AbitibiBowater says it was blindsided by the Newfoundland and Labrador government's new legislation to expropriate its assets in the province, and the company may take legal action.

The pulp and paper maker has been asking the province to set up a joint working group to address all issues related to the closing of the Grand Falls-Windsor mill, company spokesman Jean-Philippe Cote said Tuesday.

"We tried to have open dialogue, we tried to have it in an orderly manner, so really today we just don't understand. In all the discussions we had with them since Dec. 4, they've never talked about such course of action," he said.

Cote said the company is still open to working with the government to avoid a complicated legal battle, but he says AbitibiBowater is also looking into whether or not it breaks international trade rules.

"Now we will have to review our options, including any legal considerations," he said. "AbitibiBowater also needs to assess how this destabilizing precedent opens the door to some potential U.S.-Canada trade issues."

The Newfoundland and Labrador government, with the support of opposition members of the house of assembly, passed urgent legislation Tuesday afternoon to expropriate all Abitibi Bowater assets in the province, except the mill in the central Newfoundland town of Grand Falls-Windsor.

In a statement to the legislature, Premier Danny Williams said the government will expropriate all hydroelectricity rights from the generating station at Star Lake, as well as all timber rights to forests on Crown land. The assets will be run by Nalcor, the provincially owned energy company.

"This piece of legislation is simply about trees and water, the most basic of our natural resources," Williams said in the house of assembly. "Natural resources that rightfully belong to the people of Newfoundland and Labrador."

Williams said his government is making this move because of the company's decision to stop operating the mill in Grand Falls-Windsor.

"For a hundred years, Abitibi and its predecessors enjoyed the privilege of Newfoundland and Labrador's natural resources," Williams said. "It simply makes sense if Abitibi are not going to continue the operation of the pulp and paper mill and renege on their commitment to our province, they will no longer have access to our natural resources.

"There are numerous charters and licensing agreements which allow Abitibi to operate in this province, and those relevant to the natural resources of Newfoundland and Labrador will be repatriated to the province."

Compensation possible for dams, but not resources

AbitibiBowater may be compensated for hydro assets such as dams and power stations, but not for the loss of any rights to the resources, the government said.

No price has yet been set for the assets.

Williams said that while the Newfoundland and Labrador government will now own and control these assets, the company would be allowed to continue full use of them until March 31, 2009, so that the mill can remain in operation until it shuts its doors.

Opposition MHAs, including Opposition and Liberal Leader Yvonne Jones, supported the legislation.

"Mr. Speaker, let me be clear, we on this side of the house fully support Newfoundlanders and Labradorians having access and control of their own resources, and that's the way it should be," Jones said.

NDP Leader Lorraine Michael said the legislature is protecting the rights of the people and the resources of the province.

"And what we have before us today is an opportunity to do something that is precedent setting because finally lands that had been ours and had been given away are back. The potential is to have them back in our hands where they belong, in the hands of the people of this province," she said.

Union elated

The union representing workers at the mill is elated, said George MacDonald, president of a local branch of the Communications, Energy and Paperworkers Union.

"I told the premier one day even if I had to leave the province to go to work, if we had our natural resources back, I'd pat him on the back, and I still mean that," he said.

Gary Healey, CEP's national representative, said he believes the move will open the door for the possibility of a new company taking over, even though AbitibiBowater will keep the actual mill.

"If we cannot find an operator who's interested in operating a paper mill and all that implies, then those resources need to be channelled to other enterprises that create a sustainable future for the people of central Newfoundland and, ultimately, the people of Newfoundland," he said.

After months of speculation, AbitibiBowater announced Dec. 4 that it would close its newsprint paper mill in Grand Falls-Windsor at the end of March 2009.

The day the company announced the closing, the province's deputy premier said the government would attempt to expropriate AbitibiBowater's hydro and timber rights.

Natural Resources Minister Kathy Dunderdale said if AbitibiBowater isn't going to operate a mill, it probably shouldn't get to keep existing power rights or nearby timber rights.

About 250 foresters and 450 mill workers will lose their jobs when the mill shuts down in the new year.

Forestry contractors who harvested woods on Crown land for AbitibiBowater had asked the government to transfer the company's timber rights to them, so they could stay in business after the mill closes.