Nova Scotia paper mill revived in 11th-hour twist

The province's deal with Pacific West Commercial Corp. to open the former NewPage paper mill is, once again, going forward, said Premier Darrell Dexter in a press conference Saturday evening.

The premier said the new agreement is a better deal for Nova Scotians.

Dexter said under this new agreement, all of the investments the province agreed to support will be paid in full within 12 years.

"The bottom line is that under this new agreement, the total amount the province will contribute to support the workers, families and businesses throughout the Strait should be repaid in as early as 12 years and the province will have earned about $150 million in tax revenue," Dexter told the press.

"This government has worked for a year now to restart that mill," said Dexter. "We didn't do this because it was popular — we did it because it was the right thing to do."

Dexter said his team, representatives from Nova Scotia Power and members of Pacific West worked through the night and all day Saturday to reach a deal to reopen the mill.

"It happened because people on both sides of the table recognized that it was too important to let it fail," said Pacific West CEO Ron Stern.

The Nova Scotia Utility and Review Board had given until 4:15 p.m. on Friday for a revised rate application filing by Pacific West.

The board made clear that, provided an application was received by this deadline and that ratepayers would be no worse off under the revised filing, it would be in a position to provide a revised order on or before the court-imposed closing deadline of Sept. 28.

Despite the parties' best efforts, that deadline could not be met and both sides walked away from the table Friday night.

Archie MacLachlan, vice president of the union representing the paper mill workers, said the workers he has spoken to are looking forward to making paper. But he said that people in Port Hawkesbury won't really believe the deal is done until paper is rolling out of the mill.

"I've learned a long time ago that what's true today is a lie tomorrow," he said. "But we're certainly very pleased with the developments late today."

Stern said he has not fully overcome the issue with the Canadian Revenue Agency seeking tax breaks for the money owed by the mill's previous owners.

"We are operating with a lower level of profitability than we had planned for and we believed was the right level to have. But after working on this for a year and seeing all the commitment that other people made towards this," said Stern, "we just thought the right thing for us to do was to accept a lower level of profitability and a somewhat higher level of exposure and just figure out how to make it work, even without that tax structure. That's what we're going to do."

Stern said the deal will still have to go through the UARB process next week.

"That's critical," he said. "There are some other issues that we have to get completed, which I believe will be."

"Once we've completed that, we hope to be making paper."

Stern said the mill could be making paper as early as the first week of October.

"The mill itself will, in the start-up phase, will be close to 300 people. There's another 400 people involved in the woodlands operations."

In response to a comment on trouble in the pulp and paper industry, Stern said he is confident the Port Hawkesbury mill can be profitable in an industry that has seen a global decline.

"We're hoping for a very substantial lifespan," said Stern.

"We're hoping that there is going to be a bottom in the declining use of paper and that we will be, hopefully, the most competitive mill. We will certainly be the highest quality. Our goal is to be the lowest cost mill."

Dexter said Pacific West and the province agreed that all elements of the province's previously announced support of $124.5 million will remain the same, with the following exceptions:

The $40-million repayable loan can be paid off within 12 years through the new rate deal provided by Nova Scotia Power. "The province will forgive no more than what is paid to the province in taxes, to a cap of $40 million, over a maximum of 12 years," Dexter stated in the release.

Profit-sharing for the province will increase from a cap of $9 million, to a cap of $24 million.

Pacific West will incorporate other mills and related assets into the mill, to be called "Port Hawkesbury Paper". "This will improve its competitive position through disposition of the accumulated tax losses," said Dexter.

As a result of the money committed by the province, Dexter said Nova Scotia will share the benefits of Pacific West's incorporation into Port Hawkesbury Paper. "For every dollar of accumulated tax losses used by the company, the province will be paid 32 cents, and 18 cents will be directly reinvested in the mill to improve its competitive position, subject to review of the proposed investments by the province," said Dexter.

Nova Scotia Progressive Conservative leader Jamie Baillie told CBC News that he is happy for the mill workers but remains "concerned" about the deal with Stern Group, the parent company of Pacific West Commercial Corp.

"The government said they wouldn't make it richer but, in my read it's $40 million richer, at least, from the old deal because they took a loan that was going to be repaid and made it completely forgivable," he said.

"Yet we still don't have any guarantees about future jobs or that we'll have a sustainable mill at the end of the day."

Baillie also said he was skeptical that the new deal will save the province more money.

"We're not only taking the risk that there will be a profit in the local mill but we're also taking the risk that the profit of a whole group of Stern mills — that they're going to roll into the local company. That's risk that the taxpayers of Nova Scotia are not able to carry without appropriate guarantees."

He went on to say the deal's goal should be to benefit families but said this may not be the best deal for the long-term future of the area.

"I don't like getting into the situation that it's this or nothing," said Ballie. "There are many ways to create jobs in a modern, dynamic economy and the government has decided that a bailout for the Sterns is the way to go."