Northern Pulp, past and future: It ain’t over till it’s over

On December 20, 2019 Premier Stephen McNeil announced that the province would be respecting the Boat Harbour Act, and that Northern Pulp would have to stop pumping its effluent into the Boat Harbour treatment facility on January 31, 2020.

Without the use of Boat Harbour, the Northern Pulp mill in Pictou County would have no place to send its effluent after that date.

Moments after the premier’s announcement, Brian Baarda, CEO of Northern Pulp’s parent company, Paper Excellence, part of the corporate empire of the billionaire Widjaja family of Indonesia, announced that this decision ensured the “closure of Northern Pulp” and the “devastation of Nova Scotia’s forest industry.”

Just two weeks after Baarda’s dramatic statement and hyperbolic prediction of doom and devastation, he apparently changed his mind.

On January 2, Northern Pulp informed Nova Scotia Environment that it intended to continue with the environmental assessment process for a new effluent treatment facility after all.

This about-face came as something of a surprise, to say the least.

Northern Pulp had failed — on two occasions — to provide the provincial environment department with the information it needed to assess or approve the proposed new effluent treatment facility.

In March 2019, the department found 19 key deficiencies in the registration documents for the project that Northern Pulp submitted in January that year. Then on December 17, Environment Minister Gordon Wilson announced that the focus report the company had submitted in October was also missing information needed for the assessment.  (You can read more about the deficiencies in Northern Pulp’s submissions here and here.)

Minister Wilson decided a full environmental assessment report was required, which could take up to two years.

Northern Pulp had repeatedly said that if the Boat Harbour Act were not amended to give it time to get a new treatment facility approved and constructed, it would have no option but to close the mill.

Turns out that wasn’t true.

Northern Pulp changes its tune

After Northern Pulp informed Nova Scotia Environment that it wanted to continue the environmental assessment process for a new effluent treatment facility to replace Boat Harbour, the department had to spring back into action on a file that most assumed was closed.

Late on Wednesday this week the environment department issued a statement:

…”Since the company has chosen to carry on with the environmental assessment process, we are legally required to continue,” said Environment Minister Gordon Wilson. “I want to assure Nova Scotians that, as Premier McNeil has confirmed, the Boat Harbour Act will be enforced as of Jan. 31.”

The company must submit an environmental assessment report. Draft terms of reference for the report were released today, Jan. 8.

The public and government reviewers have 30 days to comment on the draft. Once that happens, the company will have a chance to comment on the draft. A final terms of reference will be provided to the company by early April. Once the terms of reference are final, the company will have up to two years to complete the environmental assessment report.

The draft Terms of Reference for the environmental assessment (EA) were then posted online for public comment.

It was not until Premier Stephen McNeil met with reporters after his cabinet meeting yesterday morning, and spoke about Northern Pulp’s plans to somehow “mothball” the mill while Northern Pulp continued with its EA, that the company issued its own statement on the EA process and proclaimed its desire to stick around in Nova Scotia.

Since purchasing Northern Pulp Nova Scotia in 2011, Paper Excellence Canada has invested more than $70 million in people, technology, and processes to improve our production and reduce our environmental impact. Despite recent set-backs, we remain committed to the province and want to operate in Nova Scotia for the long-term. We intend to complete an environmental assessment for our proposed effluent treatment facility and are in the process of reviewing the terms of reference. Our team is currently focused on supporting our employees, developing plans for a safe and environmentally responsible hibernation, and working with the Government of Nova Scotia and stakeholders to determine next steps.

Paper Excellence / Northern Pulp communications director of the last four and a half years, Kathy Cloutier, left the company at the end of 2019 to join the British Columbia crown corporation, Partnerships BC, so it’s hard to say who handles PR for Northern Pulp these days.

But whoever wrote the statement seems to be suffering from amnesia, or perhaps hopes the public is. Gone is the stark ultimatum that Premier McNeil’s refusal to amend the Boat Harbour Act gives the company no choice but to close. Instead there is a vague reference to “recent set-backs” and the new term — hibernation — for what Northern Pulp is planning for the mill after January 31.

Lots of government monies to “invest”

As for the claim that the company has invested $70 million in “people, technology, and processes” to improve mill production and reduce its “environmental impact,” that also bears some scrutiny.

Northern Pulp may well have put $70 million in the mill, but how much of it came from government?

Here are some loans and grants that Northern Pulp has received since 2011:

Northern Pulp is also still benefiting from the 30-year $75 million loan given to its affiliate, Northern Timber Nova Scotia Corporation, by the NDP government of Darrell Dexter back in 2010, for the purchase of 475,000 acres of land in Nova Scotia. The loan included a hidden gift of $7 million when, as part of the land deal, the province immediately purchased 55,000 acres of the land from Northern Timber Nova Scotia at 1.7 times the price the company had paid per acre.

In 2010, Northern Pulp was owned by two New York private investment companies, Blue Wolf Capital and Atlas Holdings. The next year, Paper Excellence acquired Northern Pulp and all its affiliates. Former Progressive Conservative Premier John Hamm, who had already joined the board of Blue Wolf in August 2010, later became chair of the board of Northern Resources Nova Scotia Corporation, the umbrella firm for the Northern Pulp family of eight companies registered on the Nova Scotia Registry of Joint Stocks.

Now, nearly a decade later, the Northern Pulp affiliate, Northern Timber, still owes the province more than $65 million on that $75-million loan. And of course it owns 420,000 acres of the province purchased with that loan.

The mill has also had some federal money to “invest.” In January 2011, just a couple of months before Paper Excellence acquired Northern Pulp, Peter MacKay, then MP for Central Nova and federal defence minister in the Conservative government of Stephen Harper, announced that the mill would receive a grant of $28.1 million in “Green Transformation Program” funds.

According to the “Frequently Asked Questions” section on a now-defunct Northern Pulp website that I accessed in 2016, that federal grant was spent to “improve energy and environmental performance” of the mill, including an upgrade to the power boiler, improvements to the “recovery cycle” and “recycling of cooking chemicals to minimize losses,” and improvements to the mill’s “odour control system.”

On the same erstwhile website there was also this “frequently asked question”:

In recent years Northern Pulp has been provided with over $110 million in provincial loans. What projects have these funds assisted with?

This is the answer Northern Pulp gave:

Over the last 4 years, there has been significant investment in the mill’s operations and environmental performance, with more projects currently underway. While our mill has been in operation for over 47 years, the majority of significant environmental improvements and investment have occurred over the last decade, significantly with its most recent owners Paper Excellence Canada (PEC). We here at Northern Pulp and PEC are committed to continuing to improve Northern Pulp’s environmental footprint.

All funds received from the government of Nova Scotia since 2009 ($111.7 million) are repayable loans with interest, with the exception of $3.4 million.

Land Purchase ($75 million) – to purchase 420,000 acres of forest land

Maintenance & Capital Expenditure ($15 million) – to fund projects in Northern Pulp including wastewater pipeline replacement

Precipitator Replacement Project ($12 million) – to assist in installing a state-of-the-art unit to improve the removal of dust particulates from the Mill’s air emissions*

Chip Plant Project ($5.2 million) – to assist in installing a state-of-the-art on-site chip plant to reduce operating costs

Natural Gas Project ($4.5 million) – to enable natural gas to be available at the Mill site in order to eliminate heavy oil consumption and reduce greenhouse gases [emphasis in the original]

* Northern Pulp received the repayable loan to replace the existing recovery boiler precipitator which will significantly reduce air particulates while saving the Company $1.3 million per year in chemical costs. This investment allows Northern Pulp to implement new technology sooner to improve air quality. The $12 million loan consists of a $9.5 million loan repayable loan with interest and a $2.5 million forgivable loan with conditions.

All of this would suggest that a fair amount of the $70 million that Northern Pulp claims it has “invested” to improve production and reduce its environmental impact came from loans and grants from the provincial or federal governments. In other words, public money. Which means it comes from you and me.

In addition to that financing, according to Nova Scotia Public Accounts, between 2011 and 2019 the provincial government gave Northern Pulp nearly $18 million, which came from the Departments of Labour and Advanced Education, Natural Resources (now Lands and Forestry), and Transportation and Infrastructure Renewal.

Of that, $6 million went to pay for studies and the design of Northern Pulp’s proposed effluent treatment facility and the environmental assessment process.

I had hoped to ask Premier McNeil at yesterday’s press conference following the meeting of the forestry transition team if the province would be chipping in any more money for Northern Pulp to continue the environment assessment process, now that it has decided it doesn’t have to close.

Unfortunately, those of us joining the press conference by phone were given very little time for questions, so I had no opportunity to ask him that question.

The mill’s industrial approval is coming to an end

Northern Pulp’s current industrial approval, which permits it to operate, expires on January 30, 2020.

The industrial approval states that:

One (1) year prior to decommissioning/closure of the Facility, or any part thereof, the Approval Holder [Northern Pulp] shall submit a detailed closure plan to the Department for review. The plan shall include but not be limited to, the estimated total cost for labour, equipment, supplies of services of a 3rd party contractor to undertake all the work necessary to decommission the Facility, or any part thereof, as well as a plan for dealing with all of the wastes and residual materials / contamination in accordance with  any Provincial legislation including the Act, the Regulations, Policies, Procedures, Guidelines or other agreements entered into by the Province which may impact rehabilitation, as well as a long term monitoring plan for the site. 

A week ago today, I wrote to the Department of Environment to ask whether Northern Pulp had submitted a closure plan, as it should have done a year ago, given that it was aware that Boat Harbour would have to close at the end of January 2020. I also asked if Northern Pulp had submitted a long-term monitoring plan for the site, and if so, for how long the company would have to monitor the site. And I wanted to know if the closure and rehabilitation plan would include the area contaminated by mercury under and around the Canso Chemical property, which is adjacent to the pulp mill. Northern Pulp owns 50% of Canso Chemicals, while the Olin Corporation owns the other half.

Despite sending a polite reminder this week that I’m still waiting for answers, as of this writing I’ve had no reply from Nova Scotia Environment.

When Environment Minister Wilson announced in December that Northern Pulp would be required to submit an environmental assessment report, reporters asked him if Northern Pulp had submitted an application for a new industrial approval. He said the company had submitted an application on December 5, but that it was “not complete.” He said once the environment department received a complete application, it would have 60 days to assess it before either approving it or asking for revisions.

According to Pictou Landing First Nation legal counsel, Brian Hebert, the government would also be obliged to consult with PLFN on the industrial approval application.

So far, according to PLFN Chief Andrea Paul, there has been no consultation on a new industrial approval.

Nor, she told me, has there been any consultation on a “hot idle” of the mill.

Last week, the president of Elmsdale Lumber, Robin Wilber, who had just been appointed by the government to the forestry transition team to “support sector workers and businesses affected by the announced closure of the Northern Pulp mill,” told Saltwire reporter Adam McInnis that he had had a conversation with someone from the company about the possibility of putting the mill into “hot idle.” Wilber said that would mean using fresh water to keep the mill boilers going and then releasing this “water” into Boat Harbour after January 31. He maintained this would not contravene the Boat Harbour Act because it would not be effluent.

After a flurry of media interviews in which he continued to float the “hot idle” balloon, Wilber was dropped from the transition team by its leader, Kelliann Dean, deputy minister of Intergovernmental Affairs and Trade. In her statement, Dean said Wilber was no longer part of the transition team because he was focussed on the future of Northern Pulp and its options, which is “the company’s issue” and not on the table of the forestry transition team.

But the story of the mill is far from over

It turns out that Wilber wasn’t right about the mill wanting to go into a hot idle. Nor was his contention that “water” coming from a mill in hot idle would not qualify as effluent.

Brian Hebert told me that the Boat Harbour Act prohibits any form of effluent from flowing into Boat Harbour, and that “effluent is simply wastewater.” He said if there were any plans to keep the mill idling and sending wastewater to Boat Harbour, the province would have to consult with PLFN.

In his press conference Thursday following the first meeting of the forestry transition team, Premier McNeil made it clear that the forestry transition is not related to Northern Pulp, and that production at the mill will stop on January 31, as planned.

He said the mill will be “mothballed” while the environmental assessment process proceeds, and that the province will have to deal with the effluent pipe that runs from the mill to Boat Harbour, which will need to be cleaned and then severed. The federal environmental assessment for the remediation of Boat Harbour may take another 18 months, after which the project can begin.

If the mill wants to operate again in the province, McNeil said it would need to meet the province’s environmental standards.

But that environmental assessment process could take another two years, and even if it were approved, it could take another year or two for the mill to construct a new effluent treatment facility. Is Northern Pulp really prepared to maintain the mill that long in a state of “hibernation”? Or is it hoping for a different government to be elected, one that might be more compliant than Stephen McNeil’s Liberals?

Speaking on CTV television on Thursday evening, Paper Excellence Vice-President of Environment, Health & Safety and Communications, Graham Kissack, said that he “certainly hoped” that the plant would one day go back into operation, and that the period until that happened could be “of the magnitude” of five years. He said for the time being, the idea was to try to protect jobs at the mill, but that over time, if necessary, the company would be looking to relocate employees to a jurisdiction that is “more friendly to business than Nova Scotia.”

He said the company had spent $11 million on studies for the EA process He neglected to mention that the province had given Northern Pulp $6 million for the studies and the environmental assessment process.

Kissack said the idea was not to “hot idle” but to “hibernate” the mill:

It’s our intention to safely and in an environmentally sound manner, to hibernate this facility to protect the assets so it can run in the future, and to secondly, protect the receiving environment.

Confounded by what that really meant, I turned to Brian Hebert for his thoughts on Northern Pulp’s plans for the mill and its change of heart about closing it. Hebert has been representing PLFN on the Northern Pulp legal file since 2006.

This is his reply via email:

As I’ve said before, other mills have been mothballed for several years when, for example, market conditions (i.e. pulp prices) have made operating uneconomic. They can be restarted if economic conditions improve. NP [Northern Pulp] could be looking at the long term profitability of the mill and saying it is worth it to mothball now, try to get the approval and then start back up if it is still feasible at that time. In this particular case with the Province paying some or all of the costs, why wouldn’t they? 

Further, if they are serious about suing the Province over the lease and indemnity agreement they need to mitigate their losses by doing as much as they can to minimize their damages. In this case if they are going to argue that the Province owes them for loss of future profits the Province or a court could rightly ask — did you do everything you could to avoid those lost future profits. For example, did you complete what you needed to in order to get a new ETF [effluent treatment facility] approved? So the decision may be tactical based on NP’s legal duty to litigate losses in the event of a future claim against the Province or it may be just a business decision based on the economics. The mill will be quite worthless as an asset if it just dies. As long as there is a functioning plant and a chance to get an environmental approval the Mill has some value and could generate profits in the long run. 

Perhaps it is a combination of both of these.

One thing that is sure, however. The Northern Pulp story is far from its ending.

Or, as Hebert said to me in March 2017 when I interviewed him for the book I was writing about the mill, “It ain’t over till it’s over.”