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Deal reached to re-open Port Hawkesbury mill

In a deal that will have many area loggers, workers and suppliers breathing easier, a final-hour deal has been reached between the Province of Nova Scotia and Pacific West Commercial Corporation (PWCC) to re-open the former NewPage paper mill in Port Hawkesbury, NS.


September 23, 2012
By Scott Jamieson

Premier Darrell Dexter announced late on September 22nd that the province has negotiated a new agreement for Nova Scotia taxpayers to reopen the mill and keep hundreds of people working in the Strait region.

“I want to thank the people of the Strait. Their hard work, sacrifice and determination over the past year has paid off,” said Premier Dexter. “Even after it appeared there was no hope, both parties worked through the night and I’m very pleased to say we now have a new agreement that is a better deal for Nova Scotians.

“The bottom line is that under this new agreement, the total amount the province will contribute to support the workers, families and businesses throughout the Strait should be repaid in as early as 12 years and the province will have earned about $150 million in tax revenue.”

In August the premier announced a number of investments to support the reopening of the mill and protect the 1,400 jobs that rely on its operation. The province has also invested $36.8 million to date to keep the mill in hot idle and set up the Forestry Infrastructure Fund to keep people working in the forestry industry and produce product, a necessary part of keeping our forests healthy and sustainable.

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Under this new agreement, all of those investments will be recovered in full the premier said.

“This government has worked for a year now to restart that mill,” said Premier Dexter. “We didn’t do this because it was popular – we did it because it was the right thing to do.”

The new arrangement will significantly increase the annual share of profits paid to the province and it will ensure a significant amount of the tax savings generated by Pacific West Commercial Corporation (PWCC) in other provinces will be shared with Nova Scotia.

In addition to that, as a result of the Canada Revenue Agency ruling earlier this month the province will receive millions in additional revenue.

Much of the original agreement hinged on PWCC receiving a positive ruling from the Canada Revenue Agency on its taxes. When that did not happen, the province continued negotiating with the company to find a way forward within the financial framework already announced.

At the same time, the Nova Scotia Utility and Review Board had provided until 4:15 p.m. on Sept. 21, for a revised rate application filing by PWCC. The board made clear that, provided an application was received by this deadline and that ratepayers would be no worse off under the revised filing, it would be in a position to provide a revised order on or before the court-imposed closing deadline of Sept. 28.

Despite the parties’ best efforts, that deadline could not be met and both sides walked away from the table last night.

“Every option identified at that point exposed Nova Scotia taxpayers to too much risk and the province was not prepared to accept that,” Premier Dexter said. “However, later in the night there were further discussions. We worked hard and were able to come up with something that further benefits taxpayers and will make the mill more competitive.”

Pacific West and the province have agreed that all elements of the province’s previously announced support remain the same, with the following exceptions:

  • the previously repayable loan of $40 million will now be earnable by the company, subject to verification of an equivalent amount of taxes being paid by Nova Scotia Power as a result of energy purchases under the proposed new tariff. The province will forgive no more than what is paid to the province in taxes, to a cap of $40 million, over a maximum of 12 years
  • profit-sharing increases from a cap of $9 million, to a cap of $24 million
  • Pacific West will incorporate other mills and related assets into the mill (Port Hawkesbury Paper). This will improve its competitive position through disposition of the accumulated tax losses
  • in recognition of the above provincial investments, the province will share in the benefits of the use of the accumulated tax losses available through Port Hawkesbury Paper in connection with the other assets. For every dollar of accumulated tax losses used by the company, the province will be paid 32 cents, and 18 cents will be directly reinvested in the mill to improve its competitive position, subject to review of the proposed investments by the province.

“This is the outcome people have been working towards for months,” said Premier Dexter. “Employees will be able to continue working to support their families, businesses will benefit from those families staying in the community, the province gets a better deal for taxpayers and the company is able to achieve the competitive position it needs to operate the mill profitably in the long run. It’s a win-win for everyone involved.”