Northern Pulp — a Paper Excellence company that belongs ultimately to the billionaire corporate empire of the Widjaja family of Indonesia — is giving the Nova Scotia government two months notice that it intends to start legal proceedings to get “more than $100 million” from the province, which it claims represents the losses it has incurred because of the closure of the pulp mill in Pictou County.
According to an October 19th press release from Paper Excellence, “Total losses related to the early closure of the Mill are estimated to exceed $450 million.”
Northern Pulp has “taken the necessary steps to preserve its legal rights related to the closure of the Mill close to 11-years prior to the end of the term of the Effluent Treatment Facility (ETF) lease, ” states the press release.
The lease being referred to is a controversial one signed by the Progressive Conservative government of John Hamm in 2002 with Kimberly-Clark, which owned the mill at the time, that extended the lease for the use of Boat Harbour for mill effluent until 2030.
Four years after he stepped down as premier, Hamm became chair of the board of Northern Pulp, a position he held until he quietly stepped back around the time the mill closed.
The Northern Pulp mill closed in January 2020, after it failed to submit a satisfactory plan for a new effluent treatment facility to replace the Boat former Harbour facility, which had been in use since the mill opened in 1967.
The facility had caused immeasurable suffering for Pictou Landing First Nation, and following a massive effluent spill on sacred First Nation burial grounds in 2014, the Liberal government of Stephen McNeil agreed to pass legislation to close Boat Harbour and have it restored as a tidal estuary.
The Boat Harbour Act passed in 2015 gave Northern Pulp until 2020 to get a new effluent treatment system approved and built. Because it failed to do so, the mill had to close.
The press release states that Northern Pulp “tried unsuccessfully to engage two previous governments in settlement decisions,” but that the new government of Premier Tim Houston, “requested that the Company file its legal claims related to the closure of the Mill and permit the Province time to evaluate the claims and supporting evidence as a prerequisite to engaging in any settlement decisions.”
“The resolution of legal proceedings through a timely settlement is a critical component of Northern Pulp’s plan to transform and re-start the Mill,” reads the press release.
Being sued is good for Nova Scotians
Then, with breath-taking audacity that suggests Northern Pulp and its spokespeople have precious little respect for the intelligence of the public, the authors of the press release attempt to twist this exceedingly bad news for Nova Scotians as something that should make them happy, that is somehow supposed to be good for them.
First, they suggest that legal action by Northern Pulp to get more than $100 million out of the public purse and any settlement that comes out of it will somehow be “mutually” agreed and “fair to taxpayers.” They offer this quote as proof that down is really up:
“This action confirms our desire to reach a mutually agreed-upon settlement that is fair to taxpayers and compensates us for the losses suffered. Our intention is to use these funds to transform and re-start the Mill once we receive environmental approvals,” said [Jean-François] Guillot [Vice President Operations, East, Paper Excellence].
And then comes this incredible claim:
The reinjection of the funds would benefit Nova Scotians across the province during the transformation phase and operations and provide an economically viable solution for implementing ecological forestry.
If that looks like gas lighting, that’s because it is.
Northern Pulp / Paper Excellence would have Nova Scotians believe that by pumping their own money — lots of lots of it — into a multi-billion dollar corporate empire that spans the globe, they are doing themselves and their woodlands a favour.
But handing over money to the owners of the Northern Pulp mill has become something of a tradition in this province.
Since 2010, a year before Paper Excellence acquired the mill in Pictou County, the people of Nova Scotia, via their government, have lavished much more than $100 million on Northern Pulp in loans and grants, leased vast amounts of Crown land to the company for clearcutting, and the provincial government has repeatedly turned a blind eye to its environmental transgressions when its effluent pipe leaked or the mill exceeded its air pollution limits.
Recall that in 2010, for example, the NDP government of Darrell Dexter loaned the company $75 million to purchase 475,000 acres of land that belonged to the former owners of the pulp mill, and as part of the same deal, the province immediately purchased 55,000 of those acres back from Northern Pulp at 1.7 times the price per acre, which amounted to a hidden gift to the company of $7 million.
Loans still not repaid
Northern Pulp still owes the province more than $65 million from that loan, and a total of nearly $85 million.
Nevertheless, Northern Pulp continues to plead poor.
Six months after the mill went into hibernation because it failed to provide the province with a suitable plan for its effluent treatment, Northern Pulp declared itself “insolvent,” and together with seven of its affiliates sought creditor protection in British Columbia, something the Halifax Examiner reported on in depth here and here.
The October 19 press release states that it continues to operate “under protection of the Companies’ Creditors Arrangement Act (CCA) and will appear before the British Columbia Supreme Court on October 19, 2021, to request, among other things, an extension of their protection until April 30, 2022.”
The announcement that the company intends to continue to ask for creditor protection while also taking the province to court to get more than $100 million from it is – well – rich. Just like Northern Pulp’s corporate owner, Paper Excellence.
In 2019 before it sought creditor protection, Northern Pulp made nearly $60 million in loan repayments to Paper Excellence, as the Examiner reported here, and then asked Nova Scotia for $50 million in new financing in addition to the nearly $85 million it still owed the province. The government of then-Premier Stephen McNeil turned down the new financing, but did agree to freeze the loan repayments.
As the Examiner reported here, court documents also show that Northern Pulp did not use the $10 million “contribution payment” that Nova Scotia provided it for clean-up expenses in March 2020 on eligible expenses.
Even if it claims Northern Pulp and its affiliates are all “insolvent,” Paper Excellence is anything but a cash-strapped little company.
As the Halifax Examiner reported here and here, it is in the process of taking over the North American pulp and paper giant Domtar in an “all-cash transaction” for $3.77 billion (although the Halifax Examiner has been told by sources that prefer to remain anonymous that the deal has not been finalized yet because of complaints made to Canada’s Competition Bureau).
The Domtar takeover by Paper Excellence has been strongly criticized by 68 organizations around the world, and according to the global organization Natural Resources Defense Council (NRDC), it “would put at its helm a family that’s internationally notorious for both human rights abuses and deforestation.”
But none of this information made it into the Paper Excellence press release, which mentioned the “legal proceedings” as if an after-thought, focusing instead on the company’s plans for the “transformation” of the pulp mill, for which it intends to submit its environmental assessment registration to Nova Scotia Environment and Climate Change by the end of November this year.
A “transformation” that Nova Scotians may well wind up paying for.
Plus ça change.
 Details of an Indemnity Agreement signed by the Liberal government of John Savage in 1995 that provided the mill with extraordinary protection while placing extraordinary liabilities on the province, and of this lease signed by John Hamm’s Progressive Conservative government are available in my 2017 book, “The Mill – Fifty Years of Pulp and Protest.”
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