This week, a behind-the-scenes battle over the fate of Sydney Harbour facilities burst into the open when officials of the Cape Breton Regional Municipality (CBRM) denounced a plan by Nova Scotia’s Hamm Government to retain ownership of the Sydney Steel Piers.

At first blush, the dispute centres on the best ownership structure for four major facilities in Sydney Harbour:

  • the Sydport Industrial Park, recently sold by the Ottawa to well-connected local businessmen in a deal that sparked controversy;
  • the Government Wharf, devolved by Ottawa to the municipality at what municipal officials complain was a punitive price;
  • the Devco coal piers, on the federal auction block as part of the coal company assets;
  • and the massive Sysco Piers, which the province is having second thoughts about selling.

Lurking in the background is a more ominous problem: the tenuous state of the rail line from Port Hawkesbury to Sydney.

Once part of CN’s main line across Canada, the Truro-to-Sydney railway was sold a decade ago to an American short-line operator. The closure of Sysco, the imminent closure of Devco and the province’s foolhardy decision to let Georgia Pacific truck gypsum from its new strip mine at Melford, Inverness County over provincial highways instead of shipping it by rail, have decimated rail traffic on the portion of the line between Sydney and Port Hawkesbury.

Rail America, the line’s current owner, has warned local authorities it may abandon the line as early as the end of October.

Its loss would be a devastating blow to an economy already reeling from the closure of two cornerstone industries. Combined with another federal-provincial regulatory failure — the Offshore Energy Board allowing Maritimes and Northeast Pipeline to place an undersized gas line across the Strait of Canso — the province’s former industrial powerhouse is rapidly becoming an industrial cripple.

Two years ago, CBRM and the Sydney Board of Trade hired the Halifax engineering firm O’Halloran Campbell to study the port’s future. It concluded that the Sydney Harbour had been chronically under-used because the Crown corporations that ran the Devco and Sysco piers refused access to shippers of other commodities.

The consultants concluded that shippers of coal, gypsum, aggregate, and other bulk commodities would find the port attractive, but only if its four major facilities were operated by a single port authority that made them available to all comers.

A port authority with control over all the harbour assets could also develop unused land between the Sysco and Devco piers in a way that would enhance the usefulness of both facilities. Such a development could dovetail with the coke ovens and tar ponds cleanup.

Last week, CBRM formally created a port authority. It was largely a symbolic exercise though, because the city lacks the money to carry out necessary development work on the piers.

Until recently, neither Ottawa nor the province had shown much interest in port development, insisting their respective piers would be sold to the highest bidders. The imminent collapse of the railway has finally focused the province’s attention.

It recently asked bidders on the Sysco piers to consider leasing the facility and operating it on a common user basis, instead of buying it. Under the scheme, the province would retain ownership, possibly through a Crown corporation.

The notion that the province — which for decades has shown little or no interest in the port of Sydney, and which has been trying for a decade to divest itself of Sysco — would suddenly decide to create such a corporation to control a key harbour asset put municipal officials though the roof.

For their part, provincial officials believe they have, in American Metals and Coal, a bidder with a serious business plan that would invest enough in the port to keep Rail America around. But the province wants to retain ownership as a means of ensuring the investment actually takes place and that the pier operates as a common user facility.

A bigger worry is the apparent determination of Nova Scotia Power (NSP) to control its own unloading facility in Cape Breton. It has bid on both the Devco Pier and the Devco Railway. The Devco Pier is an inefficient place to unload coal, but in combination with the Deco Railway, it would suffice to meet the needs of NSP’s Lingan and Point Aconi power plants.

The power company could forge ahead with plans for a new coal unloading facility at the Strait to serve its Point Tupper and Trenton plants. In which case, kiss off the Sydney-Port Hawkesbury section of the Cape Breton and Central Nova Scotia Railway, and kiss off industrial Cape Breton’s economic future.

Despite the heated rhetoric, the parties are closer to a common position than they appear to realize. CBRM can’t afford to carry out the harbour improvements its own report calls for without help from private industry and other levels of government.

The province has belatedly understood the need to retain these facilities in public hands while developing and operating them privately.

Both the province and Ottawa need to realize the need to keep key facilities like the Devco piers and railway out of the hands of a single user like NSP. The best way to do that may just be a single port authority.