On the hook
Successive governments signed away taxpayer dollars
On Feb. 18, 2014, Stephen McNeil, the newly minted premier, had just said no to a request for money from Northern Pulp.
In a speech to the Halifax Chamber of Commerce that set out the Liberal government’s agenda, he gave a word of warning to industry.
“We will be a partner in economic development across the province, but we cannot be your banker and we cannot be the lead,” McNeil said.
But the province was already Northern Pulp’s banker.
Also, a series of contracts signed over the years by politicians of every political stripe had put taxpayers on the hook for the kraft pulp mill’s environmental liability, whatever that might be.
“I have to live by the rule of law. Previous governments have signed contracts,” McNeil told The Chronicle Herald. “That’s what I am doing.”
Government’s latest estimates put cleanup costs at more than $200 million.
Then there’s the question of how much the government owes Northern Pulp for cancelling its lease at Boat Harbour — where its effluent now goes — nearly a decade early.
But it’s not an entirely onesided relationship. According to its own figures, the mill is responsible for 339 direct jobs and spends $315 million annually, primarily on wages (averaging over $84,000 a year), trucking and purchasing fibre.
It also buys the woodchip residue from most of the province’s sawmills and is a centre of supply and exchange for an industry that, according to a 2016 Gardner Pinfold Consultants analysis, directly contributes $419 million to Nova Scotia’s gross domestic product.
The numbers are big on both sides of the ledger with Northern Pulp.
As the January 2020 legislated deadline for the closure of the Boat Harbour effluent treatment site — owned by the province and leased to the mill — draws nearer, the long relationship between the mill and government has turned to finger pointing.
“The Boat Harbour Act was introduced by the Nova Scotia government in May 2015 having no advance notice or consultation with Northern Pulp or (owner) Paper Excellence,” reads a statement from the mill titled Has Northern Pulp Delayed or Stalled the Replacement Project?
That statement blames delays in the effluent treatment planning process on the province for attempting to tighten water use limits set out in the mill’s industrial approval. Negotiations around that approval, which allows it to operate, ran into 2016 and delayed the preliminary engineering work on Boat Harbour’s replacement.
Northern Pulp also argues that the province has increased the number of studies the mill must conduct as part of the environmental assessment process.
“That number has increased to 28. Some of these studies can only be conducted during certain seasons of the year.”
For his part, McNeil won’t consider extending the deadline unless the Pictou Landing First Nation and other local stakeholders request it.
“We gave plenty of notice,” said McNeil. “We thought we’d have an (environmental assessment) long before now.”
Chief Andrea Paul will not approve a delay in closing Boat Harbour and, along with local fishermen’s associations, any replacement that puts treated effluent into the Northumberland Strait.
But there aren’t any northern bleached softwood kraft pulp mills operating anywhere that don’t end with an effluent pipe.
So what happens if Northern Pulp shuts for good?
McNeil confirmed the government is planning for that potentiality.
Paul Black was in the thick of it from the start.
Darrell Dexter’s NDP had just taken power in 2009. The financial crisis of 2008 had seemingly spared the province’s pulp industry.
But there were surprises to come.
“The reality is you inherit positive things that were started and moved along by predecessors, and you inherit results of decisions that either don’t turn out as intended or were bad decisions,” said Black, Dexter’s director of policy.
The Northern Pulp mill, built in 1967, had been sold by owner Neenah Paper in 2008 to Atlas Holdings LLC and Blue Wolf Capital Management, investment firms that buy up operations they believe can be made profitable through restructuring, then sold.
On its way out the door, the previous Tory government had loaned the newly formed Northern Pulp Nova Scotia Corp. $15 million to keep it afloat during the restructuring. Then the Dexter government loaned the company $75 million in 2010 to buy 475,000 acres of woodland from Neenah Paper.
The next year, Paper Excellence Canada, a subsidiary of Asia Pulp and Paper, bought Northern Pulp Nova Scotia Corp. from Blue Wolf as part of a cross-Canada mill buying spree.
Under Paper Excellence’s ownership, the mill got another loan for $14.7 million in 2013 for equipment that would decrease pollution coming out of its stacks.
So the province became a banker, and taxpayers may also be on the hook for an undetermined amount of money if the mill is forced to shut.
But the government is aware of it.
“I’m sure there are conversations about that,” said Premier Stephen McNeil. “At the same time, this province has a loan which is owed.”
How much taxpayers are still owed by Northern Pulp is something taxpayers are apparently not allowed to know. On Dec. 27, the Department of Business refused to provide SaltWire Network with details on the loans, saying they are “commercially sensitive.”
While the province is tightlipped with details, Kathy Cloutier, spokeswoman for Northern Pulp parent company Paper Excellence, said that as of November the company had paid back $34.6 million in interest and $18.8 million on the principal — whatever that is.
“You never have complete information,” said Black of how problems come from left field and decisions are made on the fly. “The situation doesn’t stop to let you analyze. It continues to move.”
After the NDP were voted out in 2013, Black started his own consulting firm, and Blue Wolf became a client.