Northern Pulp, affiliate company owe Nova Scotia government more than $85 million

NOVA SCOTIA (From news reports) -- Northern Pulp and an associated company owe the province more than $85 million.

While the company and the Nova Scotia government have acknowledged the existence of outstanding debts to the taxpayer, neither have been willing to disclose the amounts.

Local media received the details on the interest-bearing loans via a Freedom of Information request.

News of the magnitude of the debt comes as staff at the Nova Scotia Department of the Environment prepare a recommendation to Minister Gordon Wilson on whether to approve the construction of Northern Pulp's proposed new effluent treatment facility.

That decision must come, according to legislated timelines of the Environmental Assessment process, no later than Dec. 13.

"We knew there were loans outstanding but we didn't know the amount was that high," James Gunvaldsen Klaassen, a lawyer with the firm Ecojustice, said of the three outstanding loans totalling $85,478,537.48 to Northern Pulp and an associated company.

Gunvaldsen Klaassen argued in a February letter to then environment minister Margaret Miller on behalf of the group Friends of the Northumberland Strait that the province's contractual obligations to Northern Pulp would lead to a "reasonable perception of bias" on the part of the department deciding the company's fate.

He argued in the letter that the province should hand the decision on whether to allow the new effluent treatment facility over to the federal regulator.

Justices for both the Nova Scotia Supreme Court and the Nova Scotia Court of Appeal have also stated in recent rulings that the province is in an apparent conflict of interest.

"If the province is to become the lender, not only is it providing the means by which the (effluent treatment facility) will be built, but it will have an interest to insure that the mill will continue to remain in operation into the future so as to at least recover the taxpayers' investment," wrote Supreme Court Justice Timothy Gabriel in a decision that demanded the province consult with the Pictou Landing First Nation about funding Northern Pulp's new effluent treatment plant.

Northern Pulp Nova Scotia Corporation owes $20,093,700 on two loans dating back to 2009 and 2013.

Those loans, which bore respective interest rates of 3.3 per cent and 3.22 per cent, had a total initial value of $29,700,000 but the company has paid back $9,606,300.

Northern Timber Nova Scotia Corporation, a company affiliated with Northern Pulp, owes the province $65,384,837 on a $75-million loan made in 2010 so that it could purchase 172,000 hectares of woodland from a former owner of the Abercrombie Point Mill. Like Northern Pulp, Northern Timber lists as its directors former premier John Hamm, mill general manager Bruce Chapman and Choong Wei Tan, who is associated with Northern Pulp owner Paper Excellence.

All three loans were announced publicly at the times they were made.

Perceptions matter as the clock ticks down toward not only the environment minister's decision but also the Jan. 31 legislated date for the closing of the Boat Harbour effluent treatment facility.

Those opposed to the new facility which would send treated effluent directly into the Northumberland Strait fear that if an environmental approval is granted Premier Stephen McNeil will recall the legislature and use his majority to pass an extension of the Boat Harbour Act.

That would allow the mill and the Boat Harbour facility to continue operating while a new effluent treatment facility is constructed and prevent significant damage to the province's forestry industry. Most of the just over a million tonnes of wood chips consumed by the mill each year are a byproduct of lumber production at Nova Scotia sawmills.

Harvesters and sawmill operators have warned that a prolonged shutdown of Northern Pulp would bankrupt them.

The impassioned debate can be seen in road signs that have gone up around the province.

There are the green signs in yards reading Nova Scotia Needs Forestry and also Honour the Boat Harbour Act signs put up by fishermen, environmental activists, concerned citizens and the Pictou Landing First Nation.

The premier's office declined to comment on whether it would consider an extension to the Boat Harbour Act if the environmental assessment is approved, calling the question "speculative."

"Northern Pulp's proposal for a new effluent treatment facility must meet the province's environmental standards and regulations," reads a written response by Tina Thibeau, director of media relations for the province.

"The final decision on whether the new facility gets the go-ahead will be based on science and reason, adhering to the Environment Act."

Scott Doherty, executive assistant to the president of the union representing Northern Pulp workers, doesn't see the province allowing the mill to shut.

"(The mill) is an integral part of the fabric of Nova Scotia and I can't imagine the government will allow it to close based on the fact the employer wants to invest money and make it environmentally safe," said Doherty on Thursday.

"An extension or some other solution will be found to make sure the environment is protected and the mill can go ahead and build a new treatment facility."

Activated sludge effluent treatment facilities like the one proposed by Northern Pulp are being used at mills in British Columbia and Alberta. The towns of New Glasgow, Stellarton, Trenton and Westville currently share an activated sludge system for treating their sewage that empties into the East River and ultimately ends up in the Northumberland Strait. Pictou has its own activated sludge system and 19 effluent treatment facilities are operated on Prince Edward Island.

Northern Pulp's proposed system would be by far the largest, with a capacity to discharge up to 85 million litres of treated effluent a day into the strait - roughly four times the output of the East River Environmental Facility.

Historic agreements signed by the province mean that the taxpayer will be on the hook for some of the cost of the new effluent treatment plant if it is approved and potentially for the mill's lost profits if it isn't.

A freedom of information request filed by The Chronicle Herald last year showed that negotiations on the amount the province would owe Northern Pulp for cancelling its lease to Boat Harbour a decade early are based at least in part on the estimated cost of building the new facility (thought to be in excess of $100 million).

Thibeau's emailed response on behalf of government did not answer the question of whether money already owed by Northern Pulp and Northern Timber would offset any settlement on the province's liability for ending the Boat Harbour lease early.

The province has already admitted it has been footing the bill for the controversial new facility's design ($6 million paid thus far). 

Then there's the cost of cleaning up historic pollution at Boat Harbour. The federal government has committed $100 million to the estimated $217 million cost of remediating Boat Harbour and the province is picking up the rest.
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