Northern Pulp, Scotsburn Lumber, and U.S. tariffs

News

1. Northern Pulp, Scotsburn Lumber, and U.S. tariffs

Last month, Scotsburn Lumber sent out a letter encouraging “all our employers, contractors, business owners, forest landowners and associated suppliers to call or write a letter to your local or elected official” to express support for Northern Pulp Mill and its efforts to continue operating after the deadline for stopping the dumping of mill effluent into Boat Harbour.

The letter is signed by four Scotsburn execs: general manager Mark Baillie, procurement manager Donald Hume, controller Tracey Ferguson, and purchaser Scott Standen.

You can read the entire letter here.

There is of course nothing improper about people contacting government officials to express their concerns one way or another on any public matter, including the mill. But the letter caused me to wonder about the relationship between Scotsburn Lumber and Northern Pulp Mill, and so I spent considerable time over the holidays researching the history of each company, and in particular how the provincial government has financially supported the mill and perhaps, by extension, the forest industry generally.

The pulp mill has existed for many decades, but on April 28, 2009, Neenah Paper Company of Canada instructed Stewart McKelvey to incorporate Northern Pulp Nova Scotia Corporation “on our behalf.” Neenah was owned by two U.S.-based private equity firms — Blue Wolf Capital and Atlas Holdings — and the board of directors of the Northern Pulp consisted of various people from Georgia associated with the timber industry and New York financiers.

In 2011, the mill was sold to Paper Excellence, and in June 2011 the directorship of Northern Pulp Nova Scotia Corporation shifted to people associated with the timber industry in British Columbia and, importantly, the Widjaja family in Indonesia (which owns Paper Excellence). Former premier John Hamm was also a director.

The next year, the closed lumber mill in Scotsburn was resurrected. Reported CTV:

Owners of the Northern Pulp Nova Scotia Pulp Mill in Abercrombie Point are hoping that acquiring the Ligni Bel sawmill will help to ensure a steady supply of woodchips, as the Northern Pulp mill requires a steady supply of woodchips in order to make its bleached kraft pulp.

The Ligni Bel sawmill in nearby Scotsburn used to supply Northern Pulp with woodchips, but it shut down last November when over half of its wood supply was lost due to the closure of the NewPage paper mill in Point Tupper, N.S.

Now, an affiliate of Northern Pulp has started the process to purchase the Ligni Bel sawmill.

I worked through the directorship history of both companies (Northern Pulp and Scotsburn Lumber) from 2012 to the present, and found that management of the companies was intertwined. Here are two examples:

G. Wayne Gosse
• Officer and director with Scotsburn from July 17, 2012 to June 20, 2013
• Officer with Northern Pulp from September 12, 2008 to June 20, 2013
• Director of Northern Pulp from December 8, 2009 to June 20, 2013, and then again from August 29, 2013 to March 16, 2017

Andreas Kammenos
• President of Scotsburn from May 22, 2014 to July 28, 2014
• Director of Scotsburn from August 29, 2013 to July 28, 2014
• President of Northern Pulp from August 29, 2013 to April 2, 2015
• Throughout that period, Kammenos was a vice-president at Paper Excellence.

There are more connections that are harder to nail down: shared addresses and the like, but I think those two make the point.

I mean, it makes sense, right? Northern Pulp needed a steady supply of pulp, so bought the local sawmill.

Throughout, Northern Pulp was getting and continues to get considerable financial support from the provincial government — in fact, so much financial support that I’m sure I’ve missed a lot of it. But here’s what I’ve been able to piece together. First, let me just list the payments to either Northern Pulp or Scotsburn as reported in Public Accounts, with payments listed by department (“G&C” means “grants and contributions”):

2009
Northern Pulp Nova Scotia Corp
DNR: (G&C): 587,559.14
DNR: 109,742.44
Total: 697,301.58

2010
Northern Pulp Nova Scotia Corp
DNR: (G&C): 180,407.00
DNR: 160,184.14
Total: 340,591.14

2011
Northern Pulp Nova Scotia Corp
DNR: (G&C) 445,395.00
DNR: 9,760.27
Total: 455,155.27

2012
Northern Pulp Nova Scotia Corp
DNR (G&C): 79,629.85
DNR: 4,541,077.27
Total: 4,620,707.12

2013
Northern Pulp Nova Scotia Corp
DNR: (G&C): 522,604.50
DNR: 196,732.00
Total: 719,336.50

2014
Northern Pulp Nova Scotia Corp
Labour: 37,500.00
DNR (G&C): 969,837.64
DNR: 733,125.66
Total: 1,740,463.30

Scotsburn Lumber Ltd
Labour: 12,500.00
DNR: 159,458.94
Total: 171,958.94

2015
Northern Pulp Nova Scotia Corp
Economic & Rural Development: 61,411.25
Labour: 42,500.00
DNR (G&C): 445,652.49
DNR: 570,066.81
Total: 1,119,630.55

Scotsburn Lumber Ltd
DNR: 100,410.89
Total 100,410.89

2016
Northern Pulp Nova Scotia Corp
Labour: 16,540.00
DNR (G&C): 602,527.17
DNR: 78,719.53
Total: 697,786.70

Scotsburn Lumber Ltd
Labour: 20,000.00
DNR: 127,772.94
Total: 147,772.94

2017
Northern Pulp Nova Scotia Corp
Labour: 14,660.00
DNR (G&C): 457,143.68
DNR: 399,498.03
TIR: (G&C) 144,980.00
Total: 1,016,281.71

Scotsburn Lumber Ltd
Labour: 12,500.00
DNR (G&C): 160,742.26
Total: 173,242.26

2018
Northern Pulp Nova Scotia Corp
Labour: 29,076.50
DNR (G&C): 464,481.45
DNR: 31,353.38
TIR (G&C): 6,001,238.13
Total: 6,526,149.46

Scotsburn Lumber Ltd
Labour: 5,000.00
DNR: (G&C) 141,394.13
Total: 146,394.13

That’s somewhat more than $18 million in public money paid to Northern Pulp and about three-quarters of a million paid to Scotsburn Lumber since 2009.

I asked each department about the expenditures. Department of Labour spokesperson Shannon Kerr got back to me the very next day, with this chart:

I assume most large companies (and a lot of small ones) are taking advantage of these worker development programs.

Likewise, Transportation and Infrastructure Renewal spokesperson Marla MacInnis got back to me lickety-split, in just two hours, about the very large TIR payments to Northern Pulp. She wrote:

This is a contribution towards detailed design and engineering studies for a potential replacement effluent treatment facility.

The amount was determined based on estimates by design consultants. The overall total for design and engineering studies is $6.146 million. $6,001,238.13 flowed in fiscal 2017-2018, while $144,980.00 began this work in 2016-2017 and can be found on page 326 of Public Accounts.

The contribution allows negotiations with Northern Pulp to continue and will be credited towards any future agreement. This cost is part of a larger discussion with Northern Pulp which is yet to be concluded.

The payments were never announced publicly, but the CBC found them tucked into Public Accounts. Wrote John Laroche:

Nova Scotia Premier Stephen McNeil insisted Thursday there was no attempt to hide a $6-million payment last year to Northern Pulp, despite the fact his government only disclosed the information as a single-line item in a 351-page document on July 26.

The payment is contained in volume three of the supplementary estimates filed to officially close the books on the 2017-18 fiscal year. 

I appreciate the work of government spokespeople — we reporters can be demanding with our requests, and for the most part the spokespeople respond quickly and professionally. So I thank Kerr and MacInnis for their help.

Alas, I had less luck with Department of Natural Resources spokesperson Bruce Nunn. I emailed Nunn on December 17, asking “Can you tell me what those [DNR] payments were for? I’m guessing that that information will be self-explanatory in terms of the difference between ‘grants and contributions’ and ‘other,’ but if not, could you elaborate?”

It’s been 22 days, and I’ve had no response from Nunn. So your guess is as good as mine as to why DNR has paid Northern Pulp $10 million or so.

But wait… that list of payments to Northern Pulp doesn’t include provincial loans to the company. Joan Baxter has provided me with the results of a Freedom of Information request she made related to the loans, for which she was provided this chart:

Comments Baxter:

The total amount loaned or granted to the mill in that period, for which I had requested details (terms, payment rate, etc – all redacted), was $111.7 million.

The $75 million, 30-year loan in 2010 (for the land purchase of 475,000 acres from Neenah Paper) had a hidden gift to Northern Pulp (owned by NY companies Blue Wolf Capital and Atlas Holdings at the time) of $7 million, because the province bought back as part of the same deal 55,000 acres of land at $300 per acre, whereas NP had paid only $172.63 per acre. This is detailed on page 179 in [her book, The Mill].

There was also the $28.1 million federal grant from Peter MacKay and the Harper government in “green transformation” money in January 2011, just before the mill was acquired by Paper Excellence from two US private equity companies.

I recap some of the in-kind and financial gifts over the years between pages 215 and 219 in the book.

A few million here, a few million there, pretty soon we’ll be talking real money.

But of even further interest is how all this money going to Northern Pulp affects lumber exports.

This issue came up explicitly in a January 25, 2013 letter from Duff Montgomerie, then the deputy minister of Nova Scotia’s Department of Natural Resources, to Pedro Chang, the deputy CEO of Northern Pulp.

Wrote Montgomerie: “Although Northern Pulp does not own and control Scotsburn Lumber, we need to ensure that any support of Northern Pulp does not indirectly support Scottsburn Lumber under the Softwood Lumber agreement.” He goes on to say that the province’s and Northern Pulp’s lawyers have figured out how to move forward “without putting the trade agreements at risk.” Alas, the details of that arrangement were redacted from the copy of the letter we obtained.

You can read the letter here.

This looks, well, sketchy. It appears that while Northern Pulp may not “own and control Scotsburn Lumber,” the Widjaja family controls both Northern Pulp and Scotsburn through different holding companies. So the legal control is one level up, but the actual management coordination is, or at least was, right there through the persons of Andreas Kammenos and G. Wayne Gosse, as I detailed above.

So, despite Montgomerie’s statement to the contrary, did the payments to Northern Pulp amount to backdoor subsidization of Scotsburn Lumber, and were the payments actually in violation of the Softwood Lumber agreement? I don’t know. I’ve asked Zoltan van Heyningen, the executive director of the U.S. Lumber Coalition, for comment, but he hasn’t responded.

The Softwood Lumber Agreement expired in 2015. In 2016, the U.S. Department of Commerce determined that the Canadian softwood lumber industry was being unfairly subsidized by Canadian governments, and therefore imposed a subsidy margin of 3.34% to 18.19% on Canadian lumber, depending on the firm. Nova Scotian firms, including Scotsburn Lumber, were excluded from the penalty tariffs.

I’ve asked Mark Baillie, the general manager at Scotsburn Lumber, for comment; as of publication time, he hasn’t responded.

Update, 2:30pm: Mark Baillie responds:

I am not sure how or why the letter was forwarded to you, but you should also be aware that all other sawmills in the province are starting to voice their concerns about a potential mill closure and the impacts this would have on their business and the forestry industry in general.

As for the corporate relationship, the sawmill was purchased in 2012 by Northern Pulp and was re-sold in May of 2014. Scotsburn Lumber Ltd. the same as all other sawmills in the province, have contracts to sell their by-products to Northern Pulp and other Fiber agreements.

2. Pictou council on Northern Pulp

Last night, the Pictou County Municipal Council voted on a resolution supporting the Boat Harbour Act and closure of Boat Harbour by January 31, 2020.

The resolution was brought forward by Deputy Warden Wayne Murray, and reads as follows:

RESOLUTION

WHEREAS, after a leak of 47 million litres of pulp effluent onto Pictou Landing First Nation land and nearby waters in 2014, the Boat Harbour Act was passed with all party support in the Nova Scotia Legislature in May 2015, ending the use of Boat Harbour for wastewater effluent reception and treatment on January 31, 2020;

WHEREAS Pictou Landing First Nation has consistently stated its desire and expectation that the Boat Harbour Act be honoured and that Boat Harbour close as scheduled on January 31, 2020;

WHEREAS Pictou Landing First Nation welcomes public support for the closing of Boat Harbour as scheduled;

BE IT RESOLVED by the Municipal Council for the Municipality of the County of Pictou that Council support the stated position of Pictou Landing First Nation to honour the Boat Harbour Act and that the Boat Harbour Effluent Treatment Facility close as scheduled on January 31, 2020.

Someone who attended the meeting supplied the following account:

Pictou Landing First Nation Chief Andrea Paul made an impassioned and powerful speech to the council.

There was a lot of discussion about the resolution, and fairly widespread agreement that the mill shouldn’t close, that there must be a solution somewhere, and that by supporting the Boat Harbour Act, legislation that has already been passed provincially, the council would not be voting against industry or mill jobs.

But in the end, the council voted in favour of the resolution to support the Boat Harbour Act, and the closure date of January 31, 2020.

Those who voted against the resolution were: Randy Palmer, Andy Thompson and David Parker.

Those who voted to support the resolution were: Wayne Murray (Deputy Warden who introduced the resolution), Darla MacKeil, Deborah Wadden, Ronnie Baillie, Chester Dewar, Peter Boyles and Larry Turner.

3. Spring Garden Road

The city yesterday released three proposed options for the redesign of Spring Garden Road between Barrington and Robie Streets, although the most radical potential changes are between South Park and Queen Streets, where potentially cars and trucks will be eliminated completely during the day time.

I tried to work through the document to summarize the options, but they’re just too complex for me this morning. You can see the three options here (large PDF), or read Zane Woodford’s summary here.

I don’t have strong opinions about the proposed rebuild (anything we can do for the pedestrian experience is helpful) except to note that the entire neighbourhood around Spring Garden Road and Robie Streets is going to be an absolute mess for three or four years as the mini-Manhattan is constructed between Carleton Street and Robie Street. That construction is going to disrupt the entire peninsula, and especially the Spring Garden Road corridor. I know planners think these are different projects, that the building construction near Robie Street has nothing to do with the relatively minor construction needed to implement the changes a few blocks east, but I plead with them to consider the psychic disruption for a pedestrian walking from, say, the Central Library to the main Dalhousie campus.

4. Taxi driver charged with sexual assault

A police release from yesterday:

Police have charged a taxi driver with sexual assault in relation to an incident that occurred in Halifax over the weekend.

At approximately 5:45 a.m. on January 6 police responded to a report of a sexual assault that had occurred a short time earlier in Halifax. A taxi driver drove a female to a residence in Halifax and sexually assaulted her while she was in the vehicle.

To protect the identity of the victim, we are not releasing the address where the sexual assault occurred.

As a result of the investigation, officers arrested the taxi driver at a residence in Halifax without incident at approximately 3:30 that afternoon.

A 36-year-old Halifax man was charged with sexual assault and was released to appear in Halifax Provincial Court at a later date.

Sexual assault investigations are very complex. As part of our victim-centered, trauma-informed approach to sexualized violence, we work closely with victims to ensure they’re willing to proceed with a police investigation, which includes giving a statement about the incident and providing a description of the suspect if possible. Police must also ensure the victim’s privacy is upheld and well-being is fully considered; officers have been taking these measures since first speaking with the victim, and we’re now in a position to report this incident to the public.

5. Violence

Yesterday’s RCMP release is disturbingly detailed:

January 7, 2019, Yarmouth, Nova Scotia . . . On January 4 just before 8 p.m., an injured 17-year-old female entered a convenience store in Yarmouth. She was bleeding, had several injuries to her face and hands, and was screaming. Staff at the store called 911 for assistance. Police and paramedics attended the scene and the victim was transported to hospital via EHS.

The investigation has determined that the victim was picked up in blue Hyundai Tucson (small SUV) with Nova Scotia licence plate GGA 153, on Cliff St. by one female on a pretense, when the assaults began. Three people were in the back of the vehicle unbeknownst to the victim, and they started hitting her and punching her in the head.

They drove to Leighton St. in Hebron where the victim was further assaulted, including being dragged out of the vehicle, thrown to the ground and kicked and punched in the head. They then went to another person’s residence on Baker St. They then drove to the NSLC on Starrs Rd., and the victim went into the store with one of the suspects. They got back in the vehicle, and drove to another location on Green St. where the assaults continued and the owner of a dog tried to get it to attack her. The suspects then poured water all over her face and down her throat. She was dragged to the car by her hair. With a total of six people in the vehicle, they left that location and went to the convenience store on Hwy. 3. The victim who had been between two people in the backseat, was able to flee the vehicle, run to the store, and get help.

This was a targeted incident and the victim and suspects were known to one another. One suspect was arrested that evening, and two other females were arrested on January 5 and 6. They are facing Aggravated Assault and Assault with a Weapon charges. The two remaining suspects were arrested this morning. 

Government

City

Tuesday

Burnside Zoning Review – Public Open House, Case 21808 (Tuesday, 12pm and 4pm, in the building named after a bank, 259 Commodore Drive, Dartmouth) — Burnside is going to be turned into Shangri-La.

Halifax and West Community Council (Tuesday, 6pm, City Hall) — among other items, the council will consider a two-storey addition to the Delmore Buddy Daye Learning Institute at the corner of Cornwallis and Maitland Streets.

Wednesday

Audit and Finance Standing Committee (Wednesday, 10am, City Hall) — nothing terribly interesting on the agenda, but these are the sort of meetings where they add wild shit at the last minute because they think no one is watching.

North West Planning Advisory Committee (Wednesday, 7pm, Silver and Gold Room, Sackville Heights Community Centre) —  here’s the agenda.

Province

Tuesday

No public meetings today.

Wednesday

Public Accounts (Wednesday, 9am, Province House) — because the McNeil government doesn’t want the opposition to ask untoward questions, all the committee does anymore is look at the Auditor General’s reports. Ho-hum. This week, that means questions about the May 2018 report on Grant Programs.

On campus

Dalhousie

Tuesday

Trustworthy and novel dietary guidelines: Early results of systematic reviews on red and processed meat (Tuesday, 12pm, Room 409, Centre for Clinical Research) — Bradley Johnston from Dalhousie and Regina El Dib from Estadual Paulista University (Unesp), Brazil, will speak.

SURGE: Nova Scotia’s newest sandbox (Tuesday, 2pm, Room 2660, Life Sciences Centre) — I wrote about this yesterday.

Wednesday

Biomolecular interactions at the cell surface: My journey from helpful hormones to the deadly plague (Wednesday, 4pm, theatre A, Tupper Medical Building) — Kyungsoo Shin, from Sanford Burnham Prebys Medical Discovery Institute, San Diego, will speak.

Mount Saint Vincent

Wednesday

Two-Eyed Seeing (Wednesday, 11am, Multipurpose Room, Rosaria Student Centre) — Elder Albert Marshall, Cheryl Bartlett, and other Indigenous and Non-Indigenous “Knowledge Holders” present a workshop, free to Mount faculty, students and staff, $75 for public. Includes lunch. Register here. More info here.

Transforming Teaching and Learning Through Etuaptmumk [Two-Eyed Seeing] (Wednesday, 7pm, Multipurpose Room, Rosaria Student Centre) — Info: foodsecurity@msvu.ca

In the harbour

18:00: Thorco Liva, cargo ship, moves from Pier 9 to Bedford Basin anchorage

No arrivals or departures listed as of 9am.

Footnotes

I dislike winter.

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