In 1607, Christopher Newport sailed to the falls of the James. From that point on, the Europeans realized that shipments into the interior would require the expense of loading and unloading ships at the falls. Recognizing that trans-shipment points were logical centers of human activity, William Byrd II laid out cities on the falls of the Appomattox and the James and named them Petersburg and Richmond in 1734.
However, it took until 1772 for the House of Burgesses authorized a canal on the James so small boats could bypass the falls. Governor Spottswood had proposed connecting the James and Ohio Rivers way back in 1716, but that was long before the colony could realistically finance or construct such a project. Only after a sufficient number of settlers had moved into the Piedmont and Shenandoah Valley were the costs of a canal justified by the potential savings in shipping tobacco downstream and manufactured goods upstream.

After 1772, John Ballendine took on the challenge of building the canal to bypass the falls at Richmond. Ballendine was an entrepreneur with more failures than business successes in his past - but are you surprised that someone willing to tackle a new challenge would experience failure?
Ballendine planned to mine iron ore in Buckingham County1,
smelt it into "pigs," ship it down the James River to the upper end of the
falls, then process the pig iron in a foundry in Richmond. The foundry was
built at Westham, downstream from today's Huguenot Bridge, on the north
bank of the James River opposite Williams Island.
Why was a canal needed for a foundry? Water entered Ballendine's canal, upstream at today's Williams Dam. Perhaps 600 yards2 downstream, the water was released through a gate and dropped down onto a waterwheel. The falling water provided mechanical energy to turn the wheel. This energy was transmitted though belts and pulleys to the bellows and hammers in the foundry. The bellows were forced up and down, generating strong air flow through a forge. The extra oxygen heated the charcoal fire hot enough to melt the pigs, allowing the iron to be worked into shape or poured into molds. The hammers beat out the impurities in the iron, incorporated carbon into the metal, and pounded the iron into the shape required for various products.
Why build a canal to supply waterpower to a foundry at Richmond, rather than in Buckingham County? Perhaps the small drop of elevation at Bremo Bluff and other locations on the river upstream did not provide a sufficient hydraulic "head" to power the waterwheel without building an excessively long millrace. Perhaps there was not enough available skilled labor upstream to operate a foundry. Perhaps Ballendine preferred to locate his manufacturing plant closer to the market, so he could adapt production to fit the latest reports of demand and have the option of shipping to Boston, New York, Philadelphia, Charleston, or the Caribbean.
Ballendine never came close to fulfilling his promises to the House of Burgesses, so perhaps he might have been inclined to locate his operation out of sight, in the backcountry far away from prying eyes. The leaders in the colony knew that a canal at Richmond would be insufficient to open the James, and an initiative in 1774 had proposed removing obstructions in Buckingham County at Seven Islands, near the mouth of the Hardware River.
For whatever reason, Ballendine chose to take advantage of the House of Burgesses' support for a canal at Richmond and purchased 50 acres for a foundry. That political support continued even after the House of Burgesses was dissolved in 1774. The Virginia Convention (the revolutionary body that met 5 times between 1774-1776 to govern Virginia before it adopted a state constitution) loaned Ballendine enough money in 1776 to buy 3,000 acres in Buckingham.
The foundry did produce kitchen tools and - far more important to the new General Assembly - cannon for the Revolutionary War effort. In January, 1781, Benedict Arnold and his British cavalry under Col. Simcoe caught Gov. Thomas Jefferson and the local militia off guard. The foundry was destroyed and the materials dumped into the river.

1 John Ballendine to Cary Archibald, Edward Carrington, and James Southall, July 12, 1779, Contracts for Iron Works at Westham, Buckingham Furnace, Canal, and Dam, The Thomas Jefferson Papers at the Library of Congress
2 Gibson, Langhorne Jr., Cabell's Canal: The Story of the James River and Kanawha, Commodore Press, Richmond, 2000, p. 19