Northern Pulp in cold idle as mediation to end before Christmas

Northern Pulp is going from a “hot” to a “cold idle” as confidential talks with the Nova Scotia government come to a close.

While the details of the court-ordered mediation remain confidential, the insolvency monitor and mill manager Dale Paterson predict that if there is to be any agreement at all it will come within the next two weeks.

“(I) do verily believe that December 14 and 15, 2023 have been booked with this Court to either take the next steps in a mediated agreement or to seek approval to proceed with an alternative to a mediated settlement,” reads an affidavit filed with British Columbia Supreme Court by mill manager Dale Paterson.

Paterson and the Ernst and Young insolvency monitor are requesting the court extend the company’s creditor protection until Dec. 15.

What an “alternative to a mediated settlement” could look like isn’t explained in the document.

However, it could involve the restarting of legal actions between the mill and the province that were put on hold as part of the mediation.

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.

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.

Another insight into the direction the mediation has headed is that Northern Pulp has stopped science work for an environmental assessment of the $350-million replacement effluent treatment plant and mill revamp that it anticipated taxpayers paying for either through their lawsuit or a negotiated settlement.

“The Company acknowledges that it will not be possible to meet the timelines in the (loan agreement keeping Northern Pulp afloat), namely completion of the (Environmental Assessment) report, obtaining a decision from the Minister on the (Environmental Assessment) process, and obtaining industrial approvals,” reads a report by the Ernst and Young monitor filed with the British Columbia Supreme Court as part of Northern Pulp’s creditor protection.

“The Monitor does not see how any of these activities can be completed in 2024.”

The British Columbia Supreme Court will hear the application for a two-week creditor protection extension on Thursday.

Meanwhile, the taxpayer-funded cleanup of the provincial government-owned Boat Harbour Effluent Treatment Plant the mill leased for decades still hasn’t started.

The federal environmental assessment on the project has been held up by a debate over where to put the estimated 31,000 to 51,000 dump truck loads of contaminated sludge.

Build Nova Scotia, the provincial agency tasked with cleaning up the former Boat Harbour Effluent Treatment Facility, wants to drain/treat the water from it, put the sludge in an expanded containment cell onsite and cap it.

According to documents filed as part of the now delayed environmental assessment process, The Pictou Landing First Nation doesn’t want a half-century of accumulated Northern Pulp and Canso Chemicals pollution in their backyard anymore.

They’ve proposed trucking it to another a site for disposal.