
For the past half a year, while the Northern Pulp mill has been in “hibernation,” Northern Pulp — the company — has been one of seven related companies petitioning for creditor protection in the British Columbia Supreme Court, while it works on a “plan of compromise or arrangement” during a “restructuring phase.”
As the Halifax Examiner reported in the two-part series “Corporate Shell Game” (here and here), the petitioners seeking relief from debt payments, described in court documents as “persons,” are the following companies:
1057863 B.C. Ltd., Northern Resources Nova Scotia Corporation, Northern Pulp Nova Scotia Corporation, Northern Timber Nova Scotia Corporation, 3253527 Nova Scotia Limited, 3243722 Nova Scotia Limited, and Northern Pulp NS GP ULC
Two more affiliates, Northern Pulp Nova Scotia LP and Northern Timber Nova Scotia LP are not petitioners, but are “the main operating entities of the petitioners” and are, “indirect subsidiaries of 1057863 B.C. Ltd and Northern Resources Nova Scotia Corporation.”

Northern Pulp is 100% owned by Paper Excellence Canada Holdings Corporation and Hervey Investments, which are not petitioners. The Examiner has reported in depth on the complex and opaque nature of this corporate web, and its links to the corporate behemoths Sinar Mas and Asia Pulp & Paper, which belong to the billionaire Widjaja family of Indonesia.
The BC court appointed Ernst & Young Inc. as the monitor, and Northern Pulp works with the monitor to:
- ensure the orderly hibernation, care and maintenance of the Mill facilities;
- assess various options available to remain a viable enterprise going forward; engage in discussions with the Province of Nova Scotia (the “Province”) in connection with or arising from claims relating to the closure of the Mill and exploring alternatives for re-starting the Mill;
- work with regulators from the Province, local First Nations groups and other stakeholders to explore potential alternative means to preserve going concern asset value and prospects for re-starting the Mill; and
- reorganize, re-negotiate, or eliminate any existing contracts of an onerous nature or any non-performing assets.
Every month, Ernst & Young submits a “monitor report” to the court, which summarizes Northern Pulp activities.

The most recent monitor report was released on October 30, 2020. Its purpose, among other things, is to provide the BC court with an update on the petitioners’ activities (16 of them – listed from a to p), and including an update on the Community Liaison Committee (now called the Environmental Liaison Committee).
The Environmental Liaison Committee (ELC)
The objectives of the ELC, as outlined in the monitor report, may not be quite as grandiose and implausible as those listed in the Monty Python skit about an episode of an imaginary “How To Do It” show, which promises children that, “this week … we’re going to learn how to play the flute, how to split the atom, how to construct box girder bridges and how to irrigate the Sahara and make vast new areas cultivatable, but first, here’s Jackie to tell you how to rid the world of all known diseases.”
But the ELC certainly does have a very impressive and lofty order. According to the monitor report, the ELC is:
…designed to engage and solicit key stakeholder commentary to broaden the discussions surrounding environmental, community involvement, fishing, and marine issues, and define such issues and to formulate solutions, including suggestions with respect to the use of new technologies in the future operations of Northern Pulp and the development and construction of a replacement effluent treatment facility …
And it is expected to:
- a) review, discuss and identify all environmental, forestry, community involvement, and marine issues of Northern Pulp’s operations from a public perspective and attach priorities to each issue;
- b) identify potential environmental, forestry, community and marine solutions;
- c) reach a consensus amongst ELC members on the issues and solutions; and
- d) present findings to Northern Pulp for further consideration and action.
The Chair of the ELC is “Mr. Dale Paterson of Benton Services Inc.,” who is an “experienced pulp and paper consultant engaged directly by Northern Pulp who has been working closely with Northern Pulp, the Province, PLFN [Pictou Landing First Nation], and various other stakeholders prior to and throughout these CCAA [Companies’ Creditors Arrangement Act] proceedings.”
The ELC has 13 members, comprising:
… representatives from Pictou County community, Municipality of Pictou County Councillors, retired and current Northern Pulp employees, owners of companies within Pictou County, retired and current fishers, professors, private landowners and medical doctors.
The monitor notes that the ELC approached PLFN to be part of the Committee, but that “PLFN did not wish to formally participate in the ELC as a community member.”
The ELC is expected to submit a final summary of its reviewed plan to Northern Pulp on December 16, 2020.
Monitor confusion?
The monitor also reports on the Boat Harbour (BH) operations and decommissioning plans, and states that the petitioners have: “entered into a contract with the Municipality of Colchester to dispose of wastewater from BH through the Colchester Treatment Facility in Truro, Nova Scotia.”
The Examiner emailed Nova Scotia Environment for clarification on this, given that the federal Impact Assessment Agency is currently has not yet completed the environmental assessment for the Boat Harbour Remediation project, which presumably would include dealing with water from Boat Harbour.
Turns out the monitor had it wrong and this has nothing to do with Boat Harbour.
Nova Scotia Environment spokesperson Barbara Maclean replied that:
The wastewater is not from Boat Harbour, it is runoff water from the Mill site. It must meet the criteria outlined in the Ministerial Order before discharge. This is completely separate from the Boat Harbour Remediation project.
On the subject of decommissioning the Boat Harbour lagoon and the settling ponds that were part of the pulp effluent treatment facility, the monitor states that:
The Petitioners have established through independent testing that the Lagoon currently holds approximately 194,000 cubic meters of sludge at the bottom of the Lagoon (the “Bottom Sludge”), which existed prior to Northern Pulp’s purchase of the Mill in 1997. On top of the Bottom Sludge is approximately 81,000 cubic meters of sludge deposits produced by Northern Pulp during its period of operation (the “NP Sludge”). On top of the NP [Northern Pulp] Sludge sits 435,000 cubic meters of water. The Petitioners are responsible for the costs associated with the removal of the NP Sludge. At the time of the Interim Financing Budget being prepared, neither Northern Pulp nor the Province were aware that the Bottom Sludge existed. The discovery of the Bottom Sludge resulted in the Petitioners and the Province entering into several discussions with respect to a joint effort to remove all sludge material from the Lagoon but delayed the Petitioners original clean up plans in light of the added material being considered. The Petitioners and the Province ultimately determined they would independently proceed with respect to their respective clean up obligations. As such, Northern Pulp issued and received what they believe to be three quality bids from reputable firms with respect to the removal of the NP Sludge. The Petitioners are continuing to evaluate the most appropriate technology to remove the NP Sludge from the Lagoon. The NP Sludge removal project is expected to take approximately three (3) months to complete commencing in the Spring of 2021. Additional testing of the NP Sludge is required, and the Petitioners are working with the NSE [Nova Scotia Environment] to determine the final location where the NP Sludge will be disposed of.”
Once again, this seems to suggest that Northern Pulp will be removing sludge from Boat Harbour itself. However, Boat Harbour is slated for remediation by the Crown corporation, NS Lands, once the federal government grants environmental approval for the project, which will involve “hazardous waste-bearing sediment” being removed from the facility, “and stored on-site in an existing hazardous waste landfill.”
As reported here, more than 200 studies have been conducted over the years to find out what contaminants are in the sediment in Boat Harbour. It is not a pleasant mixture, containing cadmium, mercury, polycyclic aromatic hydrocarbons (PAHs), petroleum hydrocarbons, zinc, and, notably, dioxins and furans.
Ken Swain, who is managing the Boat Harbour Remediation project for NS Lands, told the Examiner in late 2018 that the remediation process of cleaning up Boat Harbour and restoring it as a tidal estuary would take between four and seven years and it:
… will involve dredging about a foot (30 cm) of the contaminated black sludge from the floor of the lagoon along with as little of the underlying uncontaminated brownish grey marine sediment as possible. This will be placed in “geo-tubes,” or fabric rolls, from which liquid will be removed and then taken away for treatment elsewhere. The remaining toxic sludge will go into a containment cell on the site.
Swain said that the site would require a long-term maintenance and monitoring plan, and that there was no other landfill in the province that could meet the requirements for storing sludge that contains dioxins and furans.
Yet the Ernst & Young monitor seemed to be informing the BC court that Northern Pulp would be dealing with this sludge from Boat Harbour, and that it was working with Nova Scotia Environment to find a place to dispose of it.
Once again, the Examiner sought clarification from Nova Scotia Environment, asking why the sludge removal was not part of the Boat Harbour Remediation Project, what toxins were in the sludge, what kind of facility would be required to dispose of it, and whether it required a secure landfill or if other locations were feasible.
NSE spokesperson MacLean replied:
Under the Industrial Approval, Northern Pulp Nova Scotia is the owner of the sludge in the Boat Harbour Effluent Treatment Facility, in accordance with the lease agreement with the Province. As the operator and Approval Holder for the Boat Harbour Effluent Treatment Facility and the owner of the sludge, Northern Pulp is responsible for the decommissioning of the Facility including the removal of any residual sludges remaining following the cessation of the use of the Facility. The Boat Harbour Remediation project, for which the Federal Environmental Assessment is ongoing, will remediate all sludges which were agreed to under the lease agreement between Northern Pulp and the Province. Nova Scotia Environment is currently waiting for confirmatory analysis of the sludges, as part of a decommissioning plan for the Aerated Stabilization Basin, which will dictate what kind of disposal facility will be acceptable.
While not exactly clear from this response, it would appear that the monitor was once again confusing the Boat Harbour lagoon itself with other parts of the former effluent treatment facility, namely the settlement ponds and the aeration basin.

Ditching around Canso Chemicals
The monitor report also states that the petitioners are engaged in ongoing discussions with Canso Chemicals, a former chlor-aklali plant adjacent to the mill, which once produced chlorine for the pulping process.
As the Examiner reported here, today Canso Chemicals is an entity of the Olin Corporation, a “leading U.S. manufacturer of ammunition,” and according to Olin Corporation filings to the US Securities and Exchange Commission, as of December 31, 2018, Olin owned 50% of Canso Chemicals and Northern Pulp the other 50%.
For more than 20 years, Nova Scotia Environment has been monitoring mercury contamination at the secure landfill site near Canso Chemicals where the mercury-contaminated soil, bedrock, and materials from demolished buildings are stored, and at the site of the former buildings.
The Examiner asked NSE if the mercury contamination was being considered in its discussions with Northern Pulp about ditching on the property.
Spokesperson Barbara MacLean replied that, “The site conditions at Canso Chemicals have been and will continue to be taken into consideration when evaluating any proposal for managing surface water from the Canso site.”
NP working in woodlands, collecting government rebates
The monitor report also offers information about its woodland operations, stating that the petitioners’ operations “oversee the development and approval of Crown, Northern Timber, and private harvest block plans, the submission of harvest packages to sawmills, the preparation of harvest schedules, and the delivery of harvested forest products to sawmills with harvest plant monitoring.”

Northern Pulp is also still on the receiving end of public dollars for its woodland operations.
According to the monitor, when those operations involve woodland roads on Crown land, the province can reimburse Northern Pulp for work on the roads. In addition, “the Province provides a rebate to Northern Pulp for spending on silviculture activities.”
The monitor continues:
Forestry Operations are profitable and provide a source of net positive cash flow to the Petitioners. Furthermore, it is the Petitioners’ view that the woodland operations must be maintained throughout the CCAA administration to ensure critical industry relationships are sustained and remain accessible when the Mill reopens. The woodland operations continue to support the forestry community including local sawmills and other sector participants who are critical to the long-term viability of the Mill and the Petitioners restart plans.
The Examiner has contacted Nova Scotia Lands and Forestry with several questions about Northern Pulp’s woodland operations and annual allocation on Crown land, stumpage rates it pays for harvesting on public land, as well as the amounts of the rebates for silviculture and woodland road work. As of publication, answers have not been received.
Affidavits allege Northern Pulp duplicity
Affidavits provided to the BC court in July on behalf of the province of Nova Scotia don’t paint a flattering picture of Northern Pulp’s use of provincial money.
In his July 21, 2020 affidavit to the BC Court, NS Deputy Minister of Labour and Advanced Education Duff Montgomerie states that during a conference call on July 9, 2020, Tom Dewtie of Northern Pulp acknowledged that:
… the $10 million advanced by the Province under the March 2020 Contribution Agreement was taken into the Northern Pulp bank account and not directed exclusively to the environmental clean-up expenses as required under the March 2020 Contribution Agreement. The Province also learned in that conference call that Northern Pulp had not directed matching funds of $10 million towards identified eligible expenses such as mill hibernation costs which continue to appear on its most current cash requirements spreadsheet.
Montgomerie also details the many “incentives” and loans (and concessions on those loans) that the province lavished on Northern Pulp between 2009 and 2013, and also the $6.1 million it provided in 2017 for the preparation of the design and engineering study for a new effluent treatment facility to replace Boat Harbour.
“Despite this financial support from the Province,” writes Montgomerie, “Northern Pulp did not take timely or effective steps to advance the required environmental assessment of a replacement effluent treatment facility. It failed to engage adequately and on a timely basis with the public and PLFN.”

Montgomerie recounts how Northern Pulp approached him following the conclusion of the March 2020 Contribution Agreement of $10 million from the province, asking that the government “backstop” the shareholder [Paper Excellence] who was “prepared to invest a further $50 million” to return the mill to operations.
According to Montgomerie’s affidavit, Northern Pulp was not exactly playing fair with the province:
In the course of discussions regarding the $50 million financing proposal the Province requested and received internally prepared unaudited financial statements of Northern Pulp and Northern Timber for the year 2018. It learned from these statements that approximately $59.9 million in loan repayments were directed from Northern Pulp to Paper Excellence Canada Holdings Corporation. During this 2018 year, Northern Pulp asked for and received accommodations regarding the timing of its loan repayments to the Province. The Province finds incongruous the actions of Northern Pulp in paying down large portions of its debt to its shareholder while seeking accommodation from the Province in following its payment obligations especially in light of Northern Pulp’s asserted current liquidity problems.
The province refused to provide the $50 million financing, and Montgomerie states:
The proposed expenditure of $50 million will not result in the Mill returning to an operating going concern. It will only, if successful, reach a point where the Petitioners have either obtained an environmental approval to construct the Replacement Effluent Treatment Facility or been denied such approval.
…
The entire cost of the loan contemplated … is to be borne by the Province and the end result of the financing is a negotiation with the Petitioners or a lawsuit with the Petitioners. This is not a restructuring plan but rather a proposed course of action to advance a lawsuit or claim against the Province.
Northern Pulp’s holiday on loan payments
Nevertheless, the provincial government did agree do Northern Pulp the favour of deferring, “all interest and principal payments on loans granted to Northern Pulp so long as Northern Pulp was taking active steps to obtain regulatory approval for the Mill as determined by the Province in its absolute discretion.”
Montgomerie’s affidavit states that if the province determines “that Northern Pulp is not actively taking steps to obtain regulatory approval, it will provide Northern Pulp with 60 days’ notice of the cessation of the deferral of payments” on those loans.
So perhaps it’s no surprise that the monitor’s report — which appears to be largely based on Northern Pulp’s own reporting on its activities — makes it sound as if Northern Pulp has been very busy indeed trying to restructure so it can get the mill up and running again.
If Northern Pulp can continue to convince the Nova Scotia government that it is seriously working hard on that — and somehow coming up with solutions for the many problems that have already been identified with its proposal for a new effluent treatment facility — then it can also continue to enjoy a holiday on repayments on the $84,874,246.45 that it still owes the people of Nova Scotia.