CO882-(2-3) — Page 82

PUBLIC RECORD OFFICE

Reference :-

C.O.882

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PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

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(4.) The rescourses available and necessary for the proper conduct of operations. 27. It will be sufficient, for present purposes, to touch briefly upon these points. That coal exists, and to some extent, in Labuan has been placed beyond doubt. It is not enough, however, that coal exists; it must be accessible and workable, and in both these respects also the character of the Labuan mines may be fairly considered as satisfactory.

28. Coal is accessible at a very moderate depth; that of the shaft now sinking is not estimated at more 100 fathoms, and will greatly exceed the depth of any mine hitherto worked in the island; whilst the depth of English mines varies generally from 80 to 300 fathoms.

The situation for transport is also most favourable, the whole site of the present Company's operations lying within one mile from the sea shore.

29. Objection has sometimes been urged to the inclination of the coal, but the angle of inclination (33°) is no greater than that of some of the finest Lancashire coal-fields.

30. The chief obstacle encountered, or liable to be encountered, is the quantity of water, owing to the heavy tropical rain-falls that are experienced, and to the absorbent character of the strata above the coal. This is an obstacle not indeed to be under- rated; but there has never been any reason to think that it will not, in all cases, yield to proper and skilful management, and it is the only obstacle of any importance that has yet been met with in these mines.

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31. With respect to the causes of past failure, one of them, and I think it will be found to be a principal cause, I have pointed out in a despatch No. 65 which I addressed to your Lordship on the 30th July, on the subject of the present Company's operations in the island. I refer to the neglect of deep workings, and the system of surface-workings, which form the principal feature of the Labuan mining operations in the past. There have, doubtless, been other causes, which it may be useful to investigate on a future occasion, but, in the meantime, I think it may be safely asserted that all the failures of the past have been due to the faults and shortcomings of those who worked the mines rather than to any mining or other local difficulty they may have encountered.

32. The despatch above-named will also show your Lordship the exact position and extent of the Company's present operations. It is most important, in the event of such a contingency as the retirement of the present Company, directing the attention of the Government or of a new Company to the undertaking, that this position should be clearly known, because it exhibits the basis, or, as it may be termed, the starting point of

and further operations, as also the more immediate prospects of the undertaking; upon these would probably rest the decision of the Government, or of a Company, to accept or not the undertaking, and, in the event of its acceptance by a Company, the terms upon which the Government would grant the concession.

33. I need not enter here into the particulars of this position, as they will be found in the despatch I have referred to, but I may say, that the entire value of the position depends on the speedy and successful sinking of the 100-fathom (or B) pit, and upon the proper development of its rescources-a work neither of great length nor attended with any unusual difficulty, but requiring a certain amount of time, skilful management, and adequate measures.

34. The remaining point to be be determined relates to the means necessary for the prosecution of the enterprise, and involves considerations of management, labour supply, stock of materials, financial provision, &c.

35. These considerations depend very much upon the actual position at the mines, because it is only by a knowledge of this position, by a full comprehension of the scheme of operations to be conducted, that a satisfactory estimate can be formed of the nature and extent of the measures necessary to be adopted of the professional skill and of the manual labour that are required, of the machinery and materials without which neither skill nor labour are available, and lastly of the attendant expenses.

36. Dealing with these considerations with reference to the case in point, and assuming the lease voided at this moment and the Government re-entered upon occupation of the premises, the real question of its ability to undertake the enterprise is whether it could meet the requirements of the situation.

37. Time, professional skill, sufficiency of labour, material means, are all necessary requirements and indispensable to success.

38. The calculation of Mr. Gray, the present manager, as to time is that it will occupy him from four to six months to place the pumping engine in position and remove the water, and eight additional months to sink the shaft to its proposed depth, where the coal will be won.

* No. 31.

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But that accomplished, it will still require a further period-probably ten months or a year-to open the mine sufficiently to extract coal in any quantity. So that during the first year, dating from the present stage of operations, no coal will be raised from this shaft, and during the second year only a very limited quantity must be expected. It will be in the third year that a large return, the first profitable return, may be looked for. This calculation of the Company's operations will apply cæteris paribus to operations by the Government,

39. For management and professional skill, the Government would have the services of Mr. Howard as manager or superintendent. He would require a staff of seventeen persons, consisting of four Europeans-namely, an assistant superintendent, an engineer, and two miners; and thirteen natives- namely, four engineers, six overmen, two clerks, and a storekeeper.

The number of labourers required for the works, above ground and underground, is estimated at 200 or 204. But for the first year only half this number would be required.

40. Under the head of materials may be included machinery, engines, boilers, fixtures and moveable implements, and all articles used in mining; and the acquisition of these necessaries would become an important matter for consideration.

On examining the terms of the lease granted to the Oriental Coal Company I perceive that power is reserved to the lessees at the expiration or other determination of the lease to remove all property of this description, and the Crown could only distrain upon this property for such amount of rent or royalty as was due to it. The Government therefore, on re-entering upon occupation of the mines, would find them stripped of the means of working them and would be forced to procure the necessary materials either by purchasing them of the Company or elsewhere,

41. This opens the question of the expenses of the undertaking. Here is an item of necessary expenditure at the outset. The purchase of such materials should be strictly limited to those absolutely required for the prosecution of the works; but, even with this limit it is difficult to say what amount of expenditure it would entail. It may, however, be roughly estimated at between 10,000, and 15,000. Then, taking two years as the period that must elapse before any certain or satisfactory return could be received, a calculation of the expenses of those two years, including the outlay already mentioned, may be taken to represent the amount of capital that would be required as the foundation upon which to commence the undertaking.

These expenses would consist of the salaries of the mining staff; of the cost of construction of a gaol at Coal Point, assuming employment of convict labour; of the charges for a gaol establishment; of the charges for the maintenance and clothing of convicts; and of the charges for an increased police force; or, assuming employment of free labour, of the wages and bounties payable to free labour.

The total estimate of cost for the two years together may be put roughly at 10,0001, exclusive of the outlay in machinery and materials.

42. It is evident then that this undertaking must be attended with expenditure, and that this expenditure will at the commencement require capital. Could it, indeed, be expected that mining operations should be undertaken without any provision, or that an enterprise from which large results are hoped for should be self-supporting from the first moment and the enterprisers exempt from the risk or the outlay of one single shilling?

The command of some capital in such an enterprise is indispensable, and as much so to a Government as to any association of individuals.

43. In placing these considerations before your Lordship, I do not for one moment seek to depreciate the undertaking. On the contrary, I believe that, with capital and with skilful management, the undertaking would accomplish a considerable success; and to this expression of opinion I think I may add that the amount of capital and the period for previous operations which I have named are not immoderate in view of the results that may be expected. An outlay of 25,0001. during the first two years would probably produce in the third year a return sufficient not only to meet the current expenses, but to give a balance of from 10 to 20 per cent, on the capital; and by the fifth year a net annual profit varying from 10,000. to 20,0001. might be expected from the undertaking.

44. I think it will be allowed that I give here no unfavourable representation of the position. But to say that these results are attainable without capital, and without that risk from which no enterprise is exempt, would be for me to conceal from your Lordship what, at all events, I believe to be the true state of the case.

45. Nor must I fail, at the same time, to mention that the resources of the Colony are not such, and cannot be made such, as to supply this capital or any part of it. But i reference to the estimates of the present year will at once make this apparent. The

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