(Photo: Ansgar Walk)
The Smoking Hills are located near Cape Bathurst on the Arctic Coast of the Northwest Territories. When Royal Navy Captain Robert McClure explored the area in the 1850s, he thought that the smoke on the shore came from a large number of campfires. Upon further exploration, he found the smoke emerging from vents in the ground. This stretch of land has rich veins of lignite near the surface. As the land erodes, the lignite spontaneously catches fire when exposed. The CBC explains:
Here, vast deposits of lignite -- concentrations of carbon-rich shale and pyrite rich in sulphur - literally ignite spontaneously when the hills erode and the mineral veins are exposed to the air, producing a constant smoke. […]
The sailors are said to have returned with a sample of the smoldering rock, and when they set it down on McClure's desk it burned a hole in the wood.
-via Amusing Planet