Nova Scotia government interested in buy assets of shuttered paper mill

HALIFAX – The Nova Scotia government wants to buy the assets of a shuttered paper mill owned by Resolute Forest Products Inc. (TSX:RFP) in order to prevent a foreign buyer from purchasing land and processing timber outside the province, Premier Darrell Dexter said Tuesday.

The Brooklyn, N.S., mill along the province’s South Shore shut down in June after the Montreal-based company said it couldn’t compete because of a strong Canadian dollar and competition from Europe. The closure left about 320 people who worked at the mill and its woodland operations out of a job.

Dexter said the government is interested in acquiring 222,000 hectares of timberland belonging to Resolute so that a foreign firm could not buy that land and process it outside of Nova Scotia.

“That would be a significant infringement on the economic interests of the province,” he said, adding that the government wants to ensure that the land could be used to support a viable forestry industry in the future.

The lands would be in addition to the $23.75 million the province has already spent to acquire over 10,000 hectares of woodland from the company.

Dexter said the government was also assessing other assets, which include Brooklyn Power Corp., a power generation plant, and the mill itself. But it does not want the company’s sawmill because purchasing that operation could violate the Canada-U.S. Softwood Lumber Agreement, he added.

“Whether or not this comes to fruition we will see in the weeks and perhaps months to come,” he said. “The province has a very substantial interest in this.”

Dexter said the company has said there is enough value in the assets to cover off any liabilities, including the employee pension plan. News reports have pegged the assets as worth $120 million.

Liberal Leader Stephen McNeil said any deal cut by the government would have to come before the legislature to be debated, adding that it would be important to consider the cost to taxpayers.

“If it’s a reasonable amount and wood fibre can be protected by Nova Scotians, then we’ll look at the deal then,” said McNeil.

But Progressive Conservative Leader Jamie Baillie said the government could achieve its objectives without spending millions in public money.

“The right role for government here is to facilitate the sale of that land to a responsible buyer and then to make sure that the proceeds are used for things like the pension,” Baillie said.