Waste to Profits: The Case of Consolidated Mining and Smelting Ltd
Nemetz, Peter N., Journal of Business Administration and Policy Analysis
The Consolidated Mining and Smelting Company (renamed Cominco in 1966) was formed in 1906 and four years later bought the Sullivan Mine, the world's largest silver-lead-zinc ore body, located at Kimberley in the Southeast corner of British Columbia. The complex sulphite ore was shipped to the company's newly acquired and redesigned smelter in Trail, B.C., some 160 km to the southwest, in the Columbia River valley. As the lead and zinc concentrates contained from 17-33% sulphur (anon., c.1948), their smelting produced significant quantities of sulphur dioxide as a waste product which was off-gassed from a 409-foot tall stack (Murray, 1972, p. 72). By 1930, these releases had reached a high of 651 tonnes per day of SO2 (or 325.5 tonnes as sulphur).
The topography of the Trail region presented some unusual challenges and problems:
The Trail Smelter lies in a deep gorge cut out by the Columbia river. The region is decidedly rugged and the Columbia is flanked on either side by mountains sufficiently high to preclude a diffusion of smoke fumes to east or west, except in cases of gorges formed by creek tributaries (Howes and Miller, 1929, p. 6). [See Figure 1]
The distance from Trail to the [international] boundary line is about seven miles as the crow flies or about eleven miles, following the course of the river....At Trail and continuing down to the boundary and for a considerable distance below the boundary, mountains rise on either side of the river in slopes of various angles to heights ranging from 3,000 to 4,5000 feet above sea-level, or between 1,500 to 3,000 feet above the river. The width of the valley proper is between one and two miles (Trail Smelter Arbitration Tribunal, 1935, p. 8).
The net result of this topographical configuration was a funneling of [SO.sub.2] waste gases down the Columbia River valley into Northeast Washington state. [See Figure 2] In 1926, citizens of the town of Northport in Stevens County, Washington complained that the toxic fumes were destroying crops, killing their cattle, corroding their barbed wire fences and galvanized roofs and peeling building paint. The U.S. government complained in turn to Canada and both countries agreed to take the case to arbitration under the International Joint Commission, marking the first time that an issue of air pollution came before an international tribunal (Murray, 1972; see also Agent for the Government of Canada, 1936).
The IJC found against the smelter in 1931, recommending that financial compensation of $350,000 be paid and that the company be required to reduce the massive amounts of [SO.sub.2] released into the atmosphere (IJC, 1931). The U.S. government rejected the Commission's recommendations as inadequate, and the issue was not finally settled until March 1941 when a special panel (the Trail Smelter Arbirtation Tribunal), established in 1936, issued its "Final Decision." Well before the date of settlement, the Consolidated Mining & Smelting Company had hit upon a answer to the problem and had installed several new industrial processes at their site in Trail. The solution was to extract sulphur from the gaseous emissions and produce sulphuric acid which could then be used to manufacture fertilizer.
On the face of it, being forced to expend large sums of money on the control of waste products, estimated in excess of $20 million (Read, 1963, p. 221), posed a significant financial challenge to the smelting company. Fortuitously, the system to use sulphur dioxide to produce fertilizer addressed a number of critical issues facing the Consolidated Mining & Smelting Company at the time: (1) most importantly, the new control procedures essentially removed a threat to the continued operation of the smelter; (2) it provided a more diversified product base which allowed the company to weather falling metal prices in the Great Depression; and (3) it allowed the company to capitalize on an emerging market for synthetic fertilizers, both nationally and internationally. …