NS government and Northern Pulp reach settlement agreement

NS government and Northern Pulp reach settlement agreement

The Nova Scotia government and Northern Pulp have reached an agreement under which the company would abandon its goal of reopening its factory in Pictou County, explore the possibility of opening a new factory in Liverpool and end legal disputes between the companies. Two parts.

Documents filed with the British Columbia Supreme Court lay out the details of the agreement, which still must be approved by the court. A feasibility study will be conducted to determine the “viability of the construction and operation of the new mill.”

The study, which is expected to last nine months, will be funded by Paper Excellence Canada, Northern Pulp’s parent company. It will work with the province to determine “the financial viability” of a new factory that would convert lumber into wood pulp. The parties will also work to “find any available government or related support that will enhance the viability of the new plant.”

Government officials said support could include the province’s capital investment tax credit, which maxes out at $100 million, and payroll reimbursements.

Nova Scotia Premier Tim Houston told reporters Thursday that the resolution between the province and the company resolves legal and financial issues, protects the pensions of current and former Northern Pulp workers and “offers hope” to employees. forest owners and people who work in the forestry sector of the province. .

“I know in the past people were concerned about the company’s reputation in the province,” he said. “Let me assure Nova Scotians that any project brought forward will need to meet current standards and will undergo environmental assessments, significant public engagement and Indigenous consultation.”

The sector welcomes the news

The legal and financial issues at stake included a $450 million lawsuit brought by the company after its lease to use a provincially owned effluent treatment plant in Boat Harbor was terminated, forcing the plant to close in 2020. The company also owes the province approximately $99 million in loans.

Northern Pulp, which directly employed 350 people before closing, produced pulp that was made into white tissues and toilet paper. The closure of the factory harmed the province’s forestry sector.

Stephen Moore, CEO of Forest Nova Scotia, said the settlement agreement is “huge” for an industry that was “gutted” by the closure of Northern Pulp.

“It’s about hope,” Moore told reporters.

“Hope for hundreds of families who could depend on the jobs provided by the factory, hope for families in rural Nova Scotia where there aren’t many employment opportunities and these are jobs that pay well above the provincial average.”

Moore said any project would have to set “international standards” and serve as an example for other places. That means being as environmentally responsible as possible, he said.

Two men are shown sitting at a table.
Nova Scotia Premier Tim Houston, left, and Natural Resources Minister Tory Rushton appear Thursday, May 23, 2024, in Halifax. (Michael Gorman/CBC)

The court documents state that if a new plant is feasible, the company “will make good faith efforts to obtain third-party financing for the design, construction and operation of the new plant. If the new plant is not feasible, the settlement agreement provides an orderly liquidation of the petitioners’ assets.”

Under the settlement agreement, if a new mill can be built, the company’s forests would be used as part of that operation. If a new mill is not viable, the forests will be sold and the profits distributed according to an agreement between the company and the province.

“All other assets will be liquidated and distributed to remaining creditors in accordance with their priorities,” the agreement states.

Study will provide details of possible mill

It says the company will notify the province within seven business days of completing the feasibility study if a new plant is viable based on a projected internal rate of return greater than 14 per cent.

In a brief telephone interview, Paper Excellence Chief Operating Officer JF Guillot said the settlement agreement is the result of the two sides realizing that fighting each other was getting them nowhere.

He said the public should know that if the feasibility study comes back positive, it would mean a state-of-the-art plant that would serve as “a showcase for the rest of Canada.”

Guillot said details on a possible location, construction schedule and cost of a new factory in Liverpool would be determined as part of the feasibility study.

Pulpa del Norte pensions impacted

Paper Excellence said in a news release that the pensions of all current and former Northern Pulp employees will be fully funded.

In a scenario where a new factory is viable, the company will pay $30 million to supplement Northern Pulp’s pension plans, according to a news release from the Nova Scotia government. It will also pay the province $15 million to cover loans.

If a new factory is not viable, the additional costs of the pension will be paid by the company, but the money will come from the sale of the company’s forests once the sales costs and fees related to the procedures of the company have been paid. creditor protection. It will also pay the province $30 million for outstanding loans.

While all this is happening, Northern Pulp’s Abercrombie Point mill in Pictou County will remain cold-closed, meaning the site is closed but the company maintains it.

If it were not possible to build a new factory, the company would have to dismantle and demolish the facility in Pictou County. While the company would spend $15 million on cleanup efforts, the total bill is likely to be much higher. Houston and Guillot government officials said the actual cost would have to be determined based on future plans for the area, which was once home to Canso Chemicals.

The agreement follows a non-binding mediation ordered by a court as part of the company’s creditor protection procedure. Creditor protection would remain in force until March 31, 2025.

Steam rises from a body of water.
In this file photo, aerators agitate waste from the pulp mill in Boat Harbor. The previous Liberal government passed the Ship Harbors Act in 2015, which required the former tidal estuary to stop receiving factory effluent by the end of January 2020. (Steve Lawrence/CBC)

Opposition leaders greeted Thursday’s announcement with cautious optimism, but said they still have questions.

Liberal Leader Zach Churchill said a new factory could be an answer to the needs of the forestry sector in the western part of the province and a new market for low-quality lumber and by-products. But he said the public still needs more details, including the cost to taxpayers.

“And (to) make sure that history doesn’t repeat itself and that the environment is protected, particularly for the lucrative fishery we have along the south coast.”

Opposition leaders have questions

NDP Leader Claudia Chender said she wonders what is left for the people of Pictou County whose livelihoods were affected by the loss of the mill. She also wondered about the possible long-term liability of the Abercrombie Point site that needs to be cleaned up.

“We don’t really know what will happen to that site if there isn’t a new plant,” he said.

Chender said she recognizes the need for a market that accepts low-quality lumber and chips and sees the potential in Liverpool, but she will also be attentive to details about environmental impact, the social license of the people of Queens County and indigenous consultation .

SEE | Pictou County Councilor Reacts:

Northern Pulp jobs won’t return to Pictou County

Pictou County Councilor Andy Thompson said the news is generating mixed reactions. He said even staunch opponents of the factory should think about friends and neighbors who now know their jobs will never come back.

“I think it’s a relief to the people of Nova Scotia that this very pending and thorny issue is moving toward a solution,” he said. But he questioned whether the timing influenced this week’s by-election in Pictou West.

Like Chender, Churchill said Thursday’s news explained why Houston was quick to call this week’s byelection in an area where the factory is a “very sensitive issue.” The move followed the surprise retirement last month of former Conservative MLA Karla MacFarlane. The Conservatives won a dominant victory in Tuesday’s vote.

Houston declined to go into details of the negotiations, but told reporters he was “pretty involved” in the file before Christmas.

An event was also scheduled for Thursday morning in Liverpool where members of the forestry industry gathered to watch a remote broadcast of the prime minister’s press conference.