Herbert Hoover – Australian Mining Entrepreneur
By Kay Koenig
In the 1880’s Australians were enjoying the highest standard of living in the world. But, by the 1890 the economy had swung into a deep depression. The construction industry was in freefall and the amount of gold being extracted from the rich mines of the eastern colonies was rapidly declining. Then, miraculously, boom times returned. Gold was found in the Kimberley of Western Australia in 1885 and, between 1890 and 1893, the rich goldfields of Norseman, Coolgardie and Kalgoorlie were unearthed. These discoveries sparked a rush that rivalled any seen previously in the east. Overnight depression turned to boom as thousands of men descended on the desert to make their fortune.
In Western Australia, the Eldorado landscape was arid. The miners, who swarmed to the new fields, could not use the traditional sluicing techniques to recover gold from the alluvial deposits. In Victoria, NSW and the other eastern colonies, water washed through gold cradles and long toms. Hundreds of metres of water races channelled it though sluices, into puddle machines and other contraptions that washed useless gravel, sand and soil from the precious metal. In the west, the vegetation was stunted, largely saltbush. There were few trees for shelter or for fuel. Temperatures ranged from heat wave conditions in summer to freezing in winter nights. Water, the essentially ingredient in goldmining, was absent. If rain fell, thoughts of gold turned to thoughts of water. Containers of every description were used to catch the precious liquid. Most was used for drinking, there was little for washing or for mining. New mining methods had to be developed. Wind was popular. When it wasn’t blowing, mechanical means such as bellows were used to blow the dust and soil away from the alluvial gold.
In the eastern goldfields it was possible to walk from one field to another. In the west hundreds of kilometres separated the goldfields from the coastal ports of Fremantle and Albany. These were the source of supplies and the place where the miners began their journey to the goldfields. Vast expanses separated one goldfield from another. Travel was difficult.
In a few years the easily mined alluvial deposits were exhausted. It was time to mine the extensive primary ore bodies beneath. In the eastern colonies these deposits had been mined by Australian syndicates and companies. In Western Australia conditions were much more difficult and large sums of money were usually required to sink shafts, mine and treat the ore. Because of the recent depression, there was little money in Australia for speculative mining ventures. Overseas companies, usually from England, acquired the mining leases and reaped the golden benefits. Bewick Moreing & Co Ltd held many leases in the Kalgoorlie area. In the rush, leases were grabbed in a haphazard fashion and Bewick Moreing, like most companies, had no idea if the leases they purchased were rich in gold or completely barren. By the end of 1896 it was time to discover the potential of their investments. They made enquiries in the United States, asking for a mining engineer to join the Company and travel to Australia to examine the leases. He should be young and able to survive in the harsh conditions. However, he should be old enough to have had extensive mining experience. Western Australia was no place for a novice.
A heavily bearded gentleman of thirty five answered the call. He was immediately accepted and sent to Australia in early1897. In actual fact, the mining engineer was a mere twenty two years old. He was a recent geology graduate and his extensive experience was no more than a few months working in California.
The young man, Herbert Hoover, was a Quaker, a teetotaller with a strong work ethic and absolute loyalty to his company. His parents had died when he was still a child and he, his brother and sister were brought up by relations. A member of the first graduate class of Stanford University, Hoover was determined to make a success of the opportunity that had been offered to him.
Hoover landed in the port of Albany in May 1897 and travelled to Coolgardie by train. He immediately began work across the length and breadth of the goldfields. In this desolate area, which he described as beset with ‘ red dust, black flies, and white heat’, Hoover travelled by camel, a method of transport that made him physically ill. His task was to evaluate a mining prospect from a geological and engineering point of view. In this mine, the ore grade was too low; in another, the ore body was too small. Such deposits had to be sold on as quickly as possible. This evaluation process was a big responsibility for a man in his early twenties. Hoover was undaunted, always backing his considered opinion with all the confidence of his youth and his education. He quickly gained the reputation as the best mining engineer in the colony.
On one of his early camel treks Hoover camped overnight near the foot of Mt Leonora about 500km north of Coolgardie. Gold had been discovered there in May 1896 by Carlson, White and Glendenning. They named the claim “Sons of Gwalia” in honour of their financial backer, Welshman Thomas Tobias, who was a storekeeper in Coolgardie. (Gwalia is and ancient name for Wales.) They sank a shaft and exposed the orebody. Gold was visible in the underground workings so they easily sold their prospect to George Hall for £5,000. Hall was not interested in mining the lease but in reselling it at a profit. He further developed the mine, extending the shaft to over 60 metres. It had obvious value because a primitive treatment plant produced 12,000 ounces of gold from 9000 tons of ore. Several prospective buyers looked over the site but it was one of several potentially rich prospects and, the buyers moved on. Hoover however saw the potential. His attitude was different. First explore the orebody to ascertain its value and then fully develop the mine. Profits would come later. In September 1897 he sent a detailed report about Sons of Gwalia to Bewick and Moreing in London. Then he negotiated an option to purchase the mine for £200000. Was it courage or madness that convinced him to contact C Algernon Moreing in London to urge him to commit Bewick and Moreing & Co to the venture? The mine should be purchased and a budget of £2500000 should be provided to develop the mine. In addition, Hoover had the audacity to ask Moreing to give him the entire management of designing the mine and plant. Hoover’s luck held. The London and Western Exploration Company Ltd was floated by Bewick Moreing in London and in Western Australia. It purchased Sons of Gwalia on 17th of November 1897. Hoover was granted shares in the company and he was appointed general manager of the mine with an annual salary of £10,000. This was double what he was earning when he first arrived in Western Australia.
Hoover took up his appointment at Sons of Gwalia in May 1898. His immediate aims were to reduce production costs and to fully explore the orebody to establish its extent and some reliable estimate of its gold reserves. He inherited an isolated mine in a harsh climate and claimed that “No other lode country in the world presents such an array of severe conditions which must be struggled against to do cheap mining”. Cheap mining was Hoover’s ultimate aim because it offered the best opportunity to maximise profits.
With a workforce of 150 men who had recently become unionised, a vertical shaft onto an orebody that extended to a great depth and a small inefficient mill with almost no water to run it, Hoover had to substantially reduce costs quickly or his £ 250000 development budget would soon disappear. Undaunted, he thought he could cut production costs by one third. To bring about this saving, Hoover had first to subdue his workforce. In his first four weeks as general manager he increased the working hours from 44 to 48. Traditionally miners worked in pairs. Hoover introduced single hand work. Traditionally miners returned to the surface before they finished work. The new shift began on the surface then the men travelled underground to their work site. Hoover instructed shift changes to take place underground at the work place. Miners could travel up and down the shaft in their own time. No longer would there be double pay for Sunday work. No longer would bonuses be paid for working in wet conditions. Piece-workers were employed as shaft sinkers. A fixed price would be paid no matter how long the job took. Hoover sacked the union organisers, and contemplated a general wage cut. Workers conditions were further eroded when Hoover contacted a labour agent, Pietro Ceruti of Bardoc, to provide a steady flow of Italian miners. What seems like a generous wage at home in Italy was not thought nearly as generous in the isolated desert conditions at Sons of Gwalia.
There was a great need for equipment and supplies but desert conditions 112 kilometres from the neatest railway at Menzies mean that the cost of bringing supplies to Sons of Gwalia was high. Hoover approached camel dealers Faiz and Tagh Mahomet and purchased fifty camels. Thus Sons of Gwalia had its own camel team and in two months saved £100 on freight.
Perhaps the biggest savings Hoover envisaged would come from the redesign of the mine workings to cut the excavation cost. Hoover inherited a vertical shaft and drives (tunnels) to access an orebody which dipped into the bowels of the earth at 450. He designed a new mine shaft which would descend through the orebody and be inclined at an angle of 450,mimicking the dip ofthe lode itself. A winding machine would haul ore buckets up the incline and over a 15 metre timber headframe before tipping the gold ore directly into a crusher. Work on the new shaft began in September 1898.
Hoover next designed a new treatment plant. He planned to postpone the commissioning of the plant until the dam was full of water. He needed an ensured a supply of water to run the steam engines that would drive all the machinery in the plant. In the meantime the gold ore could be stockpiled.
Bewick Moreing & Co had an office in Coolgardie. Hoover did not think highly of companies local representatives. He objected to their interfering in the management of the mine. They objected to Hoover directly consulting head office in London. The disagreement came to a head when the Coolgardie office ordered machinery for the treatment plant without consulting Hoover. He was furious. The orders were premature. With this friction and the ongoing grumblings of discontent from the Sons of Gwalia miners, perhaps it was time for Hoover to move on. Bewick Moreing & Co gave him a promotion. He was to manage the company’s coal interests in China. He left Sons of Gwalia on 21st November 1898. He was 24 years old.
Although he only controlled the mine for about six months, Hoover left a last legacy at Sons of Gwalia. Underground mining which began in 1897, continued until 1963 when Bewick Moreing & Co closed the mine. During that time it produced 2.644 million ounces of gold. The incline shaft that Hoover designed eventually reached a depth of 1080 metres, the deepest mine in Australia. As a result of his labour policies miners of Italian and Yugoslav heritage predominated throughout its history. It was the most profitable gold mine in Australia for Bewick Moreing & Co, a company which controlled about 50% of the total gold production in the state in the early 1900s. An open cut operation at Sons of Gwalia continues produce gold today.
Hoover’s next appointment in was China. First a quick trip back to America to get married, and then back across the Pacific with his new wife. Arriving in 1899, Hoover’s work in China was soon interrupted by the Boxer rebellion. In 1901 he and his wife settled in England. Hoover was made a partner in Bewick Moreing & Co. He was twenty-seven years of age.
During the first decade of the 20th century, Hoover returned to Australia almost yearly managing his company’s assets in Western Australia and the other states. He was also involved in mining ventures in China, Burma, South Africa and South America. His wealth rapidly increased, as did his reputation.
In 1883 a rich silver lead and zinc orebody was discovered in the Barrier Rangers in the far west of NSW. The eight kilometres long orebody outcropped along a broken ridge and was thus called Broken Hill. Coat-hanger shaped, the orebody plunged at both ends. The oxidised zone, with its high silver content was thickest at the centre and shallowed towards the northern and southern extremities. The discovery was made by Charles Rasp, a boundary rider on Mt Gipps station. A syndicate was formed with the manager and employees of the station. They registered a mining company, Broken Hill Proprietary Company, (BHP), leased the centre of the orebody and rapidly began to reap the profits from the easily treated oxidised zone. By the mid 1890’s the oxidised ores were almost depleted and BHP was threatened by its inability to treat the sulphide mineralisation beneath. These sulphide ores mainly consisted of lead sulphide (Galena) and zinc sulphide (Sphalerite.) The lead sulphide could be smelted but the zinc sulphide could not. By the early 1900’s Broken Hill was surrounded by mountains of over 6.5 million tonnes of zinc rich residual (tailings) from the treatment plants. Some successful method of treating the zinc tailings had to be found. Various extraction methods were tried. BHP roasted the tailings, the Australian Metal Company tried magnetic separation and several companies experimented with a flotation process.
Flotation enables a mineral concentrate to float on a liquid instead of sinking. A popular misconception places the discovery of this process at Broken Hill. In fact, flotation was first documented in1781 when an Englishman, R Watson, observed that if lead ore is crushed and placed in dilute nitric acid, it will become covered with bubbles and rise to the surface. Between 1860 and 1895, various flotation processes were patented in England, United States and Italy. In fact flotation was first used commercially in Wales in 1899. Apparently this news didn’t reach Broken Hill because in the various mines across the ridge, experiments were being tried and discarded in secret.
While the mining companies at Broken Hill were desperate to find an economic solution to sulphide problem, various Australian and international entrepreneurs, who visited Broken Hill in 1905, saw the mountains of sulphide residue as a business opportunity. August De Bavay, a Melbourne brewer had been experimenting with a flotation process in the corner of a brewery that was part owned by William Baillieu. Baillieu was also a partner in the North Mine at Broken Hill. He invited De Bavay to Broken Hill in 1905 and backed him in the purchase of the northern residue dumps. In the same year, he encouraged Herbert Hoover to visit the city and purchased the mine dumps at the southern end of the orebody.
With Australian partners Baillieu and Lionel Robinson and London stockbroker, Francis Govett, Hoover floated the Zinc Corporation and purchased 4 million tons of sulphide tailings at the southern end of the orebody. Govett was chairman. Hoover took responsibility for the design and implementation of the plant to treat the tailings. Initially the Potter flotation process was used. Developed at Broken Hill and patented in 1901, the tailings were added to hot acid solution. The zinc sulphide would float and the waste residue sink. At least that was the theory. The Potter process failed as did the next method tried. By 1907 the Zinc Corporation was virtually bankrupt.
It was decided to raise more capital and operate for one more year. Extra shares were issued and Govett topped up the coffers with his own money. Since the old treatment methods failed, a new flotation process was required. Why not the Elmore process? This was developed by Welshmen Frank and Stanley Elmore in 1the late 1890’s. It used acid and oil to separate copper and iron sulphide, (Chalcopyrite) from waste rock. Later air bubbles were pumped through the slurry to help the oil coated ore particles rise. The Elmore process was the first commercially used flotation method. It worked in the Glasdir Copper mine in Wales from 1899 and it worked at the Zinc Corporation in Broken Hill. By 1908 the prospects of the company had been dramatically turned around. Hoover’s luck held-just!
Although the Zinc Corporation could now successfully treat the mountains of zinc tailings, the process was useless when lead and zinc sulphides were mixed together. The sulphide ores being mined from the southern leases were rich in both galena, (lead sulphide) and Sphalerite, (zinc sulphide). If the southern mines were to be successful, a method to separate these two minerals had to be found. The first breakthrough was made in 1910 by E J Horwood of BHP. He carried out experiments at the Bendigo School of Mines and found that if the lead –zinc tailings were roasted to over 3000 C before being subjected to the flotation process, the lead sulphide particles would sink while the zinc particles would float. This was the first differential flotation process. The Zinc Corporation purchased the Horwood process. It is one thing to make a discovery another to make it work commercially. Horwood’s method failed commercially. Hoover’s man would find the solution.
Fleury James Lyster was born in Victoria in 1872. Orphaned at an early age, he learnt the carpentry trade from his uncle. Like many other young men in the 1890’s, he went to Western Australia to find his fortune. He eventually wandered into Lenora and worked for the new Sons of Gwalia mine in 1898. Hoover must have been impressed with him because nearly ten years later he employed Lyster at the Zinc Corporation to build the new treatment mill and then run it. Lyster had no training as a metallurgist but was a keen observer. After spending his days watching the flotation cells, Lyster began to experiment. In 1912, Lyster found that by varying the air flow though the slurry, (finely crushed ore mixed with water), he could float lead sulphide in one cell and then float zinc sulphide in another. He used alkaline water straight from the mine and added eucalyptus oil to float the lead. The system worked. Finally the huge reserves of complex lead zinc ores at Broken Hill could be mined.
Not all mining entrepreneurs were as prudent as Herbert Hoover. Many were only interested in a quick profit. One such man was Whitaker Wright. He never visited Australia but his English based company London and Globe Finance Corporation controlled several mines including the very rich Ivanhoe and Lake View Consols mines near Kalgoorlie. In 1899 Lake View Consuls struck it rich. Month after month the mine produced a ton of gold. Shares in the mine rocketed. Wright thought that the rich profits persist. He continued to buy shares in the mine when the gold ceased to flow and the share price plummeted. London Globe Finance Corporation lost £750000. For good measure, Wright’s other company, Standard Exploration, lost another £250000. Something had to be done. Why not falsify a balance sheet? Why not declare a £463000 profit? Why not borrow money to pay dividends? The ploy worked for three weeks. Then the companies collapsed. Many people were ruined. Wright was arrested and convicted of fraud. Sentenced to seven years, he committed suicide rather than go to prison.
When Whitaker Wright lost control of Lake View Consols, London stock broker Francis Govett became chairman of the company. Fearing that gold production at Lake Star would continue to dwindle, Govett sort a new golden egg. He purchased the South Blocks leases at Broken Hill. These leases had been taken up by hotel keeper William Maiden of Menindee. They were on the southern extremity of the orebody, largely devoid of the rich oxidised ore that made companies like BHP rich.
What luck! Francis Govett was the chairman of the Zinc Corporation. It was s simple matter for the Zinc Corporation to acquire the South Block Leases. This it did in 1911 when Broken Hill South Blocks Ltd amalgamated with the Zinc Corporation. Under the chairmanship of Francis Govett, The Zinc Corporation proved their leases to have one of the greatest mineralisation in the field. In 1949 the company joined The Imperial Smelting Corporation of England to become Consolidated Zinc. This provided extensive interests in Britain and Canada. In Australia Consolidated Zinc began to diversify. They mined uranium at Rum Jungle, mineral sands at Stradbroke Island, coal at Blair Athol and bauxite at Weipa. In 1962 they merged with Rio Tinto to become Conzinc Rio Tinto of Australia (CRA). Today Rio Tinto is the third largest mining company in the world. Although it no longer operates in Broken Hill, the leases it owned are still mined.
Herbert Hoover last visited Broken Hill was is 1912. He retired from the mining industry and returned to America in 1914. At forty, he was a multi millionaire. He moved into politics and eventually became president of the United States, and the rest, as they say, is history.