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Deal between Nova Scotia, Paper Excellence saves pensions of Northern Pulp Mill workers

by HR News Canada
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Workers’ pensions are being saved as part of the agreement reached between Nova Scotia and Paper Excellence, the parent company of the Northern Pulp Mill in Pictou, N.S.

“Ensuring fair treatment for the company’s pensioners was a priority for us, as well as finding a pathway to a stronger economic outcome for Nova Scotians,” said Premier Tim Houston. “We’ve come a long way and have come to a resolution that is fair to all sides – settling legal and financial issues, protecting pensioners and setting a new path forward.

The agreement addresses several issues, including a $450-million lawsuit against the provincial government related to the Boat Harbour Act and the mill’s closure in 2020, about $99 million in loans the company owes to the province, pensions of former mill workers and the opportunity for a significant new economic investment – a new mill – in rural Nova Scotia, according to the government.

The cost of the pensions is pegged around $30 million, according to the province. And it will be funded regardless of whether a new mill can be built or if the existing mill is decommissioned.

That news is being hailed by Unifor, which said it welcomed the news that “fully funding” pensions is part of the deal.

“Unifor members of Local 440 at Northern Pulp have endured uncertainty over their future and their retirement funds for years now, and it’s imperative both parties to the agreement offer the basic respect to retirees and former employees by fully funding the pension plan,” said Unifor Atlantic Regional Director Jennifer Murray. “Hearing Premier Houston speak of the workers’ pension funding being personally important to him gives us confidence the pension will be a priority.”

New mill?

The agreement approval would see Paper Excellence move forward with an independent feasibility study of the potential for a new kraft pulp mill in Queens County, in the area of the former Bowater mill. The company would withdraw its proposal to upgrade the mill in Abercrombie, Pictou County.

A new pulp and paper mill in Queens County would respond to observations from the 2018 report on forestry practices by Prof. William Lahey, which outlined that the western region experienced significantly weaker demand for its lower-grade forestry products and sawmill byproducts after the closure of the Bowater mill in Brooklyn in 2012, according to the province.

Demand was further impacted by the closure of Northern Pulp in 2020. A mill returning to Queens County would provide a new, reliable market for the region’s forestry sector and result in greater distance between two paper mills working in the province – the other being Port Hawkesbury Paper in Richmond County.

Feasibility study

It is expected Paper Excellence would launch its feasibility study immediately and it could take up to nine months. The results of the study would determine how the company’s remaining debts and assets would be handled.

If the study finds a new mill is viable, the company will:

  • pay about $50 million for costs incurred by the company through the court process
  • pay the Province $15 million to settle its debts; the Province will release its security
  • top up Northern Pulp pension plans by about $30 million
  • seek financing and work with the Province and other stakeholders to establish a new mill.

If a new mill project moves ahead in Queens County, the company will determine the next steps for the Pictou County mill site.

If the study finds a new mill is not viable, the company will decommission the current mill site in Pictou County and sell its timberlands, allocating the proceeds as follows:

  • about $50 million for costs incurred by the company through the court process
  • $30 million to top up the pension plans
  • $30 million to the Province to settle its debts; the Province will release its security
  • $15 million toward the cleanup and maintenance of the Northern Pulp site and implement a site closure plan
  • any remaining funds to the Province.

The settlement agreement is subject to approval by the British Columbia Supreme Court. The court will hold a hearing on it on May 31. If approved, the company’s lawsuit will be dismissed, and all motions against the Province within the court process will be withdrawn.

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