Nova Scotia

Dexter defends Bowater purchase

Premier Darrell Dexter provided new details on Tuesday defending the province's decision to buy the shuttered Bowater-Mersey paper mill in Brooklyn.

Opposition leaders question details of deal

WATCH: Dexter RAW forestry conference

10 years ago
Duration 2:04
Premier Darrell Dexter gave more details about what the purchase of the shuttered Bowater-Mersey mill means for Nova Scotians.

Premier Darrell Dexter provided new details on Tuesday defending the province's decision to buy the shuttered Bowater-Mersey paper mill in Brooklyn.

"It is more than the land. It is about people. It is about Nova Scotia gaining control over its economic destiny and bringing new life to the forest industry," he said.

The province announced the purchase on Monday, about six months after Resolute Forest Products closed the former Bowater-Mersey mill, putting roughly 320 people out of work.

The price Nova Scotia paid for the plant and land was the lowest in recent years, an official with the Department of Natural Resources said at the "Forestry of the Future" conference. 

She said the government ended up getting the land for $524 per hectare, that's less than the $1,507 per acre the province paid for a 2010 deal with J.D. Irving to buy 10 parcels of land in southwest Nova Scotia.

The Bowater purchase includes 220,000 hectares of woodlands, Brooklyn Power Corporation, the mill site and fibre inventory. The province paid $1 for the assets but assumed a total of $136.4 million in liabilities.

$136.4 million in liabilities include:
  • $100 million in employee pension liabilities
  • $18.4 million in other liabilities and employee costs
  • $18 million in other debt
  $150 million in assets include:
  • $117.7 million for land
  • $25 million for Brooklyn Power Corporation
  • $5 million for the mill itself
  • $1.5 million in fibre inventory
  • $1.2 million in cash and tax credits

According to the asset and liability numbers provided at the lumber conference Tuesday, the province expects to make a profit of $14 million. 

Nova Scotia Power's parent company, Emera, has agreed to buy the power plant for $25 million. That money will be used to cover the $18 million in other liabilities and employee costs for the mill's former workers. 

Dexter said the cost of servicing the pension debt will be paid by private wood harvesters using some of the land, estimated to bring in about $4 million per year. Pensions for former mill employees will be 100 per cent covered. 

The massive tract of land included in the deal covers a land area about the size of Yarmouth County. About 12,000 hectares of the land will be designated as "protected." 

The deal did not include the purchase of the Oak Hill sawmill because of concerns that provincial involvement with that asset would cause conflict with the Canada–U.S. softwood lumber agreement.

"As disappointing as it is, I think the Nova Scotia government had no other option but to back away from the sawmill's sale and purchase," said Dave Coles, president of the Communications, Energy and Paperworkers Union.

Opposition questions

Both opposition parties welcomed the purchase of the land, though they criticized the details of the deal, particularly the cost and future liabilities.

Progressive Conservative Leader Jamie Baillie said assuming $130 million of debt is too much.

"Why haven't we bought some of the land to protect it and regulated the rest of it to make sure it is available for use? It would've been a much cheaper way for taxpayers," he said.

Liberal Leader Stephen McNeil doesn't like the fact that the province bought the Brooklyn power plant and flipped it to Emera.

"In 2001, it was valued at $77 million and today we sold it for $25 million," McNeil said. 'It was a wonderful opportunity, quite frankly, for the government to look for expressions of interest outside Nova Scotia Power."

Brooklyn Power is worth less today because it cannot get cheap steam from the pulp mill, which closed. It now runs entirely on biomass.

The government said the deal for the Brooklyn plant will protect ratepayers and jobs, as well as offer a clean energy source. The plant is expected to generate five per cent of the province's renewable energy for the next 13 years.

The former paper mill itself will be turned into a research centre for forest innovation. The goal is to produce wood products other than newsprint.