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Judge approves settlement agreement for Northern Pulp mill in Nova Scotia

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VANCOUVER — A British Columbia Supreme Court judge has approved a settlement agreement announced last week between the owners of the Northern Pulp mill and the government of Nova Scotia.

VANCOUVER — A British Columbia Supreme Court judge has approved a settlement agreement announced last week between the owners of the Northern Pulp mill and the government of Nova Scotia.

The agreement is the result of court-ordered mediation that began in April 2022 as part of the company's creditor protection proceedings.

Under the agreement, which Judge Shelley Fitzpatrick approved in a hearing on Friday, paper mill owner Paper Excellence withdrew a $450 million lawsuit against the province and will abandon plans to reopen its shuttered plant in Nova Scotia's Pictou County.

The British Columbia-based company has also agreed to begin a feasibility study for a potential new kraft pulp mill near Liverpool, NS.

“The key factor will be the feasibility of the Liverpool plant,” said Lance Williams, Northern Pulp's lawyer, who told the court that the agreement would help avoid an otherwise lengthy legal battle.

“It would have been expensive and unsafe for everyone involved,” Williams said.

Sean Foreman, a lawyer with the Nova Scotia Department of Justice, said the agreement represents a comprehensive solution that is “fair to all sides.”

“It provides critical certainty on these very complex legal and financial issues … and important protections for retirees,” Foreman said. “It also provides new hope for the (forestry) sector and paves a possible new path forward.”

Northern Pulp has been under creditor protection since June 2020. That year, the company closed its mill operations after failing to meet provincial environmental requirements for a new wastewater treatment plant. The Liberal government at the time said the mill could no longer dump its waste in Boat Harbour near the Pictou Landing First Nation after the company had done so for decades.

The agreement with the British Columbia-based parent company also addresses $99 million in loans the company owes the province, and the company has stated that the pensions of all current and all Northern Pulp employees will be fully funded.

If a feasibility study, which Paper Excellence says will take about nine months, deems building a new factory viable, the company will pay about $50 million for costs related to the Companies' Creditors Arrangement Act and $15 million to the province to repay debt, with another $30 million to go into the pension fund.

If the study concludes that a new plant in Queens County, New York, is not feasible, the pension and creditor agreements would not change, but the company would have to pay the province $30 million to repay its debts and spend $15 million to clean up and close the Pictou County plant site.

After a cabinet meeting on Thursday, Prime Minister Tim Houston said he had not received any updated information on the extent of contamination at the Northern Pulp site or a cost estimate for cleaning up the contaminants.

“What happens on the site and how much it will cost in the future will not be known until the purpose of the site is clarified,” Houston said. “I can assure you that the environmental standards and the normal processes that we have in place will continue to be applied in any future scenario.”

In the meantime, the company will continue to maintain the site in accordance with an existing ministerial order to ensure environmental protection, the premier said.

This report by The Canadian Press was first published May 31, 2024.

— By Keith Doucette in Halifax

The Canadian Press