N.S. government, Northern Pulp reach settlement agreement

The Northern Pulp mill in Abercrombie Point, N.S., viewed from Pictou, N.S., in a file photo from 2019. (Robert Short/CBC - image credit)
The Northern Pulp mill in Abercrombie Point, N.S., viewed from Pictou, N.S., in a file photo from 2019. (Robert Short/CBC - image credit)

The Nova Scotia government and Northern Pulp have reached a settlement agreement that would see the company abandon its pursuit of reopening its mill in Pictou County, explore opening a new mill in Liverpool and end legal wrangling between the two parties.

Documents filed with the Supreme Court of British Columbia 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 construction and operating the new mill."

The study, which is expected to take nine months, will be funded by Paper Excellence Canada, Northern Pulp's parent company. It will work with the province to determine "the financial feasibility" of a new mill that would convert wood to wood pulp. The parties will also work to "find any available government or related support that will enhance the feasibility of the new mill."

Government officials said that support could include the province's capital investment tax credit, which tops out at $100 million, and payroll rebates.

Nova Scotia Premier Tim Houston told reporters Thursday that the resolution between the province and company settles legal and financial issues, protects the pensions of current and former Northern Pulp workers, and "offers hope" to woodlot owners and people who work in the province's forestry sector.

"I know people are concerned about the reputation of the company in the province in the past," he said. "Let me assure Nova Scotians that any project that comes forward will need to meet today's standards, and will undergo environmental assessments, significant public engagement and Indigenous consultation."

Sector welcomes news

The legal and financial issues at stake included a $450-million lawsuit launched by the company after its lease to use a provincially owned effluent treatment plant at Boat Harbour was cut short, forcing the mill to close in 2020. The company also owes the province about $99 million in loans.

Northern Pulp, which directly employed 350 people before it closed, produced pulp that was turned into white tissue and toilet paper. The mill shutdown hurt the forestry sector in the province.

Stephen Moore, executive director of Forest Nova Scotia, said the settlement agreement is "massive" for a sector that was "gutted" by the closure of Northern Pulp.

"This is about hope," Moore told reporters.

"Hope for hundreds of families who could rely on jobs provided by the mill, hope for families in rural Nova Scotia where there aren't a lot of employment opportunities and these are jobs that pay well above the provincial average."

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

Nova Scotia Premier Tim Houston, left, and Natural Resources Minister Tory Rushton are shown Thursday, May 23, 2024, in Halifax.
Nova Scotia Premier Tim Houston, left, and Natural Resources Minister Tory Rushton are shown Thursday, May 23, 2024, in Halifax.

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

Court documents state that if a new mill is feasible, the company will "make good faith efforts to obtain third party financing for the design, construction, and operation of the new mill. If the new mill is not feasible, the settlement agreement provides for an orderly liquidation of the petitioners' assets."

According to the settlement agreement, if a new mill is possible, the company's woodlands would be used as part of that operation. If a new mill is not viable, the woodlands will be sold and proceeds distributed based on an agreement between the company and province.

"All other assets will be liquidated and distributed to the 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 whether a new mill is viable based on a projected internal rate of return of greater than 14 per cent.

In a brief telephone interview, Paper Excellence chief operating officer J.F. Guillot said the settlement agreement is a result of the two sides realizing that fighting with 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 mill that would serve as "a showcase for the rest of Canada."

Guillot said details about a possible location, construction timeline and cost for a new mill in Liverpool would all be determined as part of the feasibility study.

Northern Pulp 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 mill is viable, the company will pay $30 million to top up Northern Pulp 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 mill isn't viable, the pension top-up costs will still be paid by the company, but the money will come from the sale of the company's woodlands once sales costs and fees related to creditor protection proceedings are paid. It will also pay the province $30 million for the outstanding loans.

While all of this is happening, the Northern Pulp mill at Abercrombie Point in Pictou County will remain in cold shutdown, which means the site is closed but the company is maintaining it.

Should a new mill not be possible, the company would have to decommission and demolish the facility in Pictou County. While the company would put $15 million toward cleanup efforts, the total bill is certain to be much higher. Government officials, Houston and Guillot said the actual cost would need to be determined based on future plans for the area, which was also once the home to Canso Chemicals.

The agreement comes following court-ordered, non-binding mediation as part of the company's creditor protection proceedings. The creditor protection was to remain in place until March 31, 2025.

Aerators churn up toxic mill waste in what is now lifeless, dark and foamy Boat Harbour.
Aerators churn up toxic mill waste in what is now lifeless, dark and foamy Boat Harbour.

Aerators churn up pulp mill waste in Boat Harbour in this file photo. The former Liberal government passed the Boat Harbour Act in 2015, which called for the former tidal estuary to stop receiving mill 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 mill could be an answer to the needs of the forestry sector in the western part of the province and a new market for low-grade wood and byproducts. But he said the public still needs more details, including the cost to taxpayers.

"And [to] make sure that history is not going to repeat itself and that the environment is going to be protected, particularly for the lucrative fishery we have along the South Shore."

Oppositions leaders have questions

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

"We don't really know what happens to that site if there's not a new mill," she said.

Chender said she recognizes the need for a market to take low-grade wood and chips and she sees the potential in Liverpool, but she'll also be watching for details around environmental impact, social licence from people in Queens County and Indigenous consultation.

"I think, you know, it is a relief for the people of Nova Scotia that this outstanding, very thorny issue is moving toward a settlement," she said. But she questioned if the timing impacted a byelection this week in Pictou West.

Like Chender, Churchill felt Thursday's news explained why Houston was so quick to call this week's byelection in an area where the mill is a "very sensitive topic." The move followed the surprise retirement last month of former Tory MLA Karla MacFarlane. The Tories posted a dominant win in Tuesday's vote.

Houston declined to get into details of the negotiations, but he told reporters that he became "pretty involved" in the file before Christmas.

An event was also scheduled Thursday morning in Liverpool where members of the forestry industry gathered to view a remote broadcast of the premier's news conference.