Northern Pulp may end this fall, but the expense and legal wrangling won’t

The mediation that put the legal wrangling over Northern Pulp’s future on ice will wrap up by the end of November.

What happens then will depend on whether the Nova Scotia government and the owners of the idled Pictou County pulp mill can reach an agreement on who owes who what, and whether the controversial kraft pulp mill can be restarted.

The mediation, ordered by a British Columbia judge last April as part of Northern Pulp’s creditor protection proceedings, is confidential.

The first public declaration on its progress or lack thereof came this week in a filing by Northern Pulp to have creditor protection extended to Nov. 30 (which was approved).

“The Petitioners can report that the Mediation Parties are reaching the conclusion of the Mediation Process,” reads the filing.

“If a resolution cannot be reached among the mediation parties, the Petitioners and other stakeholders will need time to prepare materials and redirect their attention toward an alternate means of restructuring. While this conclusion was anticipated the parties require some further time, which necessitates the extension being sought.”

The only other hint at how mediation is going, beyond the above-mentioned note that’s ending with a possibility of no resolution, is that Northern Pulp halted survey studies by a contractor this spring that would have contributed to the filing for an environmental assessment of its proposed new effluent treatment plant and mill modernization.

“… the Petitioners have suspended active filed work by (the environmental contractor) as a prudent strategy to conserve cash pending an outcome of the mediation process,” reads the document.

Northern Pulp’s proposed $350-million revamp would include a new effluent treatment plant to replace the one at Boat Harbour owned by the provincial government that is supposed to undergo a now-delayed remediation. The mill would also add an oxygen delignification process that it says, along with other in-mill changes, will reduce the use of bleaching chemicals by 50 per cent, reduce natural gas use by 83 per cent and reduce water consumption by nearly half to 45,000 cubic metres per day.

On the air-quality front, it promises an 80 per cent reduction from 2019 levels of sulfur emissions (so there will be no smell affecting surrounding communities), 75 per cent reduction in power boiler particulate, 70 per cent reduction of visible plumes, 50 per cent reduction in chlorine dioxide emissions and nine per cent reduction in greenhouse gas emissions.

But Northern Pulp wants the taxpayer to cover most of the cost in retaliation for legislating the closure of the former Boat Harbour effluent treatment plant.

The mill filed a $450-million lawsuit against the province in November 2021 for lost profits and damages, alleging a conspiracy by high-level government bureaucrats to force the mill’s closure by setting unachievable targets in the industrial approval process and then through timelines associated with the Boat Harbour Act. The company proposed to use funds gained from the suit for a $350-million proposed replacement effluent treatment facility and mill overhaul that has just begun a two-year environmental assessment process.

The province responded in April 2022 by amending the Boat Harbour Act to include language that retroactively removed any liability to taxpayers for its cancelling the mill’s lease to the effluent treatment plant a decade early, which resulted in the mill going idle.

“I’m not going to leave this one to the lawyers and the judges to ascribe what the intention was,” Premier Tim Houston told last reporters of why his government amended the Boat Harbour Act to remove any potential liability.

“It’s fair to the company in the sense that the company knew very well what was intended by this legislation. But it’s absolutely to protect the taxpayers of this province, which is where my primary obligation will always rest.”

Northern Pulp is currently being kept afloat by a $50 million loan from investors working under the name Pacific Harbour Group. That loan comes due on Nov. 30 if Northern Pulp can’t show either the province has agreed to pay compensation for shuttering the mill or a successful lawsuit.

While the taxpayer is Northern Pulp’s biggest secured creditor — we’re owed some $86 million for money we loaned them to buy 200,000 hectares in 2010 – the British Columbia Supreme Court has said Pacific Harbour Group gets first dibs on whatever money comes from the sale of company assets.