Nova Scotia government to add $118 million in debt to purchase mill, forests

By The Canadian Press - Monday, December 10, 2012 at 7:37 PM - 0 Comments

HALIFAX – Nova Scotia’s government is adding $117.7 million in debt to acquire a large tract of private forest land that belonged to Resolute Forest Products Ltd.

The deal announced Monday night will give the province control of 220,000 hectares of woodlands in the province’s southwestern region, along with a power generation plant, the factory site and the wood fibre inventory of the defunct paper mill.

Resolute Forest Products Ltd. closed the former Bowater-Mersey paper mill near Liverpool, N.S., in June, throwing about 320 people out of work.

Under the terms of the arrangement to take over the assets, the province is acquiring the shares of Bowater Mersey for $1 from Resolute and the Washington Post Co. Ltd.

However, with those shares come worker pension and severance liabilities that the province says are estimated to be $118.4 million and which will have to be repaid as the pension is wound up.

In addition, Paul Black, director of policy and community planning in the premier’s office, said that the acquisition will add $117.7 million to the province’s $13.3 billion debt.

Note to readers: This is a corrected story. An earlier story said unfunded pension liabilities will be added to province’s debt.

Closure of Minas Basin Pulp and Power mill a blow to Nova Scotia paper industry

By The Canadian Press - Thursday, November 1, 2012 at 9:02 PM - 0 Comments

HALIFAX – Nova Scotia’s teetering forestry industry suffered another blow Thursday with the announcement that an 85-year-old paper mill would shut down next month, the third in the province to do so in little over a year.

Minas Basin Pulp and Power Company Ltd., a producer of recycled paperboard products, said it would halt operations in December, throwing 135 workers out of work and delivering a major setback to the Annapolis Valley economy.

“It’s a sad day indeed,” said Scott Travers, who served as company president until Wednesday night. “It’s a tough old industry and I feel for the people, the massive amount of people being affected.”

A letter to employees posted on the company’s website said it hoped a restructuring of operations last year and changes to pricing would make the Hantsport plant sustainable.

“However, after several years of challenge, the board (of Scotia Investments Ltd.) has concluded that it is time to recognize the mill is at the end of its cycle,” said the letter. “Long-term sustainability cannot be achieved.”

The company said challenges in the marketplace, competition from plants using newer and more efficient technology, and rising operating costs were too difficult to overcome.

The letter said while 135 people will lose their jobs, more than 40 employees will be moved to other companies within Scotia Investments, an investment holding company. Those companies include CKF Inc., a paper plate manufacturer also located in Hantsport, a town of 1,160.

“We will begin working immediately with the remaining employees to find alternative options and support them through this transition and mill closure,” the letter said.

The letter said the company is not seeking any government assistance and would fulfil its employment obligations, including the pension plan.

Robert Patzelt, Scotia Investments’ vice-president of corporate development, said pouring more money into such a small mill just wouldn’t make sense.

“The reality is that … additional money from the government (would be) inadequate to overcome those structural and economic challenges,” he said in an interview.

“In this instance, you would have to build a new mill and it would have to be huge and it would have to be located somewhere else.”

Premier Darrell Dexter said company officials told him there was no way the plant could be economically viable.

“They said there just is no road to sustainability for the company and so the best thing for them to do is what they are doing today,” Dexter said.

He said markets are tough for much of the forestry sector, but the demise of Minas Basin doesn’t necessarily mean Nova Scotia’s two remaining mills — Port Hawkesbury Paper in Point Tupper and the Northern Pulp Nova Scotia in Abercombie — are in trouble.

“This is a completely different product line,” Dexter said. “But all of the markets are under pressure and have been now for a period of time.”

He said Labour Department programs aimed at helping laid off workers transition into new jobs will be offered.

About 100 workers at the plant are represented by Local 583 of the Communications, Energy and Paperworkers Union.

Chuck Shewfelt, the union’s Atlantic vice-president, said he was disappointed to learn of the layoffs, but not entirely shocked.

“We know that much of the industry is having problems in Nova Scotia,” he said in an interview from Moncton, N.B.

“We’ve seen NewPage (Port Hawkesbury Paper) recently reopen in a diminished capacity, we’ve seen the closure of the Bowater Mersey mill in Liverpool. So, yeah, there’s a lot of reason to be concerned.”

Shewfelt said the layoffs at Minas Basin leave the majority of workers whose skills are not easily transferable in a difficult position. He said they will have to choose between toughing it out in Hantsport, commuting to larger centres for work or moving away altogether.

The decision not to seek government assistance was ultimately the company’s, he added.

“It would be great to keep the plant going, but it has to be viable.”

The former NewPage Port Hawkesbury paper mill in Point Tupper, N.S., shut down in September 2011. But it resumed operations last month under the new name Port Hawkesbury Paper with roughly half the workers it once employed after the provincial government announced a $124.5-million assistance package.

In June, Montreal-based Resolute Forest Products (TSX:RFP) announced the closure of the Bowater paper mill in Brooklyn, N.S., throwing 320 people out of work. That came despite a $50-million government offer to the company, $23.75 million of which was spent to buy land.

The closure of Minas Basin will devastate the local area, said Progressive Conservative Chuck Porter, who represents the riding.

Porter said the NDP government needs to do more to stem job losses in rural Nova Scotia.

“We’ve lost hundreds and hundreds of jobs in the Valley and we need to get serious. What’s the plan now?”

Liberal economic development critic Geoff MacLellan said the closure was symptomatic of problems with the province’s economy.

“Our economy is not diversified and we’ve got to figure out a way to get Nova Scotians back to work,” he said.

Minas Basin was founded in 1927.

Really bad investment advice

By Jason Kirby - Tuesday, September 13, 2011 at 10:35 AM - 5 Comments

These days, Richard Kelertas, a financial analyst at Dundee Securities, isn’t saying much about Sino-Forest, the beleaguered Chinese forestry company at the centre of a fraud investigation by regulators. “I’m not speaking with the press or anyone, unfortunately,” he says. That is unfortunate, because a lot of investors who followed Kelertas’s advice to buy Sino-Forest’s shares—either before the company got into trouble, when he insisted Sino-Forest was a “class act in timberland management in China,” or after, when he called the fraud allegations a “pile of crap”—no doubt have a few choice words for him.

The Sino-Forest debacle has the potential to be the biggest stock market scandal to hit Canada since the Bre-X gold-mining fraud in the mid-1990s. Until June, Sino-Forest was the most valuable forestry company on the Toronto Stock Exchange, with a market capitalization of $6 billion. Then Muddy Waters Research, a U.S. investment firm, issued a damning report that claimed Sino-Forest “massively exaggerated its assets” and is nothing more than a Ponzi scheme. Muddy Waters said it was short selling Sino-Forest, or betting that the company’s share price would plunge. It did. By the time the Ontario Securities Commission suspended trading in the stock on Aug. 26 and raised its own concerns about fraud, Sino-Forest had shed three-quarters of its value.

At this point none of the allegations have been proven. The OSC’s accusations of fraud at the company could ultimately prove unfounded. This still may turn out not to be “Tree-X.” Even so, investors would be right to wonder why a company with the potential to completely collapse on the basis of a single critical report was regarded so highly by analysts in the first place. Kelertas wasn’t alone in his effusive praise of the company in recent years. Of the 10 analysts covering Sino-Forest before the Muddy Waters report hit the street, nine rated the stock a “buy” or “outperform,” while just one considered it a “hold,” according to Reuters.

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Sino-Forest or sigh-no-forest?

By Colby Cosh - Tuesday, June 21, 2011 at 8:23 AM - 22 Comments

Timber company Sino-Forest is locked in a fascinating battle for survival against Carson Block, a stock analyst with a mixed record of publicity attacks on Chinese-based enterprises. With professional analysts reluctant to say what they make of Block’s “strong sell” report on Sino-Forest, I’m in no position to endorse it as a piece of financial advice or investigative journalism. Considered strictly as entertainment, however, the report is remarkable. Continue…

On a deadly trail

By Tom Henheffer - Thursday, November 25, 2010 at 12:00 PM - 3 Comments

Valerie Courtois/Canadian Boreal

For years, First Nations groups and scientists have been warning about the decline of caribou. Now, with some herds wiped out completely and others suffering declines of up to 97 per cent since the 1980s, governments and resource companies are finally taking note.

The threat to caribou was an especially hot topic last month in Winnipeg at the 13th annual North American Caribou Workshop, normally a low-key event dominated by scientists and researchers. First Nations—asked to consult based on their millennia-long relationship with the animal—made up more then half of the participants, and the workshop attracted representatives from the governments of Greenland, Russia, the Canadian Prairies and territories, and major natural resource companies including AbitibiBowater. Avrim Lazar, president and CEO of the Forest Products Association of Canada, the trade organization that represents forestry companies, says many of those in the industry are starting to plan developments around caribou.

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Trees falling from the sky

By Tom Henheffer - Thursday, November 18, 2010 at 1:00 PM - 11 Comments

Getty Images

Massive planes, once used to blanket the earth in land mines, could soon be dropping a very different kind of bomb—pointed containers with saplings inside. “There is renewed interest in massive reforestation and shrub planting,” says Moshe Alamaro, an MIT researcher. “Aerial reforestation is the way to go.”

Alamaro collaborated with U.S. aerospace company Lockheed Martin in the late ’90s to replace the tedious and back-breaking work of manually planting trees by dropping saplings from the sky. The idea, which could see nearly one million trees planted per day, was based on research done at the University of British Columbia in the 1970s. The concept involved using a small fertilizing plane to drop saplings in plastic pods one at a time from a hopper. But it wasn’t very fruitful—most pods hit debris during pilot tests and failed to actually take root.

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Biz Fix

By Jason Kirby - Tuesday, July 8, 2008 at 1:25 PM - 0 Comments

In the money: Airline crisis? What airline crisis? WestJet inked a deal today with Southwest Airlines to share passengers on cross border flights. So at a time when Air Canada and other legacy carriers are dramatically scaling back their flights, Westjet will shortly be able to sell tickets to any of Southwest’s 64 U.S. destinations, and vice versa. (Like old faithful, the Dallas-based airline announced the agreement by trucking out that most Canadian of clichés: “Want to Get Away – Eh?) This is a huge deal for the Calgary carrier, which modeled itself on Southwest’s low fare structure. It’s kind of like getting a call from your mentor to come and be his partner.

Trading down: BC’s beleaguered forestry sector gets far, far, far (I could go on) less attention than Ontario’s struggling auto industry, but the two have a lot in common, namely they are both bathed in layoff notices. In some northern communities, like Mackenzie, every single mill has gone under. Today another mill near Campbell River closed and another 440 people lost their jobs, bringing the total number for the province’s forestry sector to 10,000.

Number cruncher: We’re a glum lot in Canada. Almost as glum as the Americans, if the latest consumer confidence data is any indication. According to the Conference Board of Canada, consumer confidence has Continue…