Cape Breton Development Corporation

In 1965, the Dominion Steel and Coal Corporation, or DOSCO (then a subsidiary of the Hawker Siddeley Group) announced that its mines had only 15 years of production left and concluded that the expense of opening new underground mines in the Sydney Coal Field would be too expensive. The company made its intentions clear that it would be exiting the coal mining business within months.

In response to a vast public outcry in industrial Cape Breton County, the minority government of Prime Minister Lester Pearson announced J.R. Donald would head a Royal Commission of Inquiry into the Cape Breton coal industry, with hearings held in 1965 and 1966. The Donald Commission recommended that a federal Crown corporation be established to acquire and manage DOSCO's coal operations, with the aim being to slowly wean the Sydney area economy off the coal industry.

"Future planning should be based on the assumption that the Sydney mines will not operate beyond 1981."

On July 7, 1967, the Cape Breton Development Corporation, or DEVCO, was established to operate the mines in the interim, while phasing them out throughout the 1970s and, at the same time, develop new economic opportunities for the surrounding communities. On March 30, 1968, DEVCO expropriated DOSCO's coal mines and the Sydney and Louisburg Railway, settling for a payment of $12 million. At the same time, the Government of Nova Scotia took over the operation of DOSCO's integrated steel mill in Sydney, renaming the operation Sydney Steel Corporation, or SYSCO.

Early operation, planning for retraction

DEVCO had several operating divisions, including its Coal Division, as well as economic development divisions, intended to help the Industrial Cape Breton area diversify its economy from an over-reliance on the coal and steel industries.

Initially, DEVCO focused on operating the coal mines throughout the Sydney Coal Field that it had inherited from DOSCO, while attempting to invest in other initiatives such as establishing a post-secondary education institution in the area (what would become the University College of Cape Breton, now Cape Breton University), tourism developments, industrial parks for non-coal/steel related manufacturing industries, and investing in small area businesses and community infrastructure projects to help unemployed coal miners and steel workers who had been laid off during the 1960s drawdown in production.

One of DEVCO's first tourism-related developments in the early 1970s was the Cape Breton Steam Railway, a joint project with the Sydney and Louisburg Railway Historical Society, which saw unused Devco Railway tracks between Glace Bay and Port Morien used for operating a tourist railway, with coal-powered steam locomotives. The project ran until it proved to be uneconomic to operate by the late 1970s.

Overall, until 1973, DEVCO was more-or-less focused on continuing the operation of its former-DOSCO mines and railway, while providing new economic growth for the region.