Robert Dunsmuir began working for the Hudson's Bay Company's coal mines on Vancouver Island in 1849, first at Fort Rupert and then at Nanaimo. When the company sold its coal mines to the Vancouver Coal Mining and Land Company (VCMLC) in 1862, Dunsmuir was hired as the new superintendent. He also worked briefly for the Harewood Coal Company , but returned to work for the VCMLC. The colonial government encouraged exploration for new coal deposits and during the 1860s several privately owned mines were established on Vancouver Island.

In 1869 Robert Dunsmuir discovered a coal seam near Diver Lake, northwest of Nanaimo. It proved to be the best quality coal at the time on Vancouver Island. In 1871 Dunsmuir discovered the place where the seam was richest and where he could profitably sink a slope. This became the Wellington Colliery and was where the townsite of Wellington was established, named after the Duke of Wellington.

Labour troubles and mine disasters were frequent. The strikers attempted year after year to obtain safer working conditions, higher pay and shorter hours. Top pay at that time for a European miner was about $3 a day and for a Chinese, $2. The explosions, fires and cave-ins took a heavy toll on the population. Many died in the 30 years the mines were in operation. By 1899, when fire destroyed a large part of the town, many of the residents moved away to Ladysmith, which had been developed as an alternate mining site. The remaining buildings were carried to the new town and, after l900, when the last of its coal was shipped out, Wellington ceased to be of importance.

Robert Dunsmuir died in Victoria in 1889, the richest man in BC. His company carried on and in 1928 added the Nanaimo collieries to its holdings.