities of freehold coal reserves, coal that was suitable for coking. The center-piece of his new prize was a private company, Hillcrest Collieries, secretly owned by the senior managers of the all-powerful CPR Railway that also had the dubious distinction of hosting the largest mining disaster in Canadian history.

It is almost impossible to believe that Frank took such a giant leap of faith without some prior inkling of the nascent demand for Coking Coal from the Japanese Steel Mills. General Douglas Mac Arthur had seen to it that the steel mills were rebuilt after the end of the war, but he could do nothing to replace the existing coal mines that were fast depleting.

The idea of using Coking Coal from Western Canada in Japanese mills was fraught with difficulties. The mines were 700 miles from the nearest port in Vancouver, a port that was designed for wheat not coal. The rail journey required passage over mountainous terrain with fierce winter conditions and it was thought unlikely that the railways would make the required improvements without a real incentive of high freight rates.

The giant trading companies of Japan who had been tasked with the vital role of feeding the new Japanese juggernaut, thought quite differently and began to encourage a new industry by the promise of long-term contracts.

So began the lonely quest of a man with an iron will to succeed in a seemingly impossible dream. He acquired control of Coleman Collieries, a company that was already producing coking coal for a plant in nearby British Columbia, and was able to convince  trading giant Marubeni that he could raise the capital to mechanize the mines and treatment plant. Along the way Frank got a big boost when the Kaiser family, already heavily involved with steel, began development of  the Sparwood property in South East British Columbia after obtaining the promise of a very large long-term contract from Japanese mills.

The expected bonanza was slow to commence because agreed to prices at the West Coast Port bore no resemblance to the realities faced by the new mines or the railway. Young Edgar Kaiser, keen to earn his spurs in the family business, had assumed costs based upon dragline operations in the Western United States, a totally unrealistic scenario in the high Rocky Mountains. Frank knew better but could do little to improve his situation, and so profits remained illusionary while his health deteriorated.

Imagine then the jubilation when out of nowhere there appeared a large energy company with a mandate to acquire a coal operation. Price did not appear to be a problem, and soon any army of consultants (some of whom knew nothing about mining coal) was dispatched to conduct due diligence.

it is at this point that this Horatio Alger like story becomes bizarre. Frank must have had a  visceral dislike for paying any form of taxation. He lived in Las Vegas, a no tax state, and ran his private business from the tax haven of Lyford Key in the Bahamas. Very soon a great deal of cash changed hands and Frank quite literally disappeared off the face of the earth.

Within a year it became apparent that Frank’s dream was not all it had appeared to be. His lieutenants had handled the truth very recklessly when they failed to tell the consultants that a large part of the coal reserves could not be recovered by traditional means thus rendering the price paid by the energy company unrealistic.

After a long an arduous lawsuit a high court found that malfeasance had indeed occurred and awarded damages that almost equalled the entire purchase price.

Meanwhile it became known that Frank had died in very unusual circumstances. He had chartered a large private yacht and sailed, on his deathbed, out into the Aegean Sea where according to his wishes he was buried at sea. He also died intestate (without a will) leaving all but his widow to doubt that he had ever existed.

It is befitting this strange tale have a  happy ending. Frank’s widow Helen, then living on the tax haven of Grand Cayman returned the judgement money (even though it would never have been found) and went on to become a great benefactor to the Island using millions of dollars received from the sale of Frank’s other coal properties in Western Canada.

 

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